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What does the housing market look like starting 2025? · The Financial Exchange Show

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  Speaker 1: This is the Financial Exchange with Mike Armstrong and fall Lane.
• 1:12
  Speaker 2: Good morning and happy New year to our listeners out there,
• 1:15
  Speaker 2: Thanks for tuning in on the first trading day of
• 1:17
  Speaker 2: twenty twenty five. Here markets, We're largely in positive territory
• 1:22
  Speaker 2: to start the day, but it appears the satellite has
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  Speaker 2: blown off of our roof now and so we've got
• 1:28
  Speaker 2: a flickering TV. But no, the markets are now flat
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  Speaker 2: for the day. NASDAG barely hanging onto a gain, SMP
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  Speaker 2: barely hanging onto a loss in the Dow down about
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  Speaker 2: forty nine points or a tenth of a percent as
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  Speaker 2: we start off twenty twenty five, continuing a trend that
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  Speaker 2: we saw in December of a a late year selloff
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  Speaker 2: after a pretty solid rally in the month of November.
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  Speaker 2: It's Mike, Paul and Tucker with you on a Thursday
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  Speaker 2: of a shortened trading week. Here just kick off twenty
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  Speaker 2: twenty five, and we've been talking a lot about what's
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  Speaker 2: to come in twenty twenty five. Obviously, you know, the
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  Speaker 2: first few weeks of the year will have a number
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  Speaker 2: of these really bold predictions like Goldman Sachs say, and
• 2:09
  Speaker 2: the markets will go up by ten percent in twenty
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  Speaker 2: twenty five, which is the most boring prediction that I
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  Speaker 2: can think of, but a big one will obviously be
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  Speaker 2: about the housing market. The housing market has largely been
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  Speaker 2: seen as well the defining piece of American middle class
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  Speaker 2: and increasingly unattainable for a large portion of Americans across
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  Speaker 2: the country. According to the Saint Louis Federal Reserve, across
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  Speaker 2: the United States right now, in the month of November,
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  Speaker 2: you saw inventory levels that are at a post COVID high.
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  Speaker 2: They are currently sitting at least in terms of percentage
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  Speaker 2: of pre COVID levels.
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  Speaker 3: So as of.
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  Speaker 2: November twenty twenty four, the total inventory across the United
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  Speaker 2: States for all active listings was approximately eighty three and
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  Speaker 2: a half percent of where we were in November of
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  Speaker 2: twenty nineteen. That equates to just fewer than a million
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  Speaker 2: homes for sale. But I don't find that to be
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  Speaker 2: useful because I think it's really useful to look at Okay,
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  Speaker 2: for comparing November of twenty four to November of twenty nineteen,
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  Speaker 2: where are we, and the answer is about eighty three
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  Speaker 2: percent of the total inventory. Obviously a lot more demand
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  Speaker 2: for houses because there's more people in the United States
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  Speaker 2: since then, but nonetheless we're sitting at those levels. And
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  Speaker 2: so with that in mind, Realtor dot Com puts together
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  Speaker 2: a forecast for twenty twenty five in terms of their
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  Speaker 2: anticipation for the market.
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  Speaker 3: And uh, I'll be interested.
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  Speaker 2: To see where your where your thoughts line up here
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  Speaker 2: on this one, Paul. So let's just take a look
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  Speaker 2: down down the line here. They've got their forecast for
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  Speaker 2: mortgage rates. The thirty year mortgage will be an average
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  Speaker 2: of six point three percent, getting down to six point
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  Speaker 2: two percent by year end. And if we take a
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  Speaker 2: look at where those are right now, that'd be a
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  Speaker 2: pretty significant drop from today. Today, the thirty year fixed
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  Speaker 2: rate mortgage is seven point zero seven percent, and so
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  Speaker 2: if we're going to average just six point three percent
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  Speaker 2: for the year, we've got a fair bit of dropping
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  Speaker 2: to go here in.
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  Speaker 3: Those mortgage rates. For Realtor dot Com to be correct.
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  Speaker 2: In twenty twenty four, they haven't finalized yet, but their
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  Speaker 2: expectations are for average prices to be up by four
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  Speaker 2: percent in twenty twenty four and twenty twenty five, they're
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  Speaker 2: anticipating another three point seven percent. On top of that,
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  Speaker 2: existing home sales to be up by one and a
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  Speaker 2: half percent to four point zero seven million sales. That's
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  Speaker 2: after it was down for the last two years, and
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  Speaker 2: then the inventory, which was up by fifteen percent in
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  Speaker 2: twenty twenty four. They anticipate another increase of about eleven
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  Speaker 2: and a half percent come twenty twenty five. Any other
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  Speaker 2: big key numbers for you that stood out on all
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  Speaker 2: this or or something that you disagree with, I guess
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  Speaker 2: would be important to me.
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  Speaker 4: To me, it's always it's always just amazing to wrap
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  Speaker 4: your head around inventory increasing so much more just because
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  Speaker 4: we live in a pocket of the kind Treewidi and
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  Speaker 4: inventory levels are so depressed. Obviously, those are much more
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  Speaker 4: reflective in the increases of inventory for is existing home
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  Speaker 4: for sale inventory. Like you mentioned, they're implying twelve percent
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  Speaker 4: growth this year. It was fifteen percent, it seems like
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  Speaker 4: for twenty twenty four. With that final number, that's largely
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  Speaker 4: We've talked about this in the show a lot before
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  Speaker 4: in pockets of the southeast Florida as well as Austin,
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  Speaker 4: Texas and the southwest and Phoenix, Arizona as well, where
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  Speaker 4: you've seen more of the inventory increases rather than locally.
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  Speaker 3: To that point.
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  Speaker 2: So I always pick on Connecticut because they have just
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  Speaker 2: the craziest housing market that we've seen since COVID. Their
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  Speaker 2: level of inventory in the state of Connecticut today actually
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  Speaker 2: in November of last year really was twenty nine point
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  Speaker 2: seven percent of the November twenty nineteen levels, So you
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  Speaker 2: were at less than fewer than a third of the
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  Speaker 2: homes available for sale in the state of Connecticut compared
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  Speaker 2: to pre COVID levels. And so, yeah, when I talk
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  Speaker 2: about all this, and the majority of our listeners are
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  Speaker 2: probably tuning in from New England, they're probably scratching their
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  Speaker 2: head saying, this is not my experience, and you're right,
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  Speaker 2: it is not your experience here in New England. But
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  Speaker 2: I can see a path for the inventory to tick
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  Speaker 2: up about eleven percent compared to twenty twenty four.
