Latest / Brian Thomas / Money Monday with Brian James

Transcript

Money Monday with Brian James · Brian Thomas

0:01
Speaker 1: At six if if you about Keroseed talk station. Brian
0:04
Speaker 1: Thomas here wishing everyone a very very happy Monday as
0:08
Speaker 1: we fast approach Christmas. But no difference for this Monday.
0:12
Speaker 1: It's as scheduled, regularly scheduled appointment and appointment listening at
0:15
Speaker 1: least for some people. Write Brian James doing a money
0:17
Speaker 1: Monday thing. Thanks to all Worth Financial for learning you
0:19
Speaker 1: out for a few segments talk about what's going on
0:21
Speaker 1: in the financial world. Good to hear from you.
0:23
Speaker 2: Ho ho ho, Merry Christmas. Happy Holidays to you and yours.
0:27
Speaker 2: Get your you gotta your Christmas shopping done? We do,
0:30
Speaker 2: we do. Santa is ready, he's got to sleigh loaded
0:32
Speaker 2: up and he will be here in just a few days.
0:34
Speaker 2: So yeah, yeah, we are good to go.
0:36
Speaker 1: Love be glad to hear that the last Christmas gift
0:39
Speaker 1: we had to buy about over the weekend. And yeah,
0:40
Speaker 1: I did use Amazon much of the ctagre in a
0:42
Speaker 1: lot of people who don't think I should schop on Amazon,
0:44
Speaker 1: but to get my daughter's fiance something. So I got
0:47
Speaker 1: a care package put together for Eric and that was it.
0:52
Speaker 1: We're done. So I was glad to see that. I
0:53
Speaker 1: know a lot of people wait till last minute, almost intentionally.
0:56
Speaker 1: It's almost like it's like a sport for some reason.
0:59
Speaker 1: I'll be damned. I fun running out on the Christmas
1:01
Speaker 1: Eve going to the ball or.
1:02
Speaker 2: See if I find that greatest idea ever or the
1:05
Speaker 2: greatest deal ever, yeah, or the most ridiculous g to
1:08
Speaker 2: see it in the impulse by last minute shopping with
1:11
Speaker 2: no foresight or thought into that gift you have to
1:14
Speaker 2: get for a loved one.
1:15
Speaker 1: They're supposed to be a loved one. So anyway, I
1:17
Speaker 1: get a kick out of this time of year, and
1:19
Speaker 1: I hope you have a wonderful Christmas holiday, Brian in
1:21
Speaker 1: the great New Year as well.
1:23
Speaker 2: All Right, question for you first.
1:25
Speaker 1: Now we're going to talk about the latest CPI report
1:30
Speaker 1: showing that the inflation jump two point seven percent over
1:34
Speaker 1: the past year. We think that's the figure, and correct
1:36
Speaker 1: me if I'm wrong.
1:37
Speaker 2: I as some of the database. Okay, that's okay.
1:39
Speaker 1: Now that sort of stumbles upon the issue I had
1:42
Speaker 1: to ask you sort of as a setup for this discussion,
1:45
Speaker 1: I just read excerpts from an article by Elyssa Finley
1:48
Speaker 1: why the affordability crisis is more severe in California, and
1:51
Speaker 1: she pointed out, you know of Milton Friedman saying, listen,
1:55
Speaker 1: inflation is always in everywhere a monetary a phenomenon. Okay,
1:59
Speaker 1: that's inflation, but affordability, that is, the price for particular
2:04
Speaker 1: things can vary depending upon locale. California's paying north of
2:07
Speaker 1: five dollars heading towards maybe eight to twelve dollars gasoline
2:11
Speaker 1: because they shut down the refineries. So the price of
2:13
Speaker 1: gas way out of whack compared to here where just
2:16
Speaker 1: over the weekend, I pay two thirty a gallon to
2:18
Speaker 1: fill my tank. Now, energy is part of the consumer
2:23
Speaker 1: price calculations, right, yeah, if we report it, if we
2:28
Speaker 1: report it, Oh okay, these are leading comments that make
2:31
Speaker 1: they are I understand. So I guess I just kind
2:34
Speaker 1: of want to know, listen to the difference in just
2:37
Speaker 1: the regulatory environment in any given state could be wildly different,
2:43
Speaker 1: impacting the price and throwing you know, the whole idea
2:47
Speaker 1: of well, what is inflation, you know, like as a
2:50
Speaker 1: monetary phenomenon versus what is inflation by based upon what
2:53
Speaker 1: you in your area are paying for any particular good
2:56
Speaker 1: and service. They maybe pulling their hair out screaming about
2:59
Speaker 1: the price of gasoline, price of Bee for the fact
3:01
Speaker 1: that fast foods so much more expensive in California because
3:03
Speaker 1: the mandatory twenty dollars minimum age law. But it's not
3:06
Speaker 1: that way when you go out into the world elsewhere.
