Latest / HPK Provident Advisors: The Weekly Bull / Why A Concentrated Stock Market And Mixed Data Call For Prudent Rebalancing

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Why A Concentrated Stock Market And Mixed Data Call For Prudent Rebalancing · HPK Provident Advisors: The Weekly Bull

0:13
SPEAKER_00: Welcome to Bravo.
0:16
SPEAKER_00: Friday, the partners of HDK program.
0:19
SPEAKER_00: Get together to discuss what's going on in the latest trends in the markets and the economy, and we tie in some different financial planning topics.
0:26
SPEAKER_00: So today we have partner Brian Peluso.
0:29
SPEAKER_00: Brian, glad to have you here.
0:31
SPEAKER_00: Always a pleasure.
0:33
SPEAKER_00: We missed, or no, we actually we were all on last week.
0:36
SPEAKER_01: Yeah, we had the whole crew, all three of us, uh three partners in HPK uh probably two in Florida and one in Western PA.
0:45
SPEAKER_01: Exactly.
0:46
SPEAKER_00: So I mean despite the lack of the major economic data, we still have a lot coming through.
0:53
SPEAKER_00: We'll get to that, we'll get to the markets.
0:55
SPEAKER_00: But first, we want to talk about something we're pretty excited about.
0:57
SPEAKER_00: We've been doing the daily blog posts and they've been kind of thematic but not formalized.
1:03
SPEAKER_00: So um we we got something definitive here now.
1:07
SPEAKER_00: So Brian, you want to talk about it or you want me to?
1:10
SPEAKER_01: Yeah, yeah, I'll be glad to.
1:11
SPEAKER_01: So, of course, on Friday Live for those of us who the those of you who have joined us in the past, um, what we do on Fridays, 12:30 p.m.
1:19
SPEAKER_01: Eastern Standard Time on Facebook is we talk about, expand on uh some of the social media posts.
1:27
SPEAKER_01: Um, historically, Mike uh puts out a week ahead on Mondays, and then we kind of mix in different uh financial planning or economic uh posts throughout the week.
1:39
SPEAKER_01: Uh, but now we're gonna be more thematic.
1:41
SPEAKER_01: And as you can see here on the screen, uh on Mondays, we're gonna have Market Monday.
1:46
SPEAKER_01: Uh, we're gonna do tax Tuesday.
1:48
SPEAKER_01: Now it's very important to note that we don't give tax or legal advice.
1:51
SPEAKER_01: Uh, we don't prepare taxes at our firm.
1:54
SPEAKER_01: Uh, but certainly a lot of the things that we do involve the tax code.
1:59
SPEAKER_01: So on Tuesdays, we're gonna put out some information about how investing, how financial planning, um, dovetails with taxes.
2:10
SPEAKER_01: And and uh, you know, we we just finished up our client survey, our annual client survey.
2:17
SPEAKER_01: And I would say the most consistent proactive feedback that we got is hey, I'd like to learn more about how my investments affect my overall tax picture.
2:26
SPEAKER_01: So that's gonna be on Tuesday.
2:27
SPEAKER_01: So Tuesday, social media posts will be tax Tuesday.
2:30
SPEAKER_01: Wealth Billing Wednesday, those are gonna be uh more conceptual financial planning topics.
2:36
SPEAKER_01: And we talk about those uh throughout our posts.
2:41
SPEAKER_01: But on Wednesdays, that's gonna be more about five the major areas of financial planning to include uh cash flow, protection, and strategies, insurance, um, uh investment management, the retirement planning, tax planning, and estate planning, all of those areas, but more importantly, how they all fit together.
3:02
SPEAKER_01: So that's gonna be well-filled Wednesday, and then think ahead Thursday is gonna be about proactive future planning.
3:08
SPEAKER_01: You know, what are the things that I can do now, regardless of how the world looks to me at this moment?
3:13
SPEAKER_01: What are the things that I need to be doing now to prepare myself, my family for the future?
3:19
SPEAKER_01: So uh that is what you can expect to see from us uh each week, uh, generally the topics, and then uh we'll tie it all together on Fridays, and hopefully anything that uh wasn't clear to you that will I help to make uh more sense of it on Fridays, Friday, 11 p.m.
3:38
SPEAKER_01: Eastern Standard Time on Facebook.
3:39
SPEAKER_01: Sorry.