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  Speaker 3: I think that's realistic.
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  Speaker 4: No, definitely, I'm not questioning it, just more so is
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  Speaker 4: something that is harder to wrap your head around, just
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  Speaker 4: because the area that they're in. If we look at
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  Speaker 4: the affordability side of that. I liked how they broke
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  Speaker 4: out this piece here in terms of the percentage of
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  Speaker 4: income spent on a home purchase, they did the last
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  Speaker 4: twenty five years or so, going back to the early
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  Speaker 4: two thousands, we're still at the most inaffordable level as
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  Speaker 4: it relates to percentage of income spent on a home purchase,
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  Speaker 4: it's hovering around thirty percent or so. We really didn't
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  Speaker 4: get close to that level since two thousand and five,
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  Speaker 4: two thousand and six.
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  Speaker 1: And not.
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  Speaker 4: Right, yeah, right, it has and not to make a
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  Speaker 4: two thousand and eight comparison or anything like that, because
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  Speaker 4: the problem is, you know, we just don't have the
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  Speaker 4: excess inventory side of it. I mean, we might talk
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  Speaker 4: about a lot percent, but Mike just has harped on
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  Speaker 4: the twenty nineteen comparisons. There's just nowhere near that level
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  Speaker 4: to the point where, yeah, we're not at from a
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  Speaker 4: mortgage rate perspective, six percent. To many people out there listening,
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  Speaker 4: Let's say, geez, you know my first home was at
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  Speaker 4: nine or twelve or you know, fifteen or something like that.
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  Speaker 4: Six is no problem. But what is making this market
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  Speaker 4: so difficult, and we've talked about a lot is how
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  Speaker 4: expensive the homes are.
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  Speaker 2: The combination of the rates plus the exact price and
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  Speaker 2: the affordability reflects that.
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  Speaker 3: There, it does.
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  Speaker 2: Yeah, and so I suspect it's going to continue to
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  Speaker 2: be a challenging housing market. I do think if I
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  Speaker 2: guess a silver lining in here is that very clearly
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  Speaker 2: Americans have become quite sensitive to rates. And when you
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  Speaker 2: saw those rates dropping in September October to the low sixes,
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  Speaker 2: application demand took off.
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  Speaker 5: Yep.
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  Speaker 2: So you know, it's not as though there's a ton
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  Speaker 2: of people that are saying, oh, I'm not getting back
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  Speaker 2: into the housing market until rates are at four percent.
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  Speaker 2: I think there's been some ignoret knowledgement by buyers out
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  Speaker 2: there that they might not ever get those rates again,
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  Speaker 2: and so hey, if you do see those thirty year
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  Speaker 2: mortgage rates come down to the low sixes, then I
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  Speaker 2: think it actually could be a very healthy housing market
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  Speaker 2: come twenty twenty five. But I'll tell you, if there's
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  Speaker 2: one piece of this that I am suspect of, it
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  Speaker 2: is that six point three percent average rate. That's just
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  Speaker 2: a lot to fall if you're going to get that
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  Speaker 2: for the year. I mean, I won't say that you
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  Speaker 2: have to have a recession for it to get there,
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  Speaker 2: but you need to have a very calm period of
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  Speaker 2: economic just persistent low inflation, and it's it's going to
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  Speaker 2: be tough to get that again. Not to say we
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  Speaker 2: won't touch six point three percent merely to say, to
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  Speaker 2: get to an average rate of six point three percent
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  Speaker 2: for the year.
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  Speaker 3: Again, you've got a long ways.
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  Speaker 2: To go from where we are right now, which again
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  Speaker 2: is over seven percent on that thirty year fixed rate mortgage.
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  Speaker 2: The other pieces, you know, what's going to be pricing.
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  Speaker 2: What do is pricing look like? I tend to think
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  Speaker 2: that that seems reasonable that you have a low single
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  Speaker 2: digit price appreciation number for twenty twenty five, given where
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  Speaker 2: mortgage rates are and where you see inventory ticking up.
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  Speaker 2: But as as we have always talked about, you can
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  Speaker 2: only delay those housing sales for so long. You know,
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  Speaker 2: the five d's, divorce, downsizing, diapers, diamonds, and death. You're
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  Speaker 2: starting to see that actually play out in the housing
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  Speaker 2: market with you know, the inventory upticks that we've seen
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  Speaker 2: the last two years. Again fifteen percent inventory tickup in
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  Speaker 2: twenty twenty four.
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  Speaker 4: One other thing I want to note is we've talked
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  Speaker 4: a lot about the homeowners market, but on the rental
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  Speaker 4: side of things, it is a space where if you're
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  Speaker 4: a renter, it is a much more you know, strength
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  Speaker 4: of positioning to be in because the vacancy rates are
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  Speaker 4: ticking up, the multi femin construction coming through the pipeline.
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  Speaker 4: There is a lot of new units coming through and
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  Speaker 4: there does seem like there is going to be a
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  Speaker 4: little bit more of pricing flexibility as.
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  Speaker 2: A regut to move to Florida or Texas. Quick break,
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  Speaker 2: We're gonna have trivia for you when we come back.
• 10:03
  Speaker 2: We'll be right back on the Financial Exchange.
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  Speaker 6: Time out for suvia here on the Financial Exchange. In
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  Speaker 6: nineteen twelve, the National Association of Jewelers met in Kansas
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  Speaker 6: City and officially adopted a list of monthly birth the birthstones.
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  Speaker 5: Excuse me, the list of monthly.
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  Speaker 6: Birthstones has been changed a couple of times over the years.
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  Speaker 6: Trivia question today, what is January's birthstone? Once again? What
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• 11:21
  Speaker 3: UH.