3:08
Speaker 1: So some people are feeling it a lot harder than others.
3:11
Speaker 2: Oh absolutely. So I have a little bit of a
3:13
Speaker 2: personal experience with us. Very recently. I'm helping a friend
3:17
Speaker 2: who's trying to navigate a new world, new living situation
3:20
Speaker 2: out in California and just kind of helping her understand
3:24
Speaker 2: what is the difference. And one of the little things
3:25
Speaker 2: she went through as a person who went through a
3:28
Speaker 2: divorce unfortunately and wound up buying a car from her
3:32
Speaker 2: spouse as just part of the divorce settlement, right, and
3:34
Speaker 2: she had to pay a bunch of taxes on that,
3:36
Speaker 2: And I knew that was going to happen, but the
3:38
Speaker 2: percentage that she had to pay really caught my eye.
3:40
Speaker 2: I think it wound up being like nine percent just
3:42
Speaker 2: to buy a used car from her spouse. She paid
3:44
Speaker 2: nine percent including all the fees and all the crazy
3:47
Speaker 2: stuff you got to go through, whereas here it's just
3:50
Speaker 2: sales tax of you know, a normal sales tax more
3:52
Speaker 2: like six percent. So it's a little things like that
3:56
Speaker 2: that you know that all add up. Yeah, we hear
3:58
Speaker 2: all the headline things of gas in just the overall
4:02
Speaker 2: taxation out in California, for example, but there's all kinds
4:04
Speaker 2: of little extra fees and all these other things. Yeah,
4:06
Speaker 2: to live in a beautiful place, don't get me wrong,
4:09
Speaker 2: but that state tries to eat people, no question about it. All. Right.
4:13
Speaker 1: Now back to the you know, the hints thing you
4:16
Speaker 1: were making in so far as what this actual report
4:19
Speaker 1: does show and maybe some of the data they left
4:21
Speaker 1: out of it when considering it was a two point
4:22
Speaker 1: seven inflation.
4:24
Speaker 2: Yeah, so let's talk about that a little bit. First off,
4:27
Speaker 2: when I'm not sounding any alarm bells here, I talked
4:29
Speaker 2: with Andy Stoutter, chief Investment Officer, and he gave us
4:31
Speaker 2: all an update on this, but which is that the
4:34
Speaker 2: economists are not really thrilled with us latest CPI are
4:37
Speaker 2: released because it just contains so little data. I'm looking
4:40
Speaker 2: at on the BLS Bureau of Labor Statistics page, I
4:43
Speaker 2: am looking at the CPIU report that literally has three
4:48
Speaker 2: categories of data for October and November. It's got gasoline,
4:52
Speaker 2: it has new vehicles, use cars, and trucks. Everything else
4:54
Speaker 2: has a hyphen. There's no data for food at home,
4:57
Speaker 2: food away from home, energy commodities like the utilities. It's
5:01
Speaker 2: just plane not there. So that's where our two point
5:03
Speaker 2: six percent number is coming from. And the economists are
5:07
Speaker 2: looking at this saying, okay, it's not that good. They're
5:10
Speaker 2: not thrilled with this release, but we're all the most
5:12
Speaker 2: are kind of holding their tongues, it seems, until December,
5:15
Speaker 2: because we feel like December will be back online. The
5:17
Speaker 2: reason for this, of course, is the shutdown. We weren't
5:19
Speaker 2: collecting data. We can to the head of the BLS
5:22
Speaker 2: a while ago too, it made some major changes to it.
5:25
Speaker 2: So you know, on one hand, again not time for alarm.
5:28
Speaker 2: But let's not get too excited that we actually have
5:30
Speaker 2: a two point seven percent CPI print. I don't think
5:32
Speaker 2: that's the case.
5:33
Speaker 1: All right, But wheneverybody gets back online and they get
5:35
Speaker 1: all the data points. Going back to here you mentioned energy,
5:37
Speaker 1: I know the Northwest is struggling with energy. It's very,
5:40
Speaker 1: very expensive. They haven't done pipe projects that would have
5:42
Speaker 1: helped bring natural gas in lower and provide some relief.
