Latest / HPK Provident Advisors: The Weekly Bull / From Rate Cuts To Real-World Planning

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From Rate Cuts To Real-World Planning · HPK Provident Advisors: The Weekly Bull

• 0:05
  SPEAKER_02: Welcome to Friday Live.
• 0:07
  SPEAKER_02: Every Friday, some of the partners of HPK Profiting get together and discuss what's going on in the markets and the economy and tie in a few financial planning topics.
• 0:15
  SPEAKER_02: So today we have partner David Harper.
• 0:18
  SPEAKER_02: David, thanks for joining.
• 0:21
  SPEAKER_01: Always good to be available.
• 0:23
  SPEAKER_01: Sometimes life gets in the way.
• 0:25
  SPEAKER_01: Um, I think last week, this time, I was taking care of a family member in the hospital with an appendectomy.
• 0:33
  SPEAKER_01: Mm-hmm.
• 0:35
  SPEAKER_02: And things like that happen.
• 0:37
  SPEAKER_02: So that's why we talk about it's important to have a mix of asset location, like Brian was talking about in the webinar uh last night, where you have that taxable um investment account that's accessible if things happen and you need money when an emergency arises.
• 0:54
  SPEAKER_02: So we will get into the blog posts as always.
• 0:56
  SPEAKER_02: Um, but what do you say we start out with what's going on in the markets and the economy?
• 1:01
  SPEAKER_01: Yes, sir, Ree.
• 1:02
  SPEAKER_01: Uh a good topic.
• 1:04
  SPEAKER_02: Yeah, well, it was uh it was a Fed meeting week, so that's always an exciting time.
• 1:09
  SPEAKER_02: Um, as expected, we got a 25 basis point cut.
• 1:13
  SPEAKER_02: What was a little more surprising was the announcement of the they're not calling it quantitative easing, but they're buying, I think, up to 40 billion in short-term treasuries.
• 1:23
  SPEAKER_02: And unlike past quantitative easing cycles, they're gonna do it when they see liquidity getting a little tight.
• 1:30
  SPEAKER_02: Um, besides that, uh, we had three dissents total in the Fed voting members.
• 1:36
  SPEAKER_02: Um, we had the the dovish one continue who wanted a 50 basis point cut.
• 1:41
  SPEAKER_02: Um, and then the other two uh were in favor of no rate cut.
• 1:45
  SPEAKER_02: And then they also used the term of there's uh a handful of other soft dissents.
• 1:50
  SPEAKER_02: So they did go along with voting alongside Powell, but they have some reservations of whether they should actually cut or not.
• 1:58
  SPEAKER_02: So going forward, it's a lot more mixed.
• 2:00
  SPEAKER_02: Um I think based on Powell's remarks, it sounded like his base case is pausing at this point.
• 2:07
  SPEAKER_02: Um, he said rate cuts are not on the table, but it's really more um kind of seeing which way direction it goes.
• 2:16
  SPEAKER_02: They they highlighted that there's upside risk to both the unemployment rate and inflation.
• 2:22
  SPEAKER_02: So, like I said, I think his base case right now is a pause, but I take that with a grain of salt because we've been in a data vacuum that has just been ending.
• 2:31
  SPEAKER_02: And so we're gonna get a lot of important data between now and the next Fed meeting, important actual jobs reports for I don't, I guess we're not getting October, but November and December, as well as inflation reports.
• 2:44
  SPEAKER_02: So I think Powell's not a a fortune teller.
• 2:48
  SPEAKER_02: So I think I think it's gonna be largely data dependent.
• 2:52
  SPEAKER_02: Um, right now the futures markets are pricing in a low probability of another rate cut before Powell gets replaced, where the the consensus is we're gonna get a lot, a much more dovish Fed president.
• 3:07
  SPEAKER_02: But with that dissent, with among the Fed members, um, he's gonna have a sales job.
• 3:12
  SPEAKER_02: He's gonna have to really convince the other committee members to go along with them.
• 3:16
  SPEAKER_02: So we'll see what happens.
• 3:17
  SPEAKER_02: Uh I I am I am getting more increasingly concerned with the labor market.
• 3:22
  SPEAKER_02: Um we haven't been getting the the major data, but up until the government shut down, things were really hiring was really slowing.