• 11:22
  Speaker 2: Speaking of US China relations, a TikTok ban is looming now,
• 11:26
  Speaker 2: and some of the creators seem to just be closing
• 11:29
  Speaker 2: their eyes and hoping that it doesn't happen. But Congress
• 11:31
  Speaker 2: passed the law that was held up in courts and
• 11:35
  Speaker 2: is now currently under reviewed by the US Supreme Court
• 11:38
  Speaker 2: regarding a ban of the overall UH social media platform
• 11:42
  Speaker 2: in the United States that would go into place on
• 11:45
  Speaker 2: January nineteenth.
• 11:48
  Speaker 3: I am a bit confused by the Trump pivot on this.
• 11:50
  Speaker 2: I don't I don't know that you can call it
• 11:51
  Speaker 2: a full Trump pivot, But he has asked the Supreme
• 11:54
  Speaker 2: Court to hold this matter and allow him to weigh
• 11:59
  Speaker 2: in on it in some way, shape or form, so
• 12:01
  Speaker 2: I don't know if he sees it as a negotiating
• 12:03
  Speaker 2: tactic or merely just that probably a lot of his
• 12:06
  Speaker 2: voters are successful and use the platform in some way,
• 12:09
  Speaker 2: shape or form as a means of income production. But
• 12:14
  Speaker 2: I would say that he is the one that kind
• 12:16
  Speaker 2: of brought a lot of attention to matters like this one,
• 12:19
  Speaker 2: and especially if you haven't read anything about the Salt
• 12:23
  Speaker 2: Typhoon hack that occurred most recently, where suspected Chinese agents
• 12:29
  Speaker 2: got a hold of AT and T in Verizon's wireless
• 12:32
  Speaker 2: networks and were able to view massive quantities of unencrypted
• 12:36
  Speaker 2: text messages and phone call data. This exact type of
• 12:42
  Speaker 2: platform is most definitely, in my view, a severe national
• 12:46
  Speaker 2: security threat, and whether or not Congress worded the law correctly,
• 12:51
  Speaker 2: I think is up for debate. But I don't think
• 12:53
  Speaker 2: it's really debatable as to whether or not this platform
• 12:57
  Speaker 2: in and of itself represents a severe security threat that
• 13:00
  Speaker 2: seems to be agreed upon by almost every expert it does.
• 13:03
  Speaker 4: I think it is fair for you to call it
• 13:05
  Speaker 4: a bit of a pivot just because, I mean, he
• 13:07
  Speaker 4: tried to ban in twenty twenty, and you now have
• 13:10
  Speaker 4: a case where he has over fourteen million followers on
• 13:14
  Speaker 4: TikTok and within his own account, and it does seem
• 13:17
  Speaker 4: like something that was pretty critical where he used for
• 13:21
  Speaker 4: his most recent campaign to win the most recent elections.
• 13:24
  Speaker 4: So it does seem like not necessarily that perhaps he
• 13:29
  Speaker 4: wants it to stay as it is, but he wants to,
• 13:32
  Speaker 4: you know, kind of get into deal making mode to
• 13:34
  Speaker 4: try and make something worth and extend that deadline a
• 13:37
  Speaker 4: little bit longer. Here, I'm agreeing with you on the
• 13:41
  Speaker 4: national security piece. I can't tell you how how pop.
• 13:45
  Speaker 4: I mean, people may not be as familiar. It's how
• 13:48
  Speaker 4: popular it is amongst you know, younger users and any
• 13:51
  Speaker 4: users who have at the algorithms driven on are extremely powerful.
• 13:55
  Speaker 4: So it's something that I don't think there necessarily needs
• 13:59
  Speaker 4: to be fears of it going away entirely. It does
• 14:01
  Speaker 4: seem like they're going to continue to drag this out
• 14:03
  Speaker 4: until they find a solution.
• 14:04
  Speaker 2: If I've voiced this before, but just to spell out
• 14:08
  Speaker 2: why I consider this to be such a national security threat.
• 14:11
  Speaker 2: Apps like this, when installed on your phone, collect vast
• 14:15
  Speaker 2: amounts of data. They are able to monitor other apps
• 14:19
  Speaker 2: on your phone. They're able to gain access to your
• 14:21
  Speaker 2: messaging apps, to view your email content, to view your
• 14:25
  Speaker 2: banking details, and many other apps do this too, right,
• 14:29
  Speaker 2: like McDonald's. By having the McDonald's app on your phone
• 14:32
  Speaker 2: is able to tell when you get paid every week.
• 14:36
  Speaker 2: So like everybody else does this too. The difference is
• 14:40
  Speaker 2: we are putting it in the hands of a company who,
• 14:43
  Speaker 2: when asked by the Chinese government to hand over data,
• 14:47
  Speaker 2: is lawfully required to do so without any sort of
• 14:50
  Speaker 2: public court proceeding. It's all the differences, and so should
• 14:55
  Speaker 2: the Chinese spy network be terribly interested in all of
• 15:00
  Speaker 2: the identities of everyone going in and out of I
• 15:04
  Speaker 2: don't know, whatever university happens to be developing the latest
• 15:09
  Speaker 2: and greatest AI semiconductor chip, and they want to get
• 15:13
  Speaker 2: the identities of everybody that is researching on that project.
• 15:17
  Speaker 2: It would probably be fairly easy to do so by saying, okay, yeah,
• 15:20
  Speaker 2: these are the people that are moving in and out
• 15:22
  Speaker 2: because they do have this application installed on their phone,
• 15:25
  Speaker 2: and I'm able to target their son or daughter for
• 15:28
  Speaker 2: a bribery scheme or a threat scheme in some way,
• 15:31
  Speaker 2: shape or form to get access to this vital information.