5:46
Speaker 1: They're all full on green and they're they're struggling with
5:50
Speaker 1: really high energy prices. Of course not as bad as Germany,
5:53
Speaker 1: who went you know, full on green and has destroyed
5:56
Speaker 1: its own economy doing that. But you know, where you're
5:59
Speaker 1: producing energy less expensively. Elsewhere in the world, the price
6:04
Speaker 1: of energy hasn't gone up as much or shouldn't now.
6:06
Speaker 1: And when they do calculate energy prices as a component
6:09
Speaker 1: of the CPI, they don't take into account the regulatory reality.
6:14
Speaker 1: It's I mean, I like to look at inflation as
6:16
Speaker 1: a purely monetary thing.
6:19
Speaker 2: No I would agree with that, I mean, and that's
6:21
Speaker 2: really what we should be focusing on. It doesn't matter
6:23
Speaker 2: what the where the components of the costs are coming from.
6:26
Speaker 2: The cost is the cost, because it's got at the
6:28
Speaker 2: end of the day, it's coming out of our pockets.
6:30
Speaker 2: The C and CPI stands for consumer. We are the
6:32
Speaker 2: ones who pay for it. So yes, we absolutely should
6:34
Speaker 2: be measuring that. Now. You can see numbers in the
6:37
Speaker 2: same report for electricity. They do have unadjusted twelve months
6:41
Speaker 2: ending November twenty to twenty five, which again this isn't perfect,
6:45
Speaker 2: but year of a year electricity is currently showing at
6:48
Speaker 2: six point nine percent and piped gas is nine point
6:51
Speaker 2: one percent. Now, again that's not including October and November
6:54
Speaker 2: because there's just no data, So those numbers are still
6:56
Speaker 2: a lot higher than we would want them to be.
6:59
Speaker 2: But hopefully again this December number will clear things up
7:01
Speaker 2: and maybe we'll have maybe you and I be having
7:02
Speaker 2: a different conversation in January.
7:04
Speaker 1: We'll see how this works out. We keep our fingers
7:06
Speaker 1: crossed that it's even lower than two point seven. Wants
7:08
Speaker 1: to get all the data in. But do they do
7:10
Speaker 1: they provide going back to my point, do they provide
7:13
Speaker 1: regional inflation numbers? Like, you know, folks in this particular
7:16
Speaker 1: area of the country are paying ten percentage points more
7:19
Speaker 1: for energy versus say, I don't know, pick a state
7:22
Speaker 1: out in the Midwest here that's got some reliable, abundant
7:25
Speaker 1: power resources where we're paying less. Do they show it
7:27
Speaker 1: in that form like maybe an advertisement for states with
7:30
Speaker 1: lower regulatory schemes and thus better affordability.
7:34
Speaker 2: Not in the reporting that I'm looking at that they
7:36
Speaker 2: do get pretty in depth, but they don't report that
7:38
Speaker 2: at the national level because they're speaking to a national audience,
7:41
Speaker 2: and I think they really normally, I think we really
7:43
Speaker 2: want to be super quiet about this until we actually
7:45
Speaker 2: get to a point where we've got good news to share.
7:47
Speaker 2: I think this administration has been very willing to be
7:50
Speaker 2: loud about the good news and very quiet about about
7:52
Speaker 2: the more frustrating news. Yeah.
7:54
Speaker 1: I just kind of am harping on it, a dwelling
7:56
Speaker 1: on it because I know Donald Trump, everybody's looking at
7:59
Speaker 1: him to do so something about inflation. I mean that's
8:02
Speaker 1: a big challenge. Of course, you got the Fed involved
8:05
Speaker 1: with that, but you also have the realities, like there's
8:07
Speaker 1: the lowest beef herd head count since the nineteen fifties.
8:11
Speaker 1: Your price of beefin is gonna go down. And Donald
8:13
Speaker 1: Trump can't wave a wand and produce like double the
8:17
Speaker 1: heads of cattle on any given farm. So that seems
8:19
Speaker 1: to be out of a quick fix relief. You know,
8:23
Speaker 1: energy prices are far more expensive than in California because
8:26
Speaker 1: they're shutting down refineries and coal plants left and right,
8:28
Speaker 1: and I mean they're just some things that are completely
8:31
Speaker 1: out of a president's hand. That's why I raised this
8:34
Speaker 1: as an issue. He's got a challenge on his hands.