3:40
SPEAKER_00: Brian, you might be a little biased, but if you had to pick one as your your favorite daily blog post, which day would you pick?
3:49
SPEAKER_01: Yeah, that yeah, that's an interesting question.
3:51
SPEAKER_01: I I think what uh well let me answer it this way.
3:55
SPEAKER_01: I think the tax Tuesday is what people, many people will look forward to the most.
4:02
SPEAKER_01: Um my personal favorite is the wealth building Wednesday.
4:08
SPEAKER_01: Mike, I don't even think I need to ask you what your favorite is gonna be to put together.
4:12
SPEAKER_00: Oh, to put together for sure, Market Monday.
4:15
SPEAKER_00: For since I that's my content and I don't obviously learn from it, I would say my favorite to read is probably I I love your financial planning uh post that you do on Wednesdays, so I'm gonna have to pick that one.
4:27
SPEAKER_00: And then I always enjoy doing Friday Live with you.
4:30
SPEAKER_01: Yeah, absolutely.
4:31
SPEAKER_01: Well, you know, I will say uh which one do I do I personally look forward uh to the most?
4:37
SPEAKER_01: And it's um you know, I you know, I guess it depends on the time of year and what's going on.
4:43
SPEAKER_01: I will tell you at this moment, for reasons that we'll talk about, and then Mike will have you do some of your commentary on what's going on in the market.
4:50
SPEAKER_01: At this moment, I would say I look forward to talking to you and reading about the market.
4:57
SPEAKER_01: Uh, those are the that's you know, the the the one topic of all the things that we do that I'm starting to hear more and more about.
5:05
SPEAKER_01: So why don't you jump right into what's going on now, and then we'll kind of talk about uh what uh what's going on now and how people should think about um some of the data and the figures that uh you're gonna talk about and uh some of the things we might be able to help them with.
5:22
SPEAKER_00: Yeah, absolutely.
5:24
SPEAKER_00: So as I mentioned before, we're still in kind of that data vacuum.
5:27
SPEAKER_00: We're relying more on the secondary data instead of like the Bureau of Economic Labor Statistics, like the non-farm payrolls that we should have got today, which we didn't again for I think the second straight month.
5:37
SPEAKER_00: So that's a shame.
5:38
SPEAKER_00: Um, and it looks like that's gonna continue.
5:41
SPEAKER_00: We're at uh new record for longest shutdown.
5:44
SPEAKER_00: Not that that's a a title that should be praised or awarded, but we are I think at 36 or 30.
5:54
SPEAKER_00: 36 37 days now of the government shutdown.
5:57
SPEAKER_00: The previous record was 35 days, and um, if I think anything we learned from the elections on was that Tuesday?
6:05
SPEAKER_00: Um yeah, Tuesday.
6:07
SPEAKER_00: The Democratic parties really had some some big wins, so it seems that they've gotten some leverage back, and I think a lot of the blame's now being put on Republicans for the shutdown.
6:19
SPEAKER_00: So they're not as eager now to kind of move to the table and negotiate.
6:23
SPEAKER_00: So I think the latest is uh President Trump's trying to push the Republicans to um do away with the filibuster.
6:31
SPEAKER_01: Oh, yeah.
6:32
SPEAKER_00: So I think if that can come, maybe we can get an end to this soon.
6:35
SPEAKER_00: But I mean, we've been seeing big disruptions.
6:38
SPEAKER_00: I I wouldn't want to travel right now, airlines have been a mess.
6:41
SPEAKER_00: I feel bad for those workers that haven't gotten paid for three weeks.
6:47
SPEAKER_00: They will get paid eventually, but I mean, eventually that I mean it's it's tough for them to spend money on their families, and that's ultimately gonna factor into economic growth and spending, and um maybe put a put a little hiccup in this economic growth story we've had.
7:06
SPEAKER_01: Well, let's hope not.
7:07
SPEAKER_01: Uh it's kind of gotten long and painful, uh for sure.
7:12
SPEAKER_01: Uh Tuesday was interesting.
7:14
SPEAKER_01: Um my sense is my personal sense.
7:16
SPEAKER_01: I'm not a uh political commentator.
7:18
SPEAKER_01: This is my observation.
7:20
SPEAKER_01: I think Tuesday people were voting uh against something more than they were voting for someone.
7:27
SPEAKER_01: It's my personal opinion.