• 15:34
  Speaker 2: And that's a quite frankly a relatively unimportant version of
• 15:40
  Speaker 2: those scenarios, right like nuclear secrets or other types of
• 15:44
  Speaker 2: important information. I've granted these apps aren't installed on government
• 15:49
  Speaker 2: phones that's already been banned. But you know, there's just
• 15:53
  Speaker 2: so many layers of hacking that have already occurred here
• 15:57
  Speaker 2: that this just seems like terrible, low hanging fruit to
• 16:01
  Speaker 2: be able to go after. And I hope there is
• 16:03
  Speaker 2: not a pivot from the Supreme Quarter from the Trump
• 16:05
  Speaker 2: administration on how it gets handled, at least long term. Paul,
• 16:11
  Speaker 2: why is breakfast busting your food budget more than more
• 16:14
  Speaker 2: than anything else? There's a piece from the Wall Street
• 16:16
  Speaker 2: Journal here that is actually pretty pretty interesting, albeit I
• 16:21
  Speaker 2: don't think it indicates much of anything from a long
• 16:23
  Speaker 2: term inflation perspective, but they point out that just due
• 16:27
  Speaker 2: to how price hikes have lined up, and you know,
• 16:31
  Speaker 2: Avian bird flu and things like that, the price of
• 16:33
  Speaker 2: breakfast is through the roof. The price for a dozen
• 16:36
  Speaker 2: eggs is sitting at five dollars and seventy seven cents.
• 16:39
  Speaker 2: That's up one hundred and forty seven percent since twenty
• 16:42
  Speaker 2: twenty three.
• 16:43
  Speaker 3: The price for a.
• 16:44
  Speaker 2: Pound of sirloin up seventeen percent from twenty twenty three,
• 16:49
  Speaker 2: average now sitting at fifteen dollars and nine cents coffee
• 16:52
  Speaker 2: prices are through the roof and expected, by the way
• 16:54
  Speaker 2: to get worse, potentially up eleven percent twenty three. Yeah,
• 16:58
  Speaker 2: that's the one, like all four go, eggs, steak, whatever
• 17:03
  Speaker 2: you want to throw at me. But I will pay
• 17:06
  Speaker 2: any price for call it's weight in gold for my
• 17:10
  Speaker 2: cup of coffee in the morning. So that one's not moving.
• 17:13
  Speaker 2: But that Yeah, the addiction is a real thing. And
• 17:16
  Speaker 2: the price of orange juice up up to four dollars
• 17:20
  Speaker 2: and thirty one cents sitting at eighteen point eighteen point
• 17:23
  Speaker 2: four percent increase from twenty twenty three. So look, there's
• 17:28
  Speaker 2: a number of price points that I think really inject
• 17:32
  Speaker 2: themselves in people's minds. I don't think breakfast is probably
• 17:36
  Speaker 2: the most important one.
• 17:39
  Speaker 3: I've talked about.
• 17:40
  Speaker 5: How Eggs does eggs is up there that gets mentioned.
• 17:44
  Speaker 4: I'm just so glad you didn't play prices right with
• 17:46
  Speaker 4: me and make me guess some of.
• 17:47
  Speaker 3: The prices that have shouldn't.
• 17:48
  Speaker 5: I Well, I now have it up some safe, protective.
• 17:51
  Speaker 2: But yeah, I mean to me, the single price that
• 17:56
  Speaker 2: influences people's opinions on the economy more than any thing.
• 18:00
  Speaker 3: Else is gasoline. Yeah, definitely, gasoline.
• 18:02
  Speaker 2: Is front and center. You might be able to make
• 18:05
  Speaker 2: an argument for home prices, but that's just a tougher
• 18:08
  Speaker 2: one to kind of figure out and look at, I
• 18:10
  Speaker 2: guess rent prices or home prices or another one.
• 18:13
  Speaker 3: But yeah, I would agree with you.
• 18:14
  Speaker 2: Egg prices, coffee prices, those are up there as well
• 18:18
  Speaker 2: in terms of things that go right front and center
• 18:21
  Speaker 2: to Americans view on the state of the economy. Unfortunately,
• 18:25
  Speaker 2: like these ones, I really can't point at, as we've
• 18:29
  Speaker 2: talked about before, right, like the dumb ideas coming from
• 18:32
  Speaker 2: politicians on how we're going to fix high grocery prices
• 18:35
  Speaker 2: have been exactly.
• 18:36
  Speaker 3: That, very dumb ideas.
• 18:38
  Speaker 2: And I don't even think you can point to much
• 18:41
  Speaker 2: of this as still a result of you know, public
• 18:44
  Speaker 2: policy when it comes to stimulus payments or COVID shutdowns.
• 18:48
  Speaker 2: Like this just happens to be a really bad egg season, uh,
• 18:52
  Speaker 2: and coffee growing season as well, And so how this
• 18:55
  Speaker 2: all gets reversed is a good question. I was asked
• 18:58
  Speaker 2: about that by Vinie Penn this morning, one of the
• 19:00
  Speaker 2: affiliates that we speak to on a regular basis, and
• 19:03
  Speaker 2: you know, he heard it all blamed on grocery stores,
• 19:05
  Speaker 2: and I told them I looked at grocery store profit margins.
• 19:08
  Speaker 3: They haven't really budged a.
• 19:10
  Speaker 2: Whole lot since pre COVID, and so you know, yeah,
• 19:14
  Speaker 2: grocery stores have maintained their profit margins, but they aren't
• 19:16
  Speaker 2: the ones raking in all the profit on this. It's
• 19:19
  Speaker 2: merely prices for a whole lot of food items are
• 19:22
  Speaker 2: through the roof and it's bothering American.
• 19:24
  Speaker 3: Still. Yeah, quick break.
• 19:26
  Speaker 2: We'll have the trivia winner when we come back. And
• 19:28
  Speaker 2: then five pros talking about inflation proofing their investments.
• 19:31
  Speaker 3: What are they talking about? That's next here?
• 19:35
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• 19:45
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• 19:55
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• 19:57
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• 20:03
  Speaker 6: Surevia question today? What is January's birdstone? That'll be garn it.
• 20:09
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• 20:20
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• 20:24
  Speaker 2: Paul, we have a few different pieces today to cover
• 20:27
  Speaker 2: on what many call portfolio protection of one sort or another.
• 20:32
  Speaker 2: I guess just general broad question for it. I'm sorry
• 20:36
  Speaker 2: I'm putting you on the spot. But when you speak
• 20:38
  Speaker 2: to the average person, they tell you they want to
• 20:40
  Speaker 2: protect their portfolio.