8:36
Speaker 1: People want him to do something, but he can't in
8:39
Speaker 1: many cases.
8:39
Speaker 2: Yeah, yeah, no, I did did just locate the so
8:43
Speaker 2: it does break down into four regions. Oh and this
8:45
Speaker 2: is again this is fuzzy numbers because it's still in.
8:47
Speaker 2: It's including the data that we just talked about. It
8:49
Speaker 2: doesn't exist. But then there's four regions Northeast, Midwest, and West.
8:53
Speaker 2: Every one of them is three to three point one percent.
8:55
Speaker 2: The South is two point two percent. So if you're
8:58
Speaker 2: looking purely for inflation inflation to be lower, I guess
9:01
Speaker 2: move north. But I would still hold off until we
9:03
Speaker 2: get some of these blank spots filled in on this report.
9:05
Speaker 1: So scurity facing cuts, who's going to save it? And
9:08
Speaker 1: some Americans don't believe it's even going to be around
9:10
Speaker 1: when they retire. Those topics coming up with money mon
9:12
Speaker 1: days Brian James, I hope you can stick around fifty
9:15
Speaker 1: five KRC dot com for more and from the program
9:17
Speaker 1: at eight forty for our hair seat care sign helping
9:20
Speaker 1: folks out there in the senior community. Is doing a
9:22
Speaker 1: great job every single day, doing a great job for
9:25
Speaker 1: financial planning for his clients. Brian James, talking money matters.
9:29
Speaker 1: Let's move over to socials security. The giant train wreck
9:31
Speaker 1: that's been We have seen the light at the end
9:33
Speaker 1: of the tunnel, and it is a train it's not
9:35
Speaker 1: a beautiful light of relief. So security is on a
9:39
Speaker 1: train wreck, and we've all known it. Nobody is willing
9:41
Speaker 1: to touch it. It's the third rail of politics. And
9:43
Speaker 1: I saw this study you have from the Cato Institute.
9:46
Speaker 1: Shocking no one, Fifty three percent of Americans under thirty
9:50
Speaker 1: say they'd rather cut benefits of those currently receiving Social Security.
9:53
Speaker 1: By contrast, eighty nine percent of seniors age sixty five
9:56
Speaker 1: and older say younger workers should pay higher taxes. It
10:00
Speaker 1: benefits steady.
10:01
Speaker 2: Yeah, but everybody voting for them, So I vote for me,
10:04
Speaker 2: go me, And that's exactly why they are elected. Officials
10:07
Speaker 2: won't touch social Security. They want to be re elected,
10:09
Speaker 2: and by touching it, it usually means having to control
10:12
Speaker 2: the expenditures because we're running out of money. Brian James,
10:15
Speaker 2: please unfold this for us. Yeah, So Cato Institute did
10:19
Speaker 2: a survey to confirm what we all kind of know,
10:21
Speaker 2: which is social Security doesn't actually work and people are
10:23
Speaker 2: mad about it. So now social security in general is
10:26
Speaker 2: highly supported. Eighty three percent of Americans do say that, Yeah,
10:29
Speaker 2: that's probably a good idea. It's seventy percent of people
10:32
Speaker 2: think that Social Security benefits are going to be reduced
10:35
Speaker 2: in the future. This is a drum beat that I
10:37
Speaker 2: hear all the time, Brian Thomas. People will always make
10:39
Speaker 2: the comment though, well, I can't count on Social Security
10:41
Speaker 2: because it's going away. No, it's not. It would have
10:44
Speaker 2: to be voted out of existence because right now there
10:47
Speaker 2: is an entry on the top of your pay stub,
10:48
Speaker 2: on the top of my pay dub that says, Fika
10:51
Speaker 2: fiica is social Security taxes. So as long as they
10:53
Speaker 2: keep pulling taxes off the tops of our pay stubs,
10:56
Speaker 2: that's going to fund Social Security. If they do absolutely nothing,
11:00
Speaker 2: then benefits on retirees in the future will have to
11:02
Speaker 2: drop by about twenty five percent, but the program will
11:05
Speaker 2: be still solvent, so it's not going anywhere. However, thirty
11:08
Speaker 2: percent believe that it won't exist at all.
