Noah Brooks (00:22)
I’m Noah Brooks. And as always with me is Chris needs. Hello. Hey, so yesterday new all time high in the S and P 500. Another one. Another one. Right. We had a little hiccup at the end of the month, um, with the jobs report, but, yeah, another all time high. You know, you go into this year, you don’t know what to expect. We have this tariff debacle.

Market goes down 20%. I feel like I’m a broken record up here and we are now at all time highs once again, over 6,400 on the S and P 500 and so many people got scared out during the tariff situation. Um, I feel bad for anybody that didn’t get right back in. We’re up 30 % from the low, uh, on that, that closing low on Tuesday, I think it was April 8th or nine up 30%. What’s the CMT mantra?

Follow trend lines, not headlines. the headlines haven’t been good. Price is truth. I mean, we are in the definition of climbing the wall of worry. Yes. And you know, realistically there are some things to be worried about today. We got, uh, some PPI report that was, let’s just say not so good. You, you’re gonna spicy, little, little spicy. So producer price index, right? Which for everybody out there, just give us a quick review.

So the producer price index measures basically we’ll call it wholesale costs where producers are getting prices for their outputs as it goes prior to going out to distribution channels. So it’s a little different than the CPI. You can consider it a little bit more of a leading indicator, I would say. What the companies are paying for their inputs, for their goods. Yes.

So you said it’s a little bit spicy. Let’s hear it. Yeah. So 3.3 year over year on the headline 2.5 was expected. So that was a hot one. Core 3.7 versus 2.9 expected. If you look at just the month over month, 0.9 on core versus 0.2 highest since March of 2022. Yeah. And that was not a good time. If you recall on the inflation front.

No, and it does seem like, you know, it’s yet to be determined whether this is kind of a one time bump. We see it for a few months, then it comes back and it’s tariff related. Or if there’s something bigger underneath. ⁓ I don’t know that anybody can know that at the moment. I think it’s probably unknowable. ⁓ But there’s no question that tariffs are playing an impact on the wholesale prices that ⁓ the companies

and manufacturers are paying for their inputs. Yeah. And it’s, it’s, it’s not possible for it not to be impacted. You would think if, unless there’s significant margins being eaten by the people selling them to consumers, this should in some way at some percentage feed through to CPI and you know, the coming months. Well, you don’t think all of the vendors are going to eat that pricing?

Probably not 100%. think they’re gonna pass it on? I think they’ll pass on a decent percentage of that. Well, we actually don’t know what’s gonna happen in six months from now. It could be, I doubt that it’s a one month bump, but it could be- trend has been higher since what, 2020 mid, the lows of 2023 when it hit bottom. I think it was under 1 % in early 23.

after we were getting our footing back and everything was kind of coming back in in place after the Fed raised rates pretty dramatically, slowing down demand a little bit. And then we’ve been kind of on a steady climb upwards, not a straight line. As you said, that it was it was high in January of this year, and we’re getting data for July as well. But it is trending upward. Yeah. And it’s not just a one month trend. I mean, it’s

right after CPI kind of the swaged fears coming in line on headline and just being up a 10th on CPI. So, you know, we felt really good after that CPI number on Tuesday, hit that all time high you already mentioned on Wednesday. And you know who I would not want to be right now? Jerome, Jerome Powell.

This guy is taking it from all different angles. The president is begging him to resign calling him all sorts of derogatory names, making up names for him. And now he’s got a situation where we have we didn’t mention the jobs report, but the jobs report came in less than expected, right? And July, July came in at 73,000 versus 115 expected.

So not a great number. think where we can say replacement level slightly below replacement level. Yeah, replacement is about 70,000 jobs. Yeah. So we’re right there. So it wasn’t a strong report, but that wasn’t the bad part. The bad part was the revisions for May and June. Between those two months, we lost 258,000 jobs in the revisions from the previous amount. We didn’t lose 258,000. They’re just revised downwards, 258.

So J-PAL is in this situation where the president and there’s a leading, there’s also economists out there that suggest they should be lowering rates, but he’s, he’s told us point blank that had tariffs not been a situation that they would have already lowered. Now he’s kind of vindicated in, we’re seeing this PPI come in much higher than expected, but at the same time we’re seeing jobs.