• 20:42
  Speaker 3: What do they mean?
• 20:44
  Speaker 5: Usually it's downside protections.
• 20:46
  Speaker 3: What you're looking from the market falling apart.
• 20:48
  Speaker 4: Correct However, typically in the most generic portfolio out there,
• 20:54
  Speaker 4: you're gonna have a sixty forty split where you have
• 20:58
  Speaker 4: sixty percent stocks and forty fifty income. That fixed income
• 21:02
  Speaker 4: exposure is supposed to provide I'll put in air quotes here.
• 21:06
  Speaker 5: Protection.
• 21:06
  Speaker 4: However, it's really something that's just not correlated to the
• 21:11
  Speaker 4: stock market. You have this sixty percent of your portfolio
• 21:13
  Speaker 4: and that hypothetical case in the US stock market subject
• 21:17
  Speaker 4: to its ebbs and flows. The other forty percent is
• 21:19
  Speaker 4: subject to what goes on on the interest rate front.
• 21:22
  Speaker 4: And what people found particularly painful in twenty twenty two
• 21:26
  Speaker 4: from a protection standpoint is that interest rates increase so
• 21:29
  Speaker 4: much that your forty percent side of the portfolio didn't
• 21:33
  Speaker 4: provide that protection. Typically, the idea with fixed income is
• 21:36
  Speaker 4: that the volatility associate with that is much less significant
• 21:41
  Speaker 4: than it is with the equity market. So the ranges
• 21:43
  Speaker 4: of returns are supposed to be tighter, and that's the
• 21:45
  Speaker 4: protection it provides you. But in twenty twenty two it
• 21:49
  Speaker 4: proved out the case. And this is well common knowledge, right,
• 21:52
  Speaker 4: if interest rates go up, you are subject to some
• 21:55
  Speaker 4: downside there on bonds as well, depending on how you
• 21:58
  Speaker 4: own them.
• 21:58
  Speaker 3: Yeah.
• 21:59
  Speaker 2: I think the point that I would make in You're
• 22:01
  Speaker 2: exactly right that I think most people when they think
• 22:02
  Speaker 2: about protecting their portfolio, the protection that they're worried.
• 22:05
  Speaker 3: About is from a recurrence of two thousand and eight. Yep.
• 22:10
  Speaker 2: And you know what, it's not to say that that's
• 22:14
  Speaker 2: that is exceedingly uncommon, right, that was the worst market
• 22:16
  Speaker 2: sell off we've seen since the Great Depression. And I
• 22:19
  Speaker 2: hope that we don't see a lot of those, but
• 22:21
  Speaker 2: you know, twenty percent market sell offs are pretty common.
• 22:24
  Speaker 2: I would make the case that for the vast majority
• 22:28
  Speaker 2: of Americans, when properly handled, the risk that they run
• 22:32
  Speaker 2: is usually not a giant market sell off, the risk
• 22:36
  Speaker 2: that they run of running out of money and completely
• 22:38
  Speaker 2: screwing up their financial strategy. In my view, from what
• 22:42
  Speaker 2: I have seen, on average, much more many more Americans
• 22:46
  Speaker 2: I think face an inflation risk compared to a market
• 22:50
  Speaker 2: downturn risk, just based on what I see on average, right,
• 22:54
  Speaker 2: A lot of people sit on a lot of cash
• 22:56
  Speaker 2: and retirement, A lot of people too defensive with their
• 23:01
  Speaker 2: portfolios in retirement. And I try and make this point
• 23:03
  Speaker 2: to them, is look, I know that we haven't seen
• 23:06
  Speaker 2: it in multiple decades now, but yeah, if we get
• 23:10
  Speaker 2: a thirty percent market sell off, it's going to be
• 23:12
  Speaker 2: vastly uncomfortable for you. You're going to see on paper a
• 23:15
  Speaker 2: loss of a large sum of money. But have you
• 23:18
  Speaker 2: thought about what would happen to you if inflation ran
• 23:21
  Speaker 2: at four percent over the next three decades instead of
• 23:23
  Speaker 2: at two percent like it did for the last three Sure,
• 23:26
  Speaker 2: and you run out those scenarios compared to you know,
• 23:31
  Speaker 2: a even conservative market with littered in there with a
• 23:34
  Speaker 2: bunch of market selloffs, people are far worse off with
• 23:37
  Speaker 2: the inflation scenario than they are the others. And you
• 23:40
  Speaker 2: know famous in financial advisor William Bengen, which I'm sure
• 23:44
  Speaker 2: all of you know, but if if you ever heard
• 23:45
  Speaker 2: of the four percent rule, this guy came up with it,
• 23:48
  Speaker 2: and and he has changed his around a little bit
• 23:51
  Speaker 2: but he talks about how his own portfolio in twenty
• 23:54
  Speaker 2: two was only invested ten percent inequities, and over the
• 23:58
  Speaker 2: last few has only been over you know, about thirty
• 24:00
  Speaker 2: seven percent inequities. And I think, look, anything there is
• 24:05
  Speaker 2: justifiable there, depending on your overall strategy. But I bring
• 24:08
  Speaker 2: it up again, you get two decades of four percent inflation?
• 24:12
  Speaker 2: And what does that do to your overall financial strategy?
• 24:14
  Speaker 2: Will so secure to keep pace with that? Will you
• 24:17
  Speaker 2: see your other income sources? Maybe you've got a pension,
• 24:20
  Speaker 2: maybe you've got something else to keep pace? What is
• 24:22
  Speaker 2: going to be your inflation protection? If we get faced
• 24:26
  Speaker 2: with let's say the worst of both worlds, right, a
• 24:29
  Speaker 2: poor equity market performance and high inflation like we saw
• 24:33
  Speaker 2: in the nineteen seventies, can people actually withstand that? If
• 24:37
  Speaker 2: you're setting resolutions for twenty twenty five and trying to evaluate, Hey,
• 24:43
  Speaker 2: where do I stand with my investments? If I am
• 24:47
  Speaker 2: approaching retirement or already there or thinking about it, or
• 24:51
  Speaker 2: maybe I'm in my peak earnings years in my thirties
• 24:54
  Speaker 2: and wondering what is the right overall investment strategy for me?