11:10
Speaker 1: Well, okay, you're a financial planner. You're sitting there with
11:13
Speaker 1: your client and they're off the mindset that it's not
11:16
Speaker 1: going to be there, and that their goal then is
11:18
Speaker 1: to plan financially for a time when they will not
11:21
Speaker 1: be able to get a Social Security check or maybe
11:24
Speaker 1: even though it'll be a lot smaller. Isn't that a
11:27
Speaker 1: healthier perspective when it comes to trying to save and
11:30
Speaker 1: manage for retirement, thinking it's not going to be there,
11:32
Speaker 1: and then magically when it shows up and you do
11:34
Speaker 1: get that additional benefit, assuming it's still around, that that's
11:37
Speaker 1: just gravy on your retirement.
11:39
Speaker 2: Well, it depends. I mean, some people just aren't going
11:41
Speaker 2: to be able to make it period without social Security.
11:43
Speaker 2: So if you're really going to try to plan without it,
11:45
Speaker 2: well then you need to find a buddy to live with,
11:48
Speaker 2: find another retired to get married sare housing with, maybe
11:51
Speaker 2: you already are. I mean I'm referring to married couples
11:53
Speaker 2: here too. It can just be too big of a
11:55
Speaker 2: hurdle to get over, you know, to completely assume. Now,
11:57
Speaker 2: now I do encourage let's run the number I always say.
12:00
Speaker 2: Let's run the hunky doory scenario of your financial plan,
12:02
Speaker 2: of your cash flow projection. You know, nothing bad ever
12:05
Speaker 2: happens again and everything you whatever promise comes to you.
12:07
Speaker 2: Here's how that looks. That's your baseline. Now, let's run
12:10
Speaker 2: it again and reduce social Security by twenty five to
12:13
Speaker 2: thirty percent. And if that doesn't work, what changes do
12:16
Speaker 2: we need to make right now? And that's always either
12:18
Speaker 2: going to be save more work longer, or expect less spending.
12:22
Speaker 2: If you can manipulate those three things, you can make
12:25
Speaker 2: it work. And then sometimes yeah, I'll do a third
12:26
Speaker 2: one with if somebody is truly kind of paranoid, let's
12:29
Speaker 2: do a third one with social security not in the
12:31
Speaker 2: mix at all, and for some people it's not on
12:33
Speaker 2: the table. That means you simply can't afford to retire.
12:35
Speaker 2: So if you want to plan for that, that's fine,
12:37
Speaker 2: but you are kind of planning for, you know, kind
12:39
Speaker 2: of the end of the world, and the math does
12:40
Speaker 2: not show that at this point.
12:42
Speaker 1: Well, and that's the beauty of having a financial planner.
12:44
Speaker 1: You've got these programs that do all those number crunching
12:46
Speaker 1: in scenarios. Doesn't it run like through a thousand different
12:50
Speaker 1: scenarios of where the market could and might go from
12:52
Speaker 1: the worst case scenario to the best case scenario.
12:55
Speaker 2: Yeah, that's the big variable is always what are my
12:57
Speaker 2: investments going to do? Right, we can figure out what
13:00
Speaker 2: spending is going to do, We can attach inflation figures
13:02
Speaker 2: to all that. You know, we can look pretty deep
13:03
Speaker 2: in somebody's lifestyle. Those numbers are kind of sort of
13:06
Speaker 2: fixed they don't tend to waver too much. But we
13:08
Speaker 2: don't know when the market is going to take chunks away.
13:11
Speaker 2: All that we know is that it will, So we
13:13
Speaker 2: do something called Monte Carlo analysis, which basically means, let's
13:16
Speaker 2: figure out what kind of cash flow you're going to
13:18
Speaker 2: need over the remaining you know, decades of your life,
13:20
Speaker 2: and then let's run it literally a thousand different times.
13:23
Speaker 2: And across those thousand times is you know, the market
13:27
Speaker 2: takes a hit upfront, the market takes a hit later
13:29
Speaker 2: in life, somewhere in the middle, all those kinds of things.
13:32
Speaker 2: And then the outcome of that is a batting average.
13:34
Speaker 2: How many times out of a thousand do I make
13:36
Speaker 2: it all the way to the end with at least
13:37
Speaker 2: a dollar in the bank. That's called Monte Carlo analysis,
13:40
Speaker 2: and it doesn't. There's nothing has nothing to do with
13:42
Speaker 2: guarantees or anything like that. We're not trying to bat
13:44
Speaker 2: a thousand. We're just trying to understand how far in
13:46
Speaker 2: our direction can we lean the odds by the tweaks
13:49
Speaker 2: we are making.
13:49
Speaker 1: Now, that's good and again another value of having a
13:52
Speaker 1: financial planner, and one that is h it was a
13:54
Speaker 1: fiduciary obligation to you that is not trying to sell
13:57
Speaker 1: you something in not charging you a fee for their works.