• 3:30
  SPEAKER_02: Um, ADP has been negative for the last six readings.
• 3:35
  SPEAKER_02: So definitely some weakness there.
• 3:37
  SPEAKER_02: Um, so something to keep an eye on.
• 3:39
  SPEAKER_02: Um, other metrics we got this week were the small business survey came in better than expected.
• 3:45
  SPEAKER_02: Um small companies, biggest concern remains uh it's tough to hire, and inflation is tough.
• 3:53
  SPEAKER_02: So that's really I mean that that's really the driver of the employment situation, those small businesses.
• 4:00
  SPEAKER_02: So we'll have to keep an eye on that.
• 4:01
  SPEAKER_02: Um, but yeah, we're we did hit an all-time closing high yesterday, technically, not a definitive breakout, but as you can see, I'll pull up the chart here.
• 4:11
  SPEAKER_02: Um, we are pulling back today.
• 4:13
  SPEAKER_02: SP's off a little more than one percent.
• 4:16
  SPEAKER_02: Um Dow Down Equal weight has actually been doing much better than the market cap weighted of late.
• 4:23
  SPEAKER_02: Um, I think I think there's really been more question around um before it was just anything having to do with AI, the stock would go up.
• 4:35
  SPEAKER_02: Now investors are questioning that a little bit.
• 4:37
  SPEAKER_02: They want to start seeing returns and not just sizable CapEx spending.
• 4:42
  SPEAKER_02: And if if you look at the GDP picture for the year, I mean a 40% of it's uh as a result of AI, um, mostly that infrastructure spend.
• 4:54
  SPEAKER_02: So is that a sustainable thing?
• 4:56
  SPEAKER_02: I don't know, but investors want to start seeing profits.
• 4:59
  SPEAKER_02: Um, we had some big blowups this week.
• 5:01
  SPEAKER_02: Um, Oracle is down big, Broadcom, I think, is selling off today, and it's really becoming less of a you know, mag seven story.
• 5:12
  SPEAKER_02: You're seeing some deterioration there, and it's actually broadening out, which is healthy.
• 5:17
  SPEAKER_02: Um but we did get the dot plots in the Fed meeting.
• 5:22
  SPEAKER_02: Um, they're expecting higher growth, stable employment, and um lower inflation.
• 5:30
  SPEAKER_02: You may ask why, how does that dynamic work?
• 5:33
  SPEAKER_02: Like if you get lower inflation and higher growth, why isn't you know?
• 5:41
  SPEAKER_02: Um, but a lot of that has to do with productivity.
• 5:44
  SPEAKER_02: AI is really making companies more productive.
• 5:48
  SPEAKER_02: Um I'm not quite I'm not quite confident that the unemployment, like, why would we've seen a steady increase in unemployment rate?
• 5:56
  SPEAKER_02: Like, what's what's gonna cause that to just stabilize or go down in the next year?
• 6:02
  SPEAKER_02: I'm not really a believer of that, but I'm not a Fed member.
• 6:06
  SPEAKER_02: They don't ask me.
• 6:08
  SPEAKER_01: Not yet.
• 6:08
  SPEAKER_01: Not yet, Mike.
• 6:10
  SPEAKER_02: I I will if I ever get offered the job of Fed chair, I'm gonna very politely pass on that one.
• 6:17
  SPEAKER_02: That is not a job I want.
• 6:19
  SPEAKER_02: I don't think Powell has many friends.
• 6:23
  SPEAKER_01: Well well, do you think um you think there's there's like a return with the with the economy?
• 6:30
  SPEAKER_01: I mean, there was there was so much a hype with the AI and the technology, and it's nice to see those coming back a little bit to earth and let the other companies catch up, or um a return to return to at least some semblance of what your uh we normally experience.
• 6:56
  SPEAKER_01: Am I volume bad?
• 6:58
  SPEAKER_02: No, you just cut out for a second.
• 7:00
  SPEAKER_01: I don't know if it's your internet or my internet, but we we want to apologize uh presently.
• 7:06
  SPEAKER_01: Uh our internet connection, I think there's a lot of people on the internet this day on these days.
• 7:13
  SPEAKER_02: Yeah, but we'll make you I am getting a new internet put in today, so hopefully in the future videos, it's a little more clear.