7:29
SPEAKER_00: So we did get some economic data this week.
7:32
SPEAKER_00: We had uh the ISM numbers.
7:34
SPEAKER_00: So on the manufacturing side, it continues to be weak.
7:37
SPEAKER_00: Remain in contractionary territory, which um is below that 50 level.
7:42
SPEAKER_00: So I think we were 40 48 in change.
7:44
SPEAKER_00: Um, that was lower than the previous month, and estimates, but some bright spots in that new orders was a nice uptick, so that should be good for going forward.
7:52
SPEAKER_00: The next reading we get.
7:53
SPEAKER_00: Um, and the employment situation still looks pretty good, which was consistent with the ISM services, which was pretty much a strong report on all levels.
8:02
SPEAKER_00: The headline rebounded to 52 and change, which is a nice uptick, getting away from that kind of contraction expansionary line.
8:11
SPEAKER_00: Um, new orders was also strong.
8:13
SPEAKER_00: And like I mentioned, the employment situation.
8:15
SPEAKER_00: So that's a good thing.
8:16
SPEAKER_00: We got some labor statistics.
8:19
SPEAKER_00: Um, as I mentioned, not the the one we usually look at, the the first Friday of the month, not farm payrolls, but we got the ADP numbers, which are actually reporting on a weekly basis now, which is kind of cool, just to give markets a little more insight.
8:34
SPEAKER_00: Um, so leading up to this report, we had two negative monthly readings of job growths, so a reduction in the in the hiring.
8:42
SPEAKER_00: Um, this one was a nice uptick to I think 42,000.
8:46
SPEAKER_00: So that's a good thing.
8:47
SPEAKER_00: On the not so good front in the labor market, we got the Challenger Jobs report, which is um a calculation of uh both public and private announced layoffs.
8:59
SPEAKER_00: So that number was 150,000 layoffs or job cuts.
9:04
SPEAKER_00: That is the highest reading in two decades.
9:08
SPEAKER_01: Oh okay.
9:10
SPEAKER_00: Yeah.
9:13
SPEAKER_00: I think that deserves a boot.
9:15
SPEAKER_00: I agree.
9:17
SPEAKER_00: So I mean, there's there's a lot of mixed readings out there, there's a lot of uncertainty.
9:21
SPEAKER_00: We have the government continuing to be shut down.
9:25
SPEAKER_00: Um the economic data is mixed.
9:27
SPEAKER_00: It seems like labor markets at least stalling out, if not gonna start to flip negative.
9:33
SPEAKER_00: Um tariffs are another potential uncertainty.
9:37
SPEAKER_00: We don't really know what's gonna happen with them.
9:39
SPEAKER_00: Um at the same time, earnings growth is actually really strong.
9:43
SPEAKER_00: I think we're tracking 14% for the quarter.
9:46
SPEAKER_00: But what I've seen of late is uh the beats aren't really getting rewarded as much.
9:50
SPEAKER_00: And there's been some big massive down, down drawdowns in some stocks.
9:55
SPEAKER_00: So I think the market's getting a little more wary.
9:59
SPEAKER_00: And and that's that's pretty normal for a market that's I mean, we have we're up 35%.
10:05
SPEAKER_00: Let me pull up the chart.
10:06
SPEAKER_00: We're up 35% from the April lows.
10:08
SPEAKER_00: It's just been straight up, minor pullbacks.
10:11
SPEAKER_00: Um, dip buyers have been pretty eager to get in.
10:15
SPEAKER_00: This week we're actually having the biggest pullback we've had in a in a while.
10:20
SPEAKER_00: I think we're down about three percent right now.
10:22
SPEAKER_00: Um we just violated the 50 day.
10:26
SPEAKER_00: We'll see if we close below that.
10:27
SPEAKER_00: There's a ton of support below this, though.
10:29
SPEAKER_00: We have the um early October lows of uh let's see here.
10:34
SPEAKER_00: I gotta look at my my actual screen because it's a little tiny on here.
10:39
SPEAKER_00: Um so that's around 64 or yeah, about yeah, 6550.
10:46
SPEAKER_00: And then below that we have the hundred day, about 6450.
10:49
SPEAKER_00: So plenty of support levels.
10:51
SPEAKER_00: Um I I mean it's no secret.
10:54
SPEAKER_00: I've been talking about, I think we need a correction for a while.