14:00
Speaker 1: Got that in for you, Brian. Now, what about fixes
14:02
Speaker 1: the Social Security? I mean, I've heard a million different
14:05
Speaker 1: ones at income based eligibility maybe, I mean, I don't know.
14:10
Speaker 1: There's a variety of different things extending Social Security out
14:14
Speaker 1: to later retirement time. People are living a lot older
14:17
Speaker 1: than they used to be. I mean when it's first
14:19
Speaker 1: started under FDR, how many workers did they have for
14:22
Speaker 1: every recipient? It was like fifteen or twenty or something
14:25
Speaker 1: or down to single digits.
14:28
Speaker 2: Yeah, the pressures here again, we've seen this train wreck
14:31
Speaker 2: coming in slow motion as you reference, yeah, for decades now,
14:34
Speaker 2: and it was simply because there were so many more workers.
14:37
Speaker 2: You know, when we had the greatest generation, the Baby Boomers,
14:40
Speaker 2: largest generations all working at full tilt and generating money
14:44
Speaker 2: into the system were Now we're on the back end
14:46
Speaker 2: of that where less is being earned. There are smaller
14:48
Speaker 2: generations out there and less is being earned by them
14:51
Speaker 2: on average, just because of the way the demographics have
14:53
Speaker 2: worked out, and so there's just less money flowing into
14:56
Speaker 2: the system. Now, there's a million ways we can change
14:59
Speaker 2: this we can raise workers, we can cut benefits. I mean,
15:02
Speaker 2: it's really we we either have to put more money
15:04
Speaker 2: into the system or take less out, and there's a
15:06
Speaker 2: million ways that can happen. You can make people work longer.
15:08
Speaker 2: We've already done that. The sociecurity age has moved forward.
15:11
Speaker 2: There were major reforms done in the eighties. Yeah, we
15:13
Speaker 2: also began payroll taxing or not pay well. We also
15:17
Speaker 2: began taxing social Security benefits. For those of you don't know,
15:20
Speaker 2: you do indeed pay taxes on Social Security benefits. And
15:24
Speaker 2: again we can change the ages that you're eligible, all
15:26
Speaker 2: those kinds of things. I mean, I think truthfully, the
15:29
Speaker 2: answer is going to have to be some combination where
15:31
Speaker 2: everybody sacrifices something otherwise we're just gonna end up with
15:34
Speaker 2: a generational war.
15:35
Speaker 1: Well, it would be a fairness element along those lines,
15:39
Speaker 1: if everybody had to tighten their belt a little bit,
15:41
Speaker 1: then you could at least sell it as a package
15:44
Speaker 1: that everyone gets impacted, not just one group or another. Complicated, absolutely,
15:49
Speaker 1: and the of the worst part about this, Brian has
15:51
Speaker 1: come up now for the third time that we have
15:53
Speaker 1: seen this problem unfold, and people have been ringing alarm
15:56
Speaker 1: bells about it for so long, and yet nothing really
15:59
Speaker 1: has been done by way of, you know, a really
16:01
Speaker 1: solid fix.
16:02
Speaker 2: Yeah, And I think the reason for that is because
16:05
Speaker 2: no politician can stand up on their soapbox and promise
16:08
Speaker 2: to give somebody something. This is all taking away by
16:11
Speaker 2: fixing this there there's no there's no way that anybody
16:14
Speaker 2: benefits other than the the Maybe we can maintain the
16:17
Speaker 2: status quo if everybody sacrifices a little bit, but nobody
16:20
Speaker 2: gains anything. So that person is going to have to
16:22
Speaker 2: stand on their soapbox and champion fixing social security by
16:26
Speaker 2: convincing three hundred million people that they all need to
16:28
Speaker 2: sacrifice something that will make them a sitting duck for
16:31
Speaker 2: their next election.
16:31
Speaker 1: Well, maybe you need a lame duck president to advance
16:34
Speaker 1: that agenda.
16:34
Speaker 2: That'd be nice that we have those every few years.
16:38
Speaker 2: Nobody brings it up. Brian James.