• 7:21
  SPEAKER_02: I'm gonna get some fiber optics.
• 7:24
  SPEAKER_02: So goodbye to Comcast.
• 7:28
  SPEAKER_02: Okay, well, all right.
• 7:30
  SPEAKER_02: So as you guys know, we do blog posts uh daily.
• 7:34
  SPEAKER_02: I do the week ahead post, um, which um comes out every Monday.
• 7:40
  SPEAKER_02: I talk about what I'm looking at in the stock market and the economy, and then um kind of review the past week.
• 7:46
  SPEAKER_02: And then we have it's it's really a thematic thing now.
• 7:49
  SPEAKER_02: So we have Tax Tuesday.
• 7:51
  SPEAKER_02: Brian did a wonderful post, uh part of his tax series.
• 7:55
  SPEAKER_02: And this one was the tax triangle.
• 7:57
  SPEAKER_02: And we went into this a lot in the webinar last night.
• 7:59
  SPEAKER_02: Um, that was recorded, so you guys can go on and view it at your leisure, um, but really goes in depth on these topics.
• 8:07
  SPEAKER_02: You have the tax-free accounts, which we're which uh include rocks, uh maybe some overfunding of insurance products, the taxable accounts, which I mentioned are are good to have in case you have those emergencies or any expenses you might have before you reach that 59 and a half mark where the tax-deferred accounts come in.
• 8:30
  SPEAKER_02: So it's really it's really important to have a nice balanced approach on that.
• 8:34
  SPEAKER_02: Anything you want to add to that topic?
• 8:36
  SPEAKER_02: I did put Brian on the spot last night.
• 8:38
  SPEAKER_02: I said, if you have a 45-year-old couple come to you and they want to invest a bunch of money, what percentage would you put in each bucket?
• 8:46
  SPEAKER_02: And he did the he did the appropriate thing and said, Well, no, it's not one percentage for each person, it's it's very unique to their circumstances.
• 8:56
  SPEAKER_02: So he uh didn't fall into my trap there.
• 9:00
  SPEAKER_01: Uh this is a very useful tool and is a visual uh for when we talk to clients and say, Look, your portfolio as constructed is for you and and is for your benefit, and based on what your desires are, we have some people coming at you know at age 50 saying, I want to retire, and yet they have no taxable accounts.
• 9:32
  SPEAKER_02: So yeah, we were we were talking about that last night where we've we've come across people come to us with huge 401ks, two, three, four million, and they want to retire early at 50, and they really have no taxable investments or a nice nest egg sitting in the bank.
• 9:53
  SPEAKER_02: So it makes it very difficult, almost impossible for even though that person saved and invested all those years, if it's not the right mix of asset location, it's gonna make it very hard for you to retire before that age 59 and a half.
• 10:08
  SPEAKER_01: And if they want to be careful not to pay a lot in taxes, well, uh every tax-deferred account is tax deferred, and you're gonna be paying taxes when it comes out.
• 10:21
  SPEAKER_01: So even 70-year-olds that have eight, nine million in their retirement accounts and they don't have enough in their taxable accounts, all of their all of their withdrawals are coming out of that tax deferred, which is gonna be taxed.
• 10:39
  SPEAKER_01: And if you're in a high tax state and community or a city, uh, as well as the federal government, you're gonna be paying a very high tax on those, and there's ways to combat that the tax triangle.
• 10:56
  SPEAKER_01: So um that's that's a very useful tool.
• 11:00
  SPEAKER_02: I I love Brian's series, the tax, the tax series.
• 11:04
  SPEAKER_02: It's been coming out for a couple weeks now.
• 11:06
  SPEAKER_02: Um, it's very good information.
• 11:08
  SPEAKER_02: And then we have for wealth building Wednesday, we have uh the cost of procrastination, and this just goes into um, you know, invest as early and often as you can.
• 11:21
  SPEAKER_02: Um, it's it's crazy the amount of difference it can make in the long run.
• 11:24
  SPEAKER_02: This shows a chart of uh two different people investing.
• 11:29
  SPEAKER_02: Um, one starts a few years earlier, and it's just amazing how much better off that person is asset-wise.