I’m gonna say rolling over but you mentioned significantly weaker than the perception was prior to the job. Yeah, weaker with revisions. We’ll get into that in a little bit about the whole BLS situation. But he’s now torn because you have wholesale inflation that’s rising and you have a labor market that seems like it’s cooling. And what did he say though, the other day at the Fed meeting, he didn’t imply that it was cooling. Yeah, and that that’s disconcerting to me. in the ⁓

you know, meeting the conference they have with the press afterwards, he was insinuating he came across kind of hawkish saying how strong the labor market was. And then two days later, we got that jobs report with those significant revisions from one and two months previous, but he has that data, right? You would think that’s why I say it’s disconcerting, you would think they have informational asymmetry compared to the rest of us where they can get real time updates on how these revisions are going.

and he was speaking up how strong the labor market was, why he didn’t want to cut rates. And then we get those massive revisions, which knocked the market down. You know, I think the SMP was down maybe 1.8 % on that Friday, something like that. You would have think he had that information. Why was he so hawkish on the jobs market? Well, this is why I said I would hate to be in his shoes. ⁓

What was the headline a few days ago or maybe over the weekend on Sunday that the president was going to sue him over ⁓ the retrofitting of the Federal Reserve buildings itself, which seems nonsensical to me. But nonetheless, he is taking it from all different sides and he still has his normal job to do. ⁓ It doesn’t look like he’s going to resign. He’s pretty.

He’s pretty stoned. he’s he’s dug in. He’s not going anywhere till his term ends. ⁓ But then he has to do the job. And, you know, so obviously, they have a lot more data at their fingertips than the average person does. But the data seems to be confusing. Yeah, you know, and you talked about those revisions to the ⁓ monthly jobs report.

Let’s talk about that in the Bureau of labor statistics, cause that’s come into play over the last week or so you’re, you’re smiling at me. But so obviously we know ⁓ a week or two ago, the president fired the head of the Bureau of labor statistics after the jobs report came out and those big revisions downward that you mentioned. And they are big ⁓ statistically they’re in the range though of

of the error of the percentage of error. Yeah. So the BLS gives that a tolerance range on each side. So basically what they’re doing statistically is trying to estimate within a 90 % confidence interval what the jobs would be. it’s sizable. So technically it’s plus or minus 136,000 jobs is the range they give. Now, given those substantial revisions,

Technically, it’s still within those bounds, but just barely two negative visions at the very threshold there. just to give an example, if there’s an increase in 50,000 jobs within the 90 % confidence interval, means the change is likely between negative 86,000 jobs and plus 186,000 jobs. That is a vast range. Yeah, that doesn’t seem like it’s very accurate.

And so let’s get into the actual, the way that they conducted these. ⁓ they’re not going out. There’s not this data set that they have access to that they’re just importing it. Like there’s no registration of new jobs created, right? There is a registration when people apply for unemployment, right? We have that number and that seems to be a hard and fast number. If you get laid off and you go apply for unemployment compensation, boom.

you’re on that role and count the application. can count the applications. Now, if someone ⁓ gets laid off and they get severance and they don’t apply for unemployment data or unemployment compensation, well, they’re not going to be counted in that number. So how does it work for job creation or, ⁓ or the opposite of job creation of job losses? So it’s a survey, right?

And so the federal reserve goes out and they’re essentially asking businesses a will they participate in this survey? Voluntary voluntarily. Like they can’t make anybody participate in a survey. And then, ⁓ they, the, even if they respond, yes, the business still has to get the data back to the federal reserve in a timely fashion on a regular basis. So let’s, let’s get into that a little bit. It seems like these revisions,

have been happening more and more. And you had some data on that from 2000 all the way up until COVID. Yeah, 1979 through 2003. The average revisions were 61,000 up or down. Since 2003 to COVID, it was 51,000. So over time, they’re getting a little more accurate reporting. But post COVID participation has been decreasing.