• 24:59
  Speaker 2: As I head into You know, what could convincingly be
• 25:03
  Speaker 2: a volatile twenty twenty five based on the change of
• 25:05
  Speaker 2: administration and a whole bunch of new policies. Please give
• 25:08
  Speaker 2: the Armstrong Advisory Group a call. We offer free consultations
• 25:11
  Speaker 2: throughout New England with folks that are looking to explore
• 25:16
  Speaker 2: how they need to be allocated for twenty twenty five
• 25:19
  Speaker 2: and beyond. We'll sit down with you, valuate what you're
• 25:22
  Speaker 2: doing today and provide a framework for how to move
• 25:25
  Speaker 2: forward from there. From the same side of the table,
• 25:27
  Speaker 2: the number for the Armstrong Advisory Group is eight hundred
• 25:30
  Speaker 2: three nine three for zero zero one. Again, that's the
• 25:33
  Speaker 2: Armstrong Advisory Group. To sign up for your free consultation,
• 25:36
  Speaker 2: call us at eight hundred three nine three for zero
• 25:40
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• 25:41
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 25:44
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 25:46
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• 25:49
  Speaker 1: your own financial, tax into state planning advisors before making
• 25:52
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• 25:55
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• 25:57
  Speaker 2: Another story about how millennials are the worst generation and
• 26:01
  Speaker 2: are going to be nothing like their parents. There's a
• 26:04
  Speaker 2: piece from the Wall Street Journal titled what happens when
• 26:07
  Speaker 2: a whole generation never grows up. And I'll be the
• 26:09
  Speaker 2: first to admit that I am always suspicious of these pieces.
• 26:13
  Speaker 2: A lot has been written over and over about how
• 26:15
  Speaker 2: one generation is going to upend society and not have kids,
• 26:18
  Speaker 2: or not buy houses, or not buy napkins anymore, and
• 26:21
  Speaker 2: up end the entire napkin industry.
• 26:24
  Speaker 3: So I tend to be suspicious of these.
• 26:26
  Speaker 2: You know, if they would just stop buying avocado toast,
• 26:28
  Speaker 2: then they'd be able to afford their homes type stories.
• 26:31
  Speaker 2: But there's a couple of pieces in here that I
• 26:33
  Speaker 2: found compellingly interesting. And you know, we all tend to
• 26:37
  Speaker 2: be pigeonholed in our own you know, friend networks and groups.
• 26:40
  Speaker 2: But a third of today's young adults will never marry,
• 26:44
  Speaker 2: according to some projections. And currently, according to surveys, the
• 26:50
  Speaker 2: share of childless adults under fifty who say they are
• 26:55
  Speaker 2: unlikely to ever have kids rose by ten percentage points
• 27:00
  Speaker 2: just over the live last five years. So the share
• 27:04
  Speaker 2: of people under the age of fifty who say they
• 27:07
  Speaker 2: will never have kids, now these are people that already
• 27:10
  Speaker 2: don't have children, rose from thirty seven percent to forty
• 27:13
  Speaker 2: seven percent.
• 27:15
  Speaker 3: That was one statistic that's stuck with me a little bit.
• 27:18
  Speaker 2: Now, it's a survey, and people's views change on these
• 27:20
  Speaker 2: things all the time, so I don't know how, you know,
• 27:23
  Speaker 2: literally we should take this, But that's a massive swing
• 27:27
  Speaker 2: from a five year time period to say that a
• 27:30
  Speaker 2: ten percent greater number of people said they're never having
• 27:32
  Speaker 2: kids in their lives over a relatively short time period.
• 27:37
  Speaker 2: And so I'm attempting here to take myself out of
• 27:39
  Speaker 2: my bubble, and it's not working because I'm sitting next
• 27:42
  Speaker 2: to a guy with three kids and across from a
• 27:43
  Speaker 2: guy with two, and I have three of my own.
• 27:46
  Speaker 2: But I do ponder what that would mean for society
• 27:50
  Speaker 2: if we are to face something like what you're seeing
• 27:54
  Speaker 2: in other parts of the world, like Italy, like China,
• 27:56
  Speaker 2: where the birth rates do genuinely drop here pace that
• 28:00
  Speaker 2: we're not used to seeing.
• 28:01
  Speaker 4: Though we are the worst people to speak about this,
• 28:03
  Speaker 4: because we live in that world and so many of
• 28:05
  Speaker 4: the people that we touched on it or interact with
• 28:07
  Speaker 4: on a day to day basis are in the same
• 28:09
  Speaker 4: spot as that's whether it's preschool, dinners, stuff out. And I, however,
• 28:13
  Speaker 4: I'm not that surprised by that. I'm surprised by the
• 28:17
  Speaker 4: increase in the percentage being that dramatic. Yeah, I'm not
• 28:21
  Speaker 4: surprised with the notion in general. Have a you know,
• 28:25
  Speaker 4: a close family friend that I grew up with who
• 28:27
  Speaker 4: is just kind of in that boat, A married couple
• 28:30
  Speaker 4: that just is not interested in going down the kid road,
• 28:34
  Speaker 4: grew up you know, right locally in need them and
• 28:36
  Speaker 4: stuff like that, and and is in a different spot.
• 28:38
  Speaker 4: And I just think that line of thinking is more
• 28:41
  Speaker 4: prevalent now, normalized, it's more normalized. It's more prevalent than
• 28:45
  Speaker 4: it was. I can't speak to five years ago, but
• 28:48
  Speaker 4: definitely twenty years ago for sure. It's much more accepted
• 28:53
  Speaker 4: culturally that this idea, Yeah, you don't want to have kids,
• 28:55
  Speaker 4: and it should always be your choice. I mean, I'm
• 28:57
  Speaker 4: not sitting here. Everyone can do whatever the heck they want.
• 29:01
  Speaker 4: Kids are your choice. It's not something that should be
• 29:04
  Speaker 4: forced upon anyone. But I do think that rationale is
• 29:07
  Speaker 4: more prevalent now.