10:58
SPEAKER_00: We'll see at what point buyers really step back in.
11:02
SPEAKER_00: Um, but some charts I want to bring up.
11:06
SPEAKER_00: Um, I mentioned when markets become a little more vulnerable when we're trading at such high valuations.
11:12
SPEAKER_00: The overall markets trading at 22.8 times forward earnings.
11:16
SPEAKER_00: Now, I I always discuss that valuations aren't a good timing mechanism.
11:21
SPEAKER_00: Um, but in the long term, they do matter, and that's really being driven by the top 10 stocks, which is close to 30 times forward earnings.
11:30
SPEAKER_00: The remaining's not as bad, um, but it's still overvalued.
11:34
SPEAKER_00: This is the chart I really want to look at to the right.
11:36
SPEAKER_00: The weight of the top 10 companies in the SP 500 is now over 40 percent.
11:42
SPEAKER_00: So it's becoming more and more concentrated every year.
11:46
SPEAKER_00: Um, that that's a little alarming to me.
11:49
SPEAKER_00: And you look at based on a market cap weight it we're at 19.4 trillion for the top 10 companies.
11:56
SPEAKER_00: Look how that compares to the previous decades.
11:59
SPEAKER_00: Like it's just insane.
12:01
SPEAKER_00: Like we have five trillion dollar companies now.
12:04
SPEAKER_00: That's small, that's more than countries.
12:08
SPEAKER_00: Any thoughts on that, Brian?
12:11
SPEAKER_01: Uh yeah, is that sustainable?
12:15
SPEAKER_01: Um so you got 40%.
12:18
SPEAKER_01: So, Mike, when you say 40% of the SP 500, this isn't exact math, but so essentially is it fair to say, you know, kind of 40% of the upside of the market, the SP 500, if you call that the market.
12:33
SPEAKER_01: We will for this purpose at this moment.
12:35
SPEAKER_01: Um, 40% of those returns come from 10 companies, effectively.
12:41
SPEAKER_00: And on the flip side, let me pull up that chart again.
12:44
SPEAKER_00: 30 uh what is it, 32 and a half percent of the earnings come from those top 10 companies.
12:50
SPEAKER_00: So yeah, right.
12:52
SPEAKER_00: They are making a bulk of the earnings, but they are outpacing that with their their uh weight in the SP 500.
12:59
SPEAKER_00: And I mean it's really like people always talk about the SP 500, the market cap weighted, and that's that's what we tend to follow as an index, but that doesn't necessarily mean that's what's going on with the bulk of companies.
13:12
SPEAKER_00: We've seen a ton of companies um with 10, 20 pullbacks in this uptrend.
13:18
SPEAKER_00: Um, starting breadth has been terrible.
13:21
SPEAKER_00: Even the if you compare the the market cap weight to the equal weight, um, going into this latest 3% drawdown, I think the market cap weight was up around 17%, while the equal weight was up around eight, or uh I I think closer to nine, maybe.
13:37
SPEAKER_00: So there's I mean, we've seen this over the past couple of years.
13:40
SPEAKER_00: It's been a big dispergence between those top 10 companies and and the rest of the market, but you got to play with the hand you got, right, Brian?
13:47
SPEAKER_01: Yeah, well, yeah, for sure.
13:51
SPEAKER_01: For sure.
13:52
SPEAKER_01: Uh yeah, hey, uh sunflowers don't grow to the sun.
13:56
SPEAKER_01: Uh Mike, would you say you you you you had alluded to it?
13:59
SPEAKER_01: Would you welcome a little bit of a pullback, a little bit of a correction?
14:02
SPEAKER_00: I would.
14:03
SPEAKER_00: I mean, I think it's healthy for a sustainable bull market, and we've been raising some cash over the last call it month, month and a half.
14:10
SPEAKER_00: Um, and we might, depending on the technicals, we might raise a little bit more, but more so in the retirement accounts.
14:18
SPEAKER_00: We don't want to make big tax implications for the non-retirement accounts.
14:22
SPEAKER_00: We have some stocks with some big embedded gains at this point, so I think the stories are still intact long term on a lot of those, but um, I don't think it's worth realizing substantial gains in the short term to add to their tax consequences because we're starting to be more tax focused with our blogs, and um it's all about after-tax returns in those taxable accounts, and that's what people really care about.