participation in the survey. Yes, in the survey has been decreasing. And then now it seems like they’re indicating at the BLS that they’ve also been getting later and later responses that may come after that arbitrary line, where they’re reporting. they putting those responses in the in the mail? Maybe I thought traditionally they were by phone, but I guess there’s a

I don’t know how are they getting those responses back to the waiting waiting for a week to respond to carrier pigeon. Yeah. So okay, so we have a decline in ⁓ survey participation. And so really, you have this data set that seems to be getting smaller and smaller. And then it’s difficult enough. There’s a we’ll call it 165 million jobs at any given time around there in the US.

and their sample size is getting smaller and smaller and they have to extrapolate that out even more, more forecasting. Yeah. So what can they do to better forecast or better, better count these jobs? How are they going to go in the future? So we know that the president has canned the head of the BLS.

Can someone else just go in there and say, we’re going to make it much better and be a lot more accurate because we’re going to do X. What are they going to do different with a new head? think they only have a couple of levers to pull. can’t force question. mean, I, my rational mind would say, well, if you’re getting them late and you’re saying this data is unreliable and there’s people making investment decisions off of it.

Why don’t you delay it one week? So maybe, you know, instead of getting the first Friday, maybe we get the second Friday, but at least that information may be 30 or 60 % more accurate. Uh, and that way investment decisions are being made with slightly more accurate information with it’s already a lagging indicator. I mean, they’re doing it after the month, obviously, you know, it’s not a leading indicator, but just like procrastination.

My procrastination your procrastination anybody’s out there if they push the push it back a week won’t the respondents just waited an extra week I Don’t know I wonder if because think about businesses across the country like responding to a BLS survey isn’t their number one job function So there may be a delay and when they crunch those numbers So maybe they’re not responding so late. Maybe it’s they get the request, you know

the very last day the month or the first day of the next month. And it takes them two or three days to finalize their reports. Giving an extra week might be able to solidify, you know, a certain percentage of those respondents. So I have no personal knowledge of what this survey looks like when it goes out to hiring managers and to businesses. I don’t personally know. ⁓ But I would imagine that it’s some type of form data where they’re just putting in

hirings and firings or anticipation of hiring or firing. But maybe I’m wrong on that. Maybe there is some bean counter out there that’s taking emails that’s actually manually adding all these things up. That doesn’t seem likely, but it’s certainly possible. But we looked at this a little bit earlier and it seems like the funding for the BLS Bureau of Labor Statistics has gone down

and really not kept up with inflation. And this year, um, the budget for 2026 has a reduction in the BLS of another 58,000 or $58 million. So even prior to this year, they were down in the range of 20 % inflation adjusted. Yeah. Right. So, that doesn’t make me think that they want, well, not they, if we want accurate data, you have to keep up and you have to fund.

this, ⁓ this organization. And so, I mean, I’m not saying that they got doged on this, but if they’re getting, if we already know that they’re understaffed and they’re not able to report these things in a timely fashion, and I don’t want to say that it’s inaccurate, but I think the data that they’re working with has to really be looked at. I don’t think personally that the head of the BLS, ⁓ is

was ⁓ politically motivated in anything. I’ll just say that unequivocally. I think the next person that comes in there is going to be faced with the ⁓ exact same issues that the prior person was faced with, that there is a lot of data and the respondents are not getting back in a timely fashion and there’s less and less people actually responding and they’re going to be faced with the same exact issues.

So I’m not worried about.

the head of it, I’m worried about whoever they put in there, how are we going to change from what we were doing before? guess we’ll find out because we had a critic of the BLS and Tony nominated. So ⁓ he’s going to go from, you know, Monday morning quarterback to cheeks in the seats, you know, actually on the field. So we’ll see if he has anything up his sleeve, maybe some techniques that weren’t being utilized. I don’t know what he could pull out, you know.

out of his hat, but well, I, so I have lots to say on that. I have lot to say on that. don’t know that he apparently floated moving to quarterly rather than monthly. I personally am not a fan of that, but, ⁓ something needs to be done. I think the easiest is that delay by a week to let some more reports funnel in because if your sample size is shrinking, you’re forecasting error.