16:40
Speaker 1: Hold on, we're going to talk about the SEC You're
16:42
Speaker 1: gonna have to explain this one to me. I admit
16:43
Speaker 1: my ignorance on tokenized stocks and how that is a
16:48
Speaker 1: move toward blockchain. That's what we have, Brian James, or
16:50
Speaker 1: will continue just a minute, Hang on, fifty five KRC
16:54
Speaker 1: the talk station Doctor with All with Financials, Brian James
16:57
Speaker 1: doing Money Monday, and every time we start talking about
17:00
Speaker 1: bitcoin blockchain, I'm just my eyes glaze over. Brian, I've
17:05
Speaker 1: had to explain to me a million times listen how
17:07
Speaker 1: that's how, that's how valuable a membership in mensa is.
17:10
Speaker 1: I can't even understand blockchain, So yeah, go ahead and
17:12
Speaker 1: make fun of somebody who's got that. All right, It's
17:15
Speaker 1: just I know it's a security thing, blockchain, and I
17:18
Speaker 1: understand it's it's pretty darn good when it comes to security.
17:21
Speaker 1: But how does this mix in with what we're talking
17:23
Speaker 1: about today, the idea of tokenizing stocks as it relates
17:28
Speaker 1: to blockchains.
17:28
Speaker 2: I actually like this update. So so I've done a
17:31
Speaker 2: decent amount of reading on how this works, and I'm
17:33
Speaker 2: not an expert by an by any stretch, but I
17:35
Speaker 2: do know a little bit. And then having thirty years
17:37
Speaker 2: of being a financial planner, it all kind of makes sense.
17:38
Speaker 2: That helps. Oh yeah, that does add a little bit.
17:41
Speaker 2: So the basic core function of the blockchain, which everybody
17:44
Speaker 2: associates with crypto, that's kind of where it came from.
17:46
Speaker 2: It's what it's one what underlies bitcoin, the entire Bitcoin
17:50
Speaker 2: network and really most of crypto nowadays. But the whole
17:52
Speaker 2: point of it is, it's just a record keeping structure
17:54
Speaker 2: where there is a copy of the Ledger on every
17:57
Speaker 2: computer on the face of the earth, and if you're
17:59
Speaker 2: going to fake it, then you have to manage to
18:01
Speaker 2: change every single copy out there across the universe. That's
18:05
Speaker 2: what makes it secure. Everybody sees the same information. It
18:07
Speaker 2: has to be changed all over the place.
18:08
Speaker 1: So it's the ultimate transparency exactly.
18:11
Speaker 2: And you can see these things. You actually can look
18:14
Speaker 2: in and see what wallet owns, how many bitcoin and
18:16
Speaker 2: all that other stuff, because it's all publicly available. So
18:18
Speaker 2: that's where the security comes from. Now, the reason we're
18:20
Speaker 2: talking about it today though, the SEC has approved a
18:23
Speaker 2: plan to tokenize US stocks. Now this has nothing to do
18:27
Speaker 2: with cryptocurrency. Stocks are not becoming crypto or anything like that.
18:30
Speaker 2: All it is is that the Ledger program is being
18:33
Speaker 2: updated technologically speaking, to make it more efficient. Now why
18:37
Speaker 2: this is important. When I started in this industry, a
18:40
Speaker 2: settlement time for a stock trade was something called T
18:42
Speaker 2: plus three, which means time of trade plus three business days.
18:46
Speaker 2: If I sold something on a Friday, my money wasn't
18:48
Speaker 2: going to be available until the following Wednesday, three business days.
18:51
Speaker 2: Then it went to T plus one in about twenty seventeen,
18:55
Speaker 2: and this will hopefully make it almost instantaneous because the
19:00
Speaker 2: way the blockchain infrastructure works, so you could have access
19:03
Speaker 2: instant access to your money. What this means is that
19:05
Speaker 2: if you're calling me and needing a distribution from your
19:07
Speaker 2: IRA or your investment account, I might be able to
19:10
Speaker 2: send it out the same day, oh, versus telling you
19:12
Speaker 2: wait until tomorrow or maybe the next day, you know,
19:15
Speaker 2: barring holidays and all that kind of stuff. So I
19:16
Speaker 2: do think this is a good thing. I just don't
19:18
Speaker 2: want people to get worried that stocks are becoming crypto.
19:20
Speaker 2: That's not what's happening.
19:21
Speaker 1: Okay, But I wrote down the word privacy when you
19:25
Speaker 1: were talking about that. Because everybody in the world has
19:27
Speaker 1: this blockchain, they know what's in the wallets, they can't
19:30
Speaker 1: can they trace a particular wallet to a particular individual,
19:33
Speaker 1: Because if that's the case, then they Tokenizing your stocks
19:37
Speaker 1: would allow people to have a clear understanding of what
19:40
Speaker 1: your stock portfolio.