• 11:37
  SPEAKER_02: Um, by just starting a little bit earlier, it makes a big difference.
• 11:41
  SPEAKER_01: And then the time, the timing makes such a huge difference, it's not just so much the amount of money or what the investment is, and as much as it's the time to allow that investment to mature and continue to grow.
• 11:56
  SPEAKER_02: Right.
• 11:58
  SPEAKER_02: You want to talk about life insurance needs?
• 12:01
  SPEAKER_01: Life insurance is it's some people consider it a necessity, but in a lot of cases it can become a luxury.
• 12:13
  SPEAKER_01: So there is nothing better to transfer wealth to the next generation or to your your grandchildren than through life insurance, uh, because it comes tax free.
• 12:26
  SPEAKER_01: And there's and uh some of the um some of the benefits of life insurance uh is way overlooked.
• 12:36
  SPEAKER_01: Um if you have a permanent policy, it starts building up a cash value.
• 12:40
  SPEAKER_01: Uh that's that is also in the in the tax triangle.
• 12:45
  SPEAKER_01: Um, as Mike referred to it in the in the um uh in the webinar last night, it's the uh the the rich man's the yep, the rich man's wrath.
• 12:57
  SPEAKER_01: Okay, if you have uh uh increased disposable income, even if you're single and you've got lots of income, setting up a permanent policy and overfunding it will increase that cash value, and you can take out uh that cash value uh as a loan, it's not tactical as long as the policy stays in force.
• 13:23
  SPEAKER_01: Well, you gotta be careful that it doesn't collapse.
• 13:26
  SPEAKER_01: If it collapses, that's not a good thing, and that that takes planning and so forth, and we can help you with that.
• 13:32
  SPEAKER_01: Uh, but life insurance not only can it protect your loved ones when you don't have enough assets, it can provide for you and your loved ones a stream of tax-free income for an extended period of time, and then when you pass, then it's gonna the remainder is gonna go to your uh beneficiaries tax-free.
• 13:58
  SPEAKER_01: So you've had all that tax-free benefit during your lifetime and after your lifetime, yeah.
• 14:05
  SPEAKER_02: And things to consider, which this article talks about, is the dime method.
• 14:09
  SPEAKER_02: So that stands for debt, income, mortgage, and education.
• 14:13
  SPEAKER_02: So all things to consider when you're you're thinking about your life insurance needs.
• 14:16
  SPEAKER_02: Debt, consider all your outstanding debts, excluding the mortgage.
• 14:20
  SPEAKER_02: Um, this could include credit card debt, personal loans, car loans, your income, calculate 10 years of your income.
• 14:26
  SPEAKER_02: This can start to help you understand what financial gaps may occur if you're to decease.
• 14:32
  SPEAKER_02: Mortgage, add the amount of required to pay off your mortgage using life insurance proceeds.
• 14:37
  SPEAKER_02: Um, and then education, estimate the cost of your children's college education.
• 14:41
  SPEAKER_02: You may want to use a range since costs vary from school to school, whether you're in state, out of state.
• 14:46
  SPEAKER_02: And then other things to consider when you should really review your life insurance needs, um, life events, change in marital status, birth of a child, change in employment, buying, selling, or paying off a home.
• 14:58
  SPEAKER_02: So all things to consider.
• 15:00
  SPEAKER_02: Um insurance is a great tool, like you discussed.
• 15:04
  SPEAKER_02: Um, definitely has its place in financial planning.
• 15:09
  SPEAKER_01: I don't know of a better tool when it comes to estate planning than life insurance.
• 15:15
  SPEAKER_02: And then the cycle of investing, just understand volatility of the stock market.
• 15:20
  SPEAKER_02: Um, we have pullbacks multiple times a year.
• 15:24
  SPEAKER_02: We have corrections on average, just over once a year.
• 15:27
  SPEAKER_02: That's it characterized by any decline in the stock market greater than 10%.
• 15:31
  SPEAKER_02: And then the unfortunate bear markets happen ever about every uh three to seven years.
• 15:37
  SPEAKER_02: Um, that's characterized by a decline of 20%.
• 15:40
  SPEAKER_02: So when we're thinking about that and and um kind of thinking about your ability and willingness to take risk, can you endure that kind of drawdown?