• 29:08
  Speaker 2: Yeah, I think it's more prevalent. I think it's generally
• 29:10
  Speaker 2: more accepted. And I also happen to think that there's
• 29:13
  Speaker 2: no public policy that's going to shift the mindset. So
• 29:16
  Speaker 2: that's the piece that I'm interested in is time and
• 29:18
  Speaker 2: time again countries have attempted to adapt policies that increase
• 29:22
  Speaker 2: the birth rate. And unless you genuinely shape your entire
• 29:27
  Speaker 2: society for encouraging more childbirths, which is incredibly expensive and
• 29:32
  Speaker 2: unknown if it really pays off, it's tough to see
• 29:35
  Speaker 2: that societally really shift in the other direction.
• 29:38
  Speaker 4: Again, and if you just think about all the major
• 29:40
  Speaker 4: milestones just when you get married, you know, certainly in
• 29:43
  Speaker 4: our parents are or maybe even prior to that, or
• 29:45
  Speaker 4: our grandparents are much more early twenties now, much more
• 29:50
  Speaker 4: late twenties to perhaps even early thirties at this point,
• 29:53
  Speaker 4: and that just pushes back, you know, all those things.
• 29:55
  Speaker 2: But again, what I'll point out too is, you know,
• 29:58
  Speaker 2: the Journal article itself acknowledge too that you know, millennials
• 30:02
  Speaker 2: and forty year old and younger have a more pessimistic
• 30:05
  Speaker 2: view about the economy, but their personal finances aren't about
• 30:08
  Speaker 2: the same place their parents' generation was. Their rates of homeownership,
• 30:12
  Speaker 2: while it took longer to get there, are at about
• 30:14
  Speaker 2: the same rate that their parents were. And so I
• 30:17
  Speaker 2: tend to continue to be very suspect of these articles
• 30:20
  Speaker 2: saying that society is going to be completely reformed. But
• 30:24
  Speaker 2: that ten percent swing in five years.
• 30:26
  Speaker 3: Is a vast, vast move on you know, people's views
• 30:31
  Speaker 3: on having children.
• 30:33
  Speaker 4: You can make the POM population argument, but the predictivity
• 30:36
  Speaker 4: in the workforce, I don't feel like that is as
• 30:39
  Speaker 4: big of a concern.
• 30:40
  Speaker 2: Let's take a quick break when we come back, bit
• 30:42
  Speaker 2: if stack Roulette here on the Financial Exchange.
• 30:44
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• 30:47
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• 31:53
  Speaker 2: Well, we hit a exciting new record in twenty twenty four, guys.
• 31:57
  Speaker 2: Do you know it was no disgusting illnesses on cruise ships.
• 32:02
  Speaker 2: So good news there, and just one more reason I
• 32:06
  Speaker 2: have no interest in getting on another cruise ship. The
• 32:09
  Speaker 2: truth is that norovirus outbreaks are on the rise across
• 32:15
  Speaker 2: the country, regardless of whether or not you are on
• 32:17
  Speaker 2: a cruise ship. A cruise ship just happens to be
• 32:19
  Speaker 2: the worst possible place you can get neurovirus because you're
• 32:21
  Speaker 2: crammed into tight quarters with loved ones and non loved
• 32:25
  Speaker 2: ones and are more likely to contract and then give
• 32:28
  Speaker 2: the disease to others. But nearly nine hundred people aboard
• 32:31
  Speaker 2: cruise ships were sickened from gastro intestinal diseases in December,
• 32:35
  Speaker 2: amid escalation both the frequency and severity of outbreaks. So
• 32:38
  Speaker 2: far this year, there have been sixteen outbreaks on cruise
• 32:41
  Speaker 2: ships from norovirus, salmonella, or E. Coli, or other unidentified pathogens.
• 32:45
  Speaker 2: That cause symptoms such as diarrhea or vomiting. That's the
• 32:49
  Speaker 2: largest number of cruise ship outbreaks in twelve years, so
• 32:52
  Speaker 2: I guess not a record. It was just the best
• 32:54
  Speaker 2: number that we've seen in terms of neurovirus outbreaks on
• 32:57
  Speaker 2: cruise ships in twelve years. Recent incident involved the British
• 33:01
  Speaker 2: ocean liner Queen Mary two, where nearly thirteen percent of
• 33:05
  Speaker 2: passengers and over five percent of crew aboard were infected.
• 33:08
  Speaker 3: That is terrible.
• 33:10
  Speaker 2: Ks having gone through an entire family gathering. We were
• 33:15
  Speaker 2: on vacation one time, and I think there were fifteen
• 33:17
  Speaker 2: of us. Every single person came down with norovirus, but
• 33:22
  Speaker 2: not at the same time. You would know who came
• 33:25
  Speaker 2: down with it by the fact that they were not
• 33:26
  Speaker 2: at breakfast the next morning.
• 33:27
  Speaker 3: Wow, what do you have for us, Paul? Why are
• 33:30
  Speaker 3: you going to avoid cruise ships?
• 33:31
  Speaker 4: In twenty twenty second, intended moviegoers were dealt in original
• 33:38
  Speaker 4: originality set back in twenty twenty four. In twenty twenty three,
• 33:42
  Speaker 4: there was some optimism that Hollywood was actually going to
• 33:45
  Speaker 4: be creative and come up with some new ideas instead
• 33:47
  Speaker 4: of the same old, same old sequel crap.
• 33:50
  Speaker 3: Barbenheimer in twenty twenty.
• 33:51
  Speaker 4: Three exactly, and Sound of Freedom, which I couldn't remember
• 33:54
  Speaker 4: what that movie was about. And though I see very
• 33:58
  Speaker 4: few movies as it is, However, looking back at twenty
• 34:00
  Speaker 4: twenty four, we were right back in our sequel.
• 34:03
  Speaker 5: Swing of things.