19:41
Speaker 2: Yeah, this is a little different. I mean what I
19:43
Speaker 2: was referring to there is the original, because remember bitcoin
19:45
Speaker 2: does not exist on a network. It's just out in
19:47
Speaker 2: the universe, right, everybody can see it. This is still
19:50
Speaker 2: going to be behind closed doors. It's just allowing the
19:52
Speaker 2: big custodians to move things more quickly because they're going
19:56
Speaker 2: to be synchronizing all of their ledgers across the whole universe.
19:58
Speaker 2: But it doesn't mean that the general but can see it.
20:00
Speaker 2: That is definitely a Bitcoin thing. It's not as private
20:03
Speaker 2: as you might. There's some great books out there about
20:04
Speaker 2: how unprivate that actually is, really, but that is not
20:07
Speaker 2: what's happening here. I really want to stress that this
20:09
Speaker 2: is this is literally as big as you know in
20:12
Speaker 2: the sixties and seventies when big brokers just went from
20:15
Speaker 2: paper certificates to electronic and things got a heck of
20:18
Speaker 2: a lot faster. This is another iteration like that.
20:20
Speaker 1: So I guess the ledger in this particular case is
20:24
Speaker 1: everyone who has any interest in any given stock, so
20:28
Speaker 1: they would all know what's been sold. I mean, because
20:30
Speaker 1: there's a finite amount of shares available for any given
20:33
Speaker 1: company that's traded, right, sure, everybody who's trading in that
20:36
Speaker 1: particular stock on behalf of people, they would all know
20:39
Speaker 1: real time what trades have happened and how much stock
20:42
Speaker 1: is out there or how much has been withdrawn.
20:44
Speaker 2: Yeah, well that's true, but that that's available anyway. I mean,
20:47
Speaker 2: that's just trading data on a daily basis, So that
20:49
Speaker 2: doesn't change things. And there's going to be rules and
20:50
Speaker 2: that this is they're building this out now. There will
20:54
Speaker 2: be rules in place to say who owns what. But
20:56
Speaker 2: remember these are publicly traded security so the information as
20:58
Speaker 2: to who owns how much that's definitely out there. You've
21:00
Speaker 2: always been able to find that stuff. You can see
21:02
Speaker 2: who the you know, the major shareholders are in the
21:04
Speaker 2: perspectus is you can look on websites and see who
21:06
Speaker 2: owns what. That's what publicly traded means. So that part
21:10
Speaker 2: is not really going to.
21:10
Speaker 1: Change, all right. So just the speed with which we
21:14
Speaker 1: can get access to the money that we've put away
21:16
Speaker 1: for sure.
21:17
Speaker 2: And again I do believe this is a good thing.
21:19
Speaker 2: I know from my day to day and our operational
21:21
Speaker 2: folks here at all worth it will be. It will
21:22
Speaker 2: be helpful to reduce the amount of time that we
21:24
Speaker 2: can promise somebody, Hey, your money's going to be in
21:26
Speaker 2: your checking accounts, so you can go.
21:27
Speaker 1: Pay your bills, Okay, if that's ultimately what we get
21:29
Speaker 1: out of it, and there's not any pitfalls that I
21:31
Speaker 1: haven't created on a whole cloth in my mind for
21:34
Speaker 1: lack of understanding on how this works, and they do
21:36
Speaker 1: have a decent regulatory environment that actually makes sense in place.
21:40
Speaker 1: All right, I'll go for that as a concept anyway, Brian.
21:43
Speaker 1: We'll probably talk about it as we closer approach the
21:45
Speaker 1: launch date of this happening.
21:47
Speaker 2: Right, I bet this will be a topic in twenty.
21:49
Speaker 1: Six big time. And in twenty six you and I'll
21:51
Speaker 1: be talking on Mondays again. I pray we will. We will, indeed,
21:55
Speaker 1: wonderful Brian James, for my entire listening audience, my family
21:58
Speaker 1: to yours, wonderful Merry Christmas to you and all the
22:01
Speaker 1: folks over at all Worth. I hope you enjoyed the
22:03
Speaker 1: holiday season, and I wish you in advance a happy
22:06
Speaker 1: New Year as well you as.
22:07
Speaker 2: Well, and merry Christmas. Do all happy belated Hanukkah and
22:10
Speaker 2: so on and so forth. All that to all the families.
22:12
Speaker 1: Take care of my friend