• 15:50
  SPEAKER_02: Do you have liquidity needs?
• 15:52
  SPEAKER_02: Are you willing to take that kind of drawdown?
• 15:54
  SPEAKER_02: If not, you have to kind of reflect that in your asset allocation.
• 15:59
  SPEAKER_02: Maybe you want to have more fixed income, cash, short-term, um, fixed income vehicles that will kind of buffer some of that downside.
• 16:07
  SPEAKER_02: So just things to think about.
• 16:09
  SPEAKER_02: We can certainly help you um come up with that asset allocation mix and determine your both willingness and ability to take risk.
• 16:17
  SPEAKER_01: And your comfort level.
• 16:19
  SPEAKER_01: I mean, we don't want you to be losing sleep at night over your investments.
• 16:23
  SPEAKER_01: You do a good job of saving.
• 16:25
  SPEAKER_01: All right.
• 16:26
  SPEAKER_01: Let's make it clear.
• 16:27
  SPEAKER_01: Um, as a firm for a long time, we never discount the value of a good night's sleep.
• 16:34
  SPEAKER_01: So uh if you're if your wife's feet get a little cold, uh turn the heat up.
• 16:40
  SPEAKER_01: Or if if you want some sleep.
• 16:42
  SPEAKER_01: I think I'm gonna have that tonight.
• 16:45
  SPEAKER_01: Uh.
• 16:48
  SPEAKER_02: So yeah, we're cold here.
• 16:50
  SPEAKER_02: I think we were 45 this morning in North Florida.
• 16:54
  SPEAKER_02: You the our Pennsylvania clients and viewers are probably laughing at us, but we're not used to it.
• 17:01
  SPEAKER_02: Our blood is thin.
• 17:02
  SPEAKER_01: Er.
• 17:03
  SPEAKER_01: When we were up in Pennsylvania, right, Mike?
• 17:06
  SPEAKER_02: Mm-hmm.
• 17:06
  SPEAKER_02: Yeah, but I've been down in Florida for a long time now.
• 17:12
  SPEAKER_02: So, anything else you want to touch on?
• 17:15
  SPEAKER_02: Economic, um, markets.
• 17:20
  SPEAKER_01: Uh maybe, maybe an object lesson.
• 17:23
  SPEAKER_01: Maybe just an object lesson, and and forgive me, Justin.
• 17:26
  SPEAKER_01: Uh sometimes you need a checkup.
• 17:31
  SPEAKER_01: Uh sometimes if you're not feeling well, sometimes you've got to bite the bullet and go to the go to the doctor or go to the emergency room.
• 17:41
  SPEAKER_01: And sometimes you don't want to delay that too much.
• 17:44
  SPEAKER_01: Well, we got there at the emergency room last Wednesday night, and by Thursday morning, one o'clock, it was very clear it was an appendix.
• 17:56
  SPEAKER_01: And so we waited, and meantime, his pain level was at eight, nine out of ten, and it went up to ten.
• 18:06
  SPEAKER_01: And we're thinking, okay, um, what so they called the on-call surgeon and were waiting for the um uh the determination, and we thought maybe it would maybe my appendix might be taken out and you know, Thursday morning.
• 18:23
  SPEAKER_01: Well, come Thursday afternoon, uh we we stuck uh Mummel Bear uh on on the doctors.
• 18:31
  SPEAKER_01: So uh Justin's mom came and said, you know, it's time uh and doctor came in and he wasn't even scheduled.
• 18:40
  SPEAKER_01: Well, he got scheduled and the the appendix came out at four o'clock.
• 18:44
  SPEAKER_01: All right.
• 18:46
  SPEAKER_01: Now, as they were doing the laparoscopic, you know, the appendix started to burst.
• 18:53
  SPEAKER_01: So it started to perforate.
• 18:55
  SPEAKER_01: And and the body did a nice job of walling it off, and so it didn't spread.
• 19:02
  SPEAKER_01: Okay, but that could have been a that could have been a huge, huge problem.
• 19:07
  SPEAKER_01: Uh but thankfully everything is turned out nice, and uh the cost of procrastination is not uh is something you really need to consider, and give yours give yourself time to breathe.
• 19:23
  SPEAKER_01: So that's the old object lesson about you know don't procrastinate.