increases. That’s just the laws of statistics. just say that this data is important. Right? I mean, there’s there’s no question that economy, the economy needs this data and to have accurate information on jobs is really important across the board, not just throughout the financial services and investments, but to all the ⁓ economies of the world, right? And to know exactly what’s going on. I’m I would love to be able to find

have them find a better way, whether it’s a different type of survey or more automated or maybe throwing a little bit of AI in there. ⁓ but you know, who’s not worried about that is ADP because ADP has a competing jobs report that comes out. ⁓ they’re probably loving this. Yeah. Now, generally speaking, those two numbers, I think the ADP comes out on a Wednesday, the first, first Wednesday of the month or

It’s always like the joke is if one strong fade the other because they’re not always in line with each other. Do you think that the ADP report is going to be more valuable today than it has been? I think, yeah, I think it’ll be slightly increased weight from where it normalized. would say normally it wasn’t weighted that heavily. It’s definitely a blip compared to the real government jobs report, but I think there will be more eyes on it in the short term.

Yeah. And maybe that’s the solution is, you know, to get in in bed, if you want to call it with the payroll companies that actually do the payroll. that’s that’s the benefit of ADP. Yes, they have a limited scope on who it’s only the actual companies that utilize them. But that’s hard data to them. They are fully aware of it. Yeah. But they know it there’s is not a survey. They know how many people are on the payroll from

It’s survey in a different way because it’s a slice of companies that utilize them. Yeah. Well, that’ll be interesting to see. And we’ll continue reporting on that as we get new information. ⁓ I say reporting like we’re, some kind of journalists, but I mean, I think it’s interesting. It’s not every day that the BLS changes anything. I don’t know that they’ve changed how they do the surveys in years and years and years. So it’ll be, it’ll be really interesting to see how this, ⁓ all develops.

Yeah. ⁓ but the fact of the matter is that these numbers have been revised and they probably should look at altering it somehow. Right. remember last year there was everybody was up in arms. ⁓ it was the 800,000 revision. think it was on the annual or the quarterly report where they go backwards and they look back several months and there was 800,000 jobs that weren’t there that they revised down.

And you know, you have one side saying this was for political gains of one party, and then you have the other side saying no, you know. Yeah, if we could, if we could tighten it up, that’d be ideal. don’t think everyone agrees with that. think. Yeah, I think everybody does agree with that. I don’t think it was I said, a political situation unequivocally. I’ll put that out there. I do think it needs to be updated. Yeah, yeah, there’s there’s no question about it. But we are at all time highs, which is

pretty, pretty amazing after ⁓ the March, April scenario. And, you know, going forward, it’s going to come down to like, okay, you have this CPI report that come out significantly hotter than expected. Santelli on CNBC this morning was all hot about it. He was getting a little hot and he is, he can be, he can be funny. He goes from zero to a million really, really quickly, which I think is funny, especially when he’s on live television.

but then it’s really going to come down to next month. And that’s always the case. Well, we’ll see if this is a trend, right? It seems to me the most likely outcome here is that CPI and PPI become elevated due to tariffs for some limited period of time. We’ll call it a ⁓ bump up to adjust for those tariffs. Now, the only issue here is that we haven’t fully

determined what the tariffs are going to be going forward for the next, you know, six months, year, two years, three years, or, ⁓ we just, have pauses with Mexico and China. Yeah. Another 90 day pause on China. Canada though? I know there was a report out this morning that, ⁓ some of the distilleries are, you know, the Canadian imports of,

spirits like Jack Daniel’s and then and American whiskeys are down 60 to 70 % depending on what you’re looking at and that they’re buying only, ⁓ you know, can put it on the shelves, only Canadian whiskey, Irish whiskey, Scotch whiskey, even Japanese whiskey to some degree self-driven embargo. Yeah. Yeah. ⁓ if that continues, you know, the companies like Diageo and, ⁓ some of the other big brands out there, you know, they could really be impacted and

Okay. I don’t know that the, how many people are in Canada? should probably know this. I don’t know either. know that 90 % of the Canadian population lives within a hundred miles of the U S border. ⁓ but I don’t, I don’t know the actual numbers. I think we have the power to figure it out, but he said, it’s probably a relatively small dollar figure in aggregate. ⁓ but, but it is meaningful. I mean, it could knock some.

percentage points off the probability of these. Any consumer on the margins is important when they’ve forecasted to the best of their abilities where they’re going to be in terms of sales and earnings. So we don’t actually know we have ⁓ a 90 day pause, another 90 day pause with China. ⁓ It would be awesome if we could get that, you know, locked and loaded and we know exactly what’s going to happen.