• 34:04
  Speaker 4: Of the top ten slots at the North American box office,
• 34:07
  Speaker 4: nine of those ten were sequels. It consisted of inside
• 34:11
  Speaker 4: Out two, Despicable Me four, Deadpool and Wolverine, Malana two,
• 34:16
  Speaker 4: Dune Part two, Beetlejuice, Beetlejuice, Kung Fu Pana four Twisters,
• 34:20
  Speaker 4: and the thirty eighth thirty eight Godzilla movies, Godzilla and Kong,
• 34:27
  Speaker 4: the New Empire.
• 34:28
  Speaker 5: And here's the kicker.
• 34:30
  Speaker 4: If you want to look at number ten, it's Wicked,
• 34:32
  Speaker 4: which it's not a direct sequel or anything, but it's
• 34:37
  Speaker 4: taking some already existing ip and sort of.
• 34:40
  Speaker 3: Revap to a movie.
• 34:41
  Speaker 2: So we have no original I mean, honestly, this is
• 34:45
  Speaker 2: there will still be original movie ideas, but it does
• 34:47
  Speaker 2: seem that people now only go to theaters for big
• 34:52
  Speaker 2: blockbusters and the safe play is to, yeah, create the
• 34:56
  Speaker 2: next Moana or inside Out.
• 34:57
  Speaker 4: Well here's the other thing too. The executives at these
• 35:01
  Speaker 4: movie studios are controlling this a bit too in a
• 35:03
  Speaker 4: sense where you're right, there always is going to be
• 35:06
  Speaker 4: originality in films. It's just the places that you're going
• 35:09
  Speaker 4: to get it are not from the major studios. It's
• 35:11
  Speaker 4: going to be from those smaller ones, or from releasing
• 35:14
  Speaker 4: two different streaming services. It seems like because from a
• 35:17
  Speaker 4: betting standpoint or investing standpoint, if you're going to pour
• 35:21
  Speaker 4: you know, fifty million dollars into a budget one hundred
• 35:23
  Speaker 4: million dollars into a budget for a movie, you want
• 35:26
  Speaker 4: to ensure your return on that capital. And the best
• 35:28
  Speaker 4: way to do that is already knowing you have an
• 35:29
  Speaker 4: existing viewing base that is going to come out to
• 35:32
  Speaker 4: see the thirty eighth Godzilla movie or to see, you know,
• 35:36
  Speaker 4: Despicable Me. For That's what studio heads have done and
• 35:40
  Speaker 4: will continue to do, because when you swing and miss
• 35:42
  Speaker 4: on these big budgets, it's not like you get the return,
• 35:46
  Speaker 4: the recurring revenue from you know, these DVD sales. There
• 35:49
  Speaker 4: are things like that after there's just not as much
• 35:51
  Speaker 4: of a tailwind for these types of projects.
• 35:54
  Speaker 2: Let's see, I saw Inside Out too, Deadpool, Wolverine, UH
• 35:59
  Speaker 2: and Twisters, not see any of the rest of them,
• 36:01
  Speaker 2: but I see all of my Actually I saw Dune
• 36:03
  Speaker 2: Part two as well. I see all of my new
• 36:05
  Speaker 2: releases exclusively on planes. I do not go to movie
• 36:09
  Speaker 2: theaters anyway anymore. I don't rent movies that are out new.
• 36:11
  Speaker 2: The only time I ever see them is when I'm
• 36:13
  Speaker 2: sitting on a long haul flight somewhere across the country
• 36:15
  Speaker 2: for usually for business, and then I end up catching
• 36:18
  Speaker 2: up on a movie or two.
• 36:19
  Speaker 4: For twenty twenty five, we'll have a Superman coming out,
• 36:22
  Speaker 4: Jurassic World Rebirth, Lelo and Stitch, Freak Your Friday, The
• 36:26
  Speaker 4: Naked Gun, Avatar, Fire and Ash. So there will be
• 36:29
  Speaker 4: at least another those and another thirty three other major
• 36:32
  Speaker 4: franchise sequels and reboots and remakes.
• 36:35
  Speaker 3: Who's going to be in Freak Your Friday?
• 36:37
  Speaker 5: I think Jon's coming back?
• 36:39
  Speaker 3: Oh yeah.
• 36:41
  Speaker 6: Textra noted that Dune wasn't a sequel, Paul, it was
• 36:43
  Speaker 6: the second half of the movie.
• 36:45
  Speaker 3: Get it right, dude, somebody's holding your feet to the
• 36:49
  Speaker 3: fire on that one.
• 36:49
  Speaker 2: On Juary, I mentioned that when I was out in
• 36:58
  Speaker 2: San Francisco on business last month, I rode in a
• 37:00
  Speaker 2: Weymo ROBOTAXI and I was thoroughly impressed. Granted, if you're
• 37:04
  Speaker 2: in San Francisco, it's not as though you're getting on
• 37:07
  Speaker 2: highways or on and off highways or dealing with any
• 37:10
  Speaker 2: of that you know, high speed type stuff. But for
• 37:13
  Speaker 2: navigating a very complex city with severe uh, you know,
• 37:18
  Speaker 2: severe hills and double parked cars, I was personally thoroughly impressed.
• 37:24
  Speaker 3: But in kind of funny.
• 37:26
  Speaker 2: Story of the year, here a Weimo Robotaxity collided with
• 37:31
  Speaker 2: a self driving serve delivery robot in the city of
• 37:35
  Speaker 2: Los Angeles recently. And I am here to say that
• 37:39
  Speaker 2: I love the future.
• 37:41
  Speaker 4: It's and it's the Spidermen me of like who's responsible
• 37:43
  Speaker 4: for this? And all just like scenes like right, who
• 37:50
  Speaker 4: RoboCop shows up? Who's responsible for this? Like looking for
• 37:54
  Speaker 4: the person and there's just no one, Like how does
• 37:57
  Speaker 4: this get worked out in court? You're just for insurance purposes.
• 38:01
  Speaker 4: I'm just fascinating you call ghostbusters.
• 38:06
  Speaker 2: That is all the time that we have for today's
• 38:08
  Speaker 2: financial exchange. Markets have swung back into positive territory. We'll
• 38:12
  Speaker 2: have a full recap for you tomorrow to close out
• 38:14
  Speaker 2: the week. Happy New Year, folks, and we'll talk to
• 38:16
  Speaker 2: you then