• 19:27
  SPEAKER_01: If if you're having trouble sleeping, seek help, talk to us, or if it's a medical issue, talk uh go to a doctor.
• 19:39
  SPEAKER_01: Yeah, don't call if you're if you're stubborn if if if your stomach is causing you doctors to be able to sleep, don't call us.
• 19:47
  SPEAKER_01: Go to the go to the doctor.
• 19:50
  SPEAKER_02: Yep.
• 19:51
  SPEAKER_02: Well, David, any uh any exciting plans this weekend?
• 19:55
  SPEAKER_01: Oh well, we are packing.
• 20:00
  SPEAKER_01: Excuse me, we're packing because we are moving into a new home uh on December 18th.
• 20:09
  SPEAKER_02: And and I understand it's a it's a long, it's a big move for you.
• 20:13
  SPEAKER_02: It's is it a m a full mile?
• 20:17
  SPEAKER_01: You know, actually I think it's I think it's actually a mile and a half, Mike.
• 20:21
  SPEAKER_02: Okay.
• 20:22
  SPEAKER_01: You know, uh I missed my I missed my in-laws and I needed to get over closer to them.
• 20:28
  SPEAKER_01: Okay.
• 20:29
  SPEAKER_01: Uh and it's ironic that uh we've been in this house here uh since December 18th, 2002.
• 20:41
  SPEAKER_01: Uh so 23 years ago, and here our closing for the next house is on December 18th.
• 20:49
  SPEAKER_01: Okay.
• 20:50
  SPEAKER_01: Uh so thank you for those weeks before Christmas moves.
• 20:54
  SPEAKER_01: I'm I'm thrilled with them.
• 20:57
  SPEAKER_02: I'll have to put that on my calendar.
• 20:59
  SPEAKER_02: 23 years from this past June, I will be buying a new house.
• 21:06
  SPEAKER_01: You know, uh I'm not sure about the rest of the country, but here in Florida, uh the average the average uh uh residency in a in a home is like five years that people move every five years.
• 21:23
  SPEAKER_01: Uh Mike, you and I um we extend that trend.
• 21:29
  SPEAKER_01: Uh so uh folks, uh have a great Christmas.
• 21:34
  SPEAKER_01: We'll be talking to you again next Friday.
• 21:37
  SPEAKER_02: Uh all right, and I'm not sure, let's see.
• 21:39
  SPEAKER_02: Yeah, next Friday will be the week before Christmas.
• 21:43
  SPEAKER_02: So we will still do Friday live and keep an eye out for our blog posts.
• 21:47
  SPEAKER_02: Um, and then as I mentioned, we did do the webinar last night, so you can review that at your leisure.
• 21:53
  SPEAKER_02: Um, we're gonna try to do one every month, so keep an eye out for that.
• 21:58
  SPEAKER_02: Um, I don't know the specific topic yet, but it'll either be around taxes, social security.
• 22:04
  SPEAKER_02: Actually, maybe we might do uh Brian and I were talking about this on the webinar last night.
• 22:08
  SPEAKER_02: Maybe we'll do a um like a year-end market recap for the next one and kind of what we're looking for in the year ahead.
• 22:16
  SPEAKER_02: So keep an eye out for that.
• 22:18
  SPEAKER_02: Um, before we go, I'm gonna flip on the disclosures.
• 22:21
  SPEAKER_02: So make sure you pay attention to that, and we'll see you next Friday.
• 22:24
  SPEAKER_00: Super.
• 22:25
  SPEAKER_00: Have a great week, folks.
• 22:28
  SPEAKER_00: Member FINRA and SIPC.org.
• 22:31
  SPEAKER_00: Advisory service is offered through LPL Financial LLC, a registered investment advisor.
• 22:37
  SPEAKER_00: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
• 22:43
  SPEAKER_00: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
• 22:52
  SPEAKER_00: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 22:58
  SPEAKER_00: All investments involve risk, including the possible loss of principal.
• 23:02
  SPEAKER_00: This communication may include links or references to third party websites.
• 23:06
  SPEAKER_00: These links are provided as a convenience only.
• 23:09
  SPEAKER_00: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
• 23:14
  SPEAKER_00: Brian, Mike, and David, and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.