But so I was saying that most likely this is a one time bump up and I don’t mean a month bump up, but a one time step up based on tariffs, whether they’re 10 % or 15%. So we have a period where producers, their cost goes up, they’re going to pass that on to us. So inflation rises a little bit and then kind of moderates because it’s always year over year, right? So at some point it’s not

continuing to go up. And so we just had that one one time pump up. ⁓ That seems to me that that’s the most likely scenario here. But it comes down to getting all these tariffs taken care of. Yeah. Lots, lots of still forecasting issues with our major trading partners. We got EU locked down, which is nice. But when most of our inputs come from one specific country or through

Canada and Mexico, definitely something we have to get dialed in. ⁓ It was interesting. had ⁓ the Nvidia and AMD proposing paying a tax in order to secure their licenses to sell to China. 15 % export tax, we’ll call it. And then China came right out and said, yeah, but to our home domestic companies, we don’t want you using that.

Did you see DeepSeek is delaying their R2 model? Remember when that caused a ruckus? DeepSeek is the chat GPT version that they said that is almost caused Armageddon for like two, three weeks earlier in the year. They essentially came out and they said we have this AI model, this large language model that does everything plus, and we only spent a fraction of money and CapEx building it.

And that freaked everybody out. So they came out and they said what exactly? They said the second release of the model hasn’t been as powerful. And earlier reports, this is from a US reporter saying, you know, they’re having issues getting the proper computing power with the Yawai chips. Oh, so can’t you just buy more of them? I guess, but they lose their output. They have to pay more for energy then. I mean, at some point,

Like, yeah, I don’t think we’re there yet. I obviously we’re not. But like you have Moore’s law, which essentially says that the computing power of these chips will double every two years approximately. And at some point ⁓ and maybe the next leap, right, obviously is quantum computing. We know that that’s on the horizon. That’s that’s coming soon. But we’re still doing it in the traditional chip manufacturing, silicon wafer type of stuff. Obviously, they’re getting better and better and better.

But at some point that Moore’s law kind of dissipates. But for me as a consumer, not necessarily a data center consumer, but for me as a consumer, whether I have ⁓ an I seven chip in a laptop or an I nine chip in a laptop, I don’t know that it really matters to the point about deep seek. Can’t they just add more chips instead of making the chips better? And yeah, I know that that’s going to be more require a second chip if you will, or an extra 2000 chips.

and more power, but why would that prevent them from moving forward? I wonder if they’re having issues like isn’t the thing with chips if they’re throwing too much power into it and the algorithms are too powerful for them to handle? Don’t they literally melt the components from being overworked? They can. I wonder if they’re running through that and melting a ton of yallway chips. I mean,

The fact of the matter is that China is significantly behind us, right? Their technology is behind us, but they’ve been gaining dramatically over the years. And whether that is through tearing down our stuff and rebuilding their own, which they’re known for, ⁓ you know, we can call it ⁓ intellectual property theft and theft is, you know, vague, but that’s what they’ve been doing.

And but they’re just they have not caught up to us yet. But I you got to think and that’s this is where the whole trajectory would say they would and they have they have the power. They have the power to pass us but they don’t have the technology yet. Yet. Yeah. Well, hopefully they won’t. But in terms of power, mean, we are seeing we know we’ve talked about this in the past, we’ve seen electrical electric costs go up pretty dramatically. I said a few weeks ago on on here that

you know, I have a lot more electrical components in my home than I did 10 years ago, everything is ⁓ sucking electricity out of the wall or on a battery. ⁓ And that’s not going to disappear anytime soon. Not with AI and blockchains and all this stuff coming to the forefront. We’ve seen a bunch of big IPOs this year in the AI and crypto space. Obviously, there has actually I should say there hasn’t been a