14:47
SPEAKER_01: Yeah, yeah.
14:48
SPEAKER_01: I mean, we could certainly be uh tax aware, uh for sure.
14:52
SPEAKER_01: And and uh we are as much as uh as we possibly can.
14:56
SPEAKER_01: Of course, you know, somebody's overall tax situation involves much more than just their investment accounts.
15:02
SPEAKER_01: Um, so we've got to you know be conscious of that as well.
15:04
SPEAKER_01: Let me ask you this question, Mike.
15:06
SPEAKER_01: So we get kind of mixed data, right?
15:08
SPEAKER_01: Uh unemployment, earnings are okay, unemployment's you know, kind of um uh mixed, uh, some good, some bad.
15:19
SPEAKER_01: Uh, I would say probably the same with housing, right?
15:22
SPEAKER_01: Keep up people keep buying houses at higher and higher prices.
15:25
SPEAKER_01: Mostly bad.
15:26
SPEAKER_01: Okay, we'll go with mostly bad on that.
15:27
SPEAKER_01: Hey, here's the question that that is posed to me, and let's contemplate that for a minute.
15:33
SPEAKER_01: Um, so uh, and you look at a ton of different things, and thank you on behalf of myself and our clients.
15:40
SPEAKER_01: Uh, what are the chances?
15:43
SPEAKER_01: Well, you know, what would be the chances that you look at all these things, but then one day you wake up and in a big surprise, they're all negative.
15:51
SPEAKER_01: Or are all of these pieces, are they things that start to tell you a story over time and you can begin to uh you know, begin to make adjustments that are necessary?
16:04
SPEAKER_01: So, you know, is it possible?
16:05
SPEAKER_01: I think that's what you know if if we take this conversation that we're having now and all these individual components, uh, I'm gonna paraphrase the questions I'm getting in our financial planning discussions.
16:16
SPEAKER_01: You know, what are the possibilities that just one day you wake up and say, oh my gosh, uh overnight, these are all super negative, and boom, it happens, and the market just goes down.
16:25
SPEAKER_00: What it would I would say it's probably higher than people think, just because most recessions have some kind of exogenous shock that goes on, some kind of and usually it's revolved around credit or leverage.
16:40
SPEAKER_00: Um, so usually something blows up.
16:43
SPEAKER_00: So, in those circumstances, the economic data kind of follows that.
16:47
SPEAKER_00: So it's tough to anticipate.
16:49
SPEAKER_00: But sometimes you see the weakening of the labor market, you see spending slowing, you look at some of the leading indicators like claims when the government's open and that data's available.
16:59
SPEAKER_00: Um but I I think it's just um being a prudent portfolio manager, you need to when we've had such a good run, no need to be greedy.
17:12
SPEAKER_00: Take some potentially take some profits off the table.
17:15
SPEAKER_00: Make sure you're positioned and are comfortable with your portfolio allocation because drawdowns will occur.
17:22
SPEAKER_00: We will get a 10% correction at some point, we will get a 20% bear market at some point again, we will get a recession at some point.
17:29
SPEAKER_00: So make sure you're positioned for that.
17:31
SPEAKER_00: Don't get alarmed, don't go all cash.
17:33
SPEAKER_00: That's certainly not what we're saying, but incrementally get a little more defensive as things are going robust and no problems seem to be an issue for the markets.
17:43
SPEAKER_00: And that's kind of the way we manage portfolios.
17:45
SPEAKER_00: We try to be very tactical, but it's very tough to time the exact top or bottom in a market.
17:50
SPEAKER_00: So we try to do that gradually.
17:52
SPEAKER_00: Yeah, it is impossible.
17:54
SPEAKER_01: Yeah, so that you know that ties in with the financial planning.
17:57
SPEAKER_01: So, what do you do from a financial planning standpoint?
17:59
SPEAKER_01: Uh, review the plan, make sure you have good cash reserve.
18:02
SPEAKER_01: That's always market way up, market way down.
18:05
SPEAKER_01: Uh, make sure you have good cash reserve.
18:07
SPEAKER_01: Diversification is paramount.
18:08
SPEAKER_01: What is diversification?
18:10
SPEAKER_01: Simply said, you have a bunch of things that do different things at different times.
18:14
SPEAKER_01: Some will be up, some will be down.
18:16
SPEAKER_01: Uh, but