high number of them, but the ones that have IPO’d have been big. They’ve really rocketed after the IPO date. We just had one this week bullish. ⁓ Not AI, but we had potential of future AI. Figma shot up after its IPO, where the other one circle, which is, guess, like more stable coin arena type stuff. ⁓ There’s a demand for this industry, this sector and

requires power. Yeah, there’s there’s no question about it. ⁓ I will say just coming back from from Europe, we spent a few days in England, visiting a luscious family. And then we moved on to Spain did a little bit of wine country and we ended up just one night in Bordeaux. But in England, ⁓ there seemed to be a lot more solar than I remember we were back in the same area as we’ve been to before. And it seems like a lot of the new build a lot.

all of the new builds have some type of solar on their roofs. And then there’s a lot of retrofit. And I come to find out just maybe like two weeks ago, Tesla has now applied ⁓ for licensing to do solar and battery power on new residential and I guess old residential homes in England. And they had never done that before. ⁓ So I feel like there’s an opportunity for us consumers

to generate some of our power significantly easier than it, and then it did before, but that opportunity doesn’t necessarily lie with these giant data centers because they need a lot more power than a small solar farm can actually collect. for, for us, for you and I, for homeowners, ⁓ not necessarily apartment dwellers, but for homeowners that aren’t in a city, I don’t know how many there are in the United States versus people that live in the city, probably

Probably half and a half, I would imagine. I have to come back to that number because I don’t know. But there’s a bigger opportunity for us to put solar up there and generate some of our ⁓ electricity than there is for these big corporations and data centers to be able to do that. And it’s going to come down to supply and demand. There currently is not enough electricity being generated, but there’s a lot more demand coming over the next 10 years for it.

So it seems like prices are going to continue to rise. Good, good hedge to produce your own energy. If you have the land in the property to do so, you know, at least supplement, yeah, supplement it. ⁓ I would love to be able to do the micro hydro. Do ever see that those little streams? And then you put this little turbine in the stream and the flow of the stream, some perpetual energy. Yeah. Right. We have a, we have a little stream where I grew up and it was never enough.

You need a certain gallons per minute to make it happen. ⁓ it was never enough to do it, but it’s just super cool. mean, that’s not scalable for everybody, but it would be super cool. Yeah. ⁓ so here, as we’re getting to the end of this thing, we know we have some jobs slowing down. We know it seems like inflation is starting to creep up, maybe not dramatically, but wholesale prices are coming up a little bit. ⁓

that could set us up for, you know, a jump of, of general inflation for a period of, I don’t know, three, four, six months. That probably wouldn’t be great for the overall market. But yet if I’m sitting here talking about it, you know, everybody knows it, but the market isn’t really responding to it. mean, I think it was down a little bit as we came in here, ⁓ S and P down a half a percent or something like that. But literally yesterday we were at all.

time highs across the board. So what is it going to take? And not that I’m rooting for the market to go down, but does it not matter if inflation is coming? It’s it’s a delicate balance. Consumers are already, I’ll call it getting tired. American consumers are amazing. And they power through a lot of things. As long as that continues, we should be all right. But if this another little tick up in inflation is what you know,

knocks things over and the consumer sort of taps out, you’re going to see earnings decrease. Even if their maybe overall top lines don’t decrease at the very worst, they’ll be forced to eat some on their margins. So I think earnings getting impacted would start to hurt the markets. And we’re talking about 99 % of the companies that don’t have the AI valuation boost.

that’ll really probably get impacted by that if they have to start eating margins. We’ll see if it’s a trend at least we don’t have the Fed who is likely to raise rates. J-PAL did say if it’s a one time pass through based on tariffs, he probably would not raise rates. And we’re still leaning even though you know, we may not get 50 basis points in September, like Besant was saying on Bloomberg the other day, we’re still likely to get some cuts in the future.

which should help out with valuations. So it’s going to be a balance between those two things, the valuation boost from slightly lower rates. Maybe we get more towards like a three or three and a half percent on the neutral rate in the next year or so. And consumers tapping out. That’s the balance we sort of have to keep an eye on. And certainly the jobs market, we don’t want to see that accelerate to the downside. If we see weaker reports and things like that, because that will.

hit the consumer immediately. Yeah. Well, there’s, there’s no question about that. And then if you go back to GDP, we know that real estate, ⁓ is a really large input to GDP. And what I keep seeing, and this is anecdotal on, on my part, cause I’m looking at houses, keep seeing housing prices on Zillow coming down, price cut, price cut, price cut, ⁓ depending on where you’re looking. And it is still really difficult for a new homeowner to go out there.

and to buy a house with a 7 % mortgage. Now we’ve had this conversation before on here. Rates were significantly higher in the eighties, but the housing prices weren’t, you know, it was $30,000. It wasn’t $400,000 for a starter house. I guess my concern is that there is a major confluence of all these things at one time. And when I say concern, I mean, we’re talking short-term concern, long-term

I have no concerns about the American economy. mean, we are the strongest economy in the world and that by itself doesn’t mean anything, but the innovation that we are bringing out on a, on a yearly basis is going to keep us moving for the next, you know, at least as long as I’m alive and I’m going to be turning 50 later this year. So that is a little bit nutty to me. I don’t worry about it long-term. I worry about it, you know, in a six month period in a nine month period. ⁓

And from, from a standpoint of investors, think the most important thing is like that sequence of returns, especially people that are taking distributions, you know? So if you have a rollover today and you’re leaving your firm, you have a big rollover, you’re rolling it into an IRA and you’re sitting down and talking to your financial advisor, the question becomes, okay, how do I, I know what I was doing at my job, but how do I invest today when

As I said, we were just at all time highs yesterday. And then how much money can I actually withdraw on a regular basis so I can beat that that sequence of returns problems that you come into? And I probably sound like a broken record on this, but if you had started in 2000 and you were taking out a higher than recommended distribution amount, you probably gotten yourself into a situation where you couldn’t make it back up because we had three.

years of negative returns. 2000 was negative nine, 2001 was negative 11 and 2002 was negative 22 % on the S &P 500. I think we’re going to be doing some work on that and sharing that next time. But there’s a real concern for new retirees about what to do with their money right now. And quite frankly, if I was retiring today, I mean, I’m a hundred percent equity investor and I’m in a different position than

you know, we people in the industry invest differently, and I think see it differently than your typical person who retires has a 401k and then moves out to an IRA, we just, you know, we’re closer to the action, if you will. But if I was in that position, and I work with people that are all the time, I would be very concerned about investing at the very top of the market if I had some type of rollover.

And one thing you’ll see, not necessarily in the work, you know, some of our advisors do in doing financial plans, but a lot of clients will in their head say, well, the SMP 500 has averaged 10 % total return over this in this period. So if I get that return, I can spend this much in retirement, but that is just a single large cap index.

You’re not diversified. think you have 500 companies. So you think you’re diversified, but you’re not diversified to the risks out in the market, the factors that drive returns. ⁓ so there’s assumptions that are made in their heads before they, you know, actually sit in front of someone and, know, they are under the assumption they can do a large distribution rate. That well, when you’re only in 60 % equities, that’s not as realistic. And your risk is telling me.

you should be in a 60 40, for example. So there’s lots of conversations there. So the S and P 500 is not diversified. There are far more asset classes out there in the world that you have to consider. And you have to understand if you’re a 50 or 60 % on your risk score, that you may not be in 100 % equity. So you can’t assume you’re going to get an equity index return. Yeah.

lots of, a lot more to be said about that. think we’re going to have some great information. Yeah, absolutely. But, you know, right at the moment we are just shy of all time highs. Everybody feeling pretty good patting themselves on the back. has been a good year so far, even after, ⁓ some, some volatility in the ⁓ beginning of the second quarter, I feel pretty good about everything. ⁓ we’ll see how it goes in the future, right?

feeling good right now feeling good all that matters. Absolutely. Well, listen, thanks everybody for listening. Appreciate it for everybody here at Good Life Companies. Thank you so much and we’ll see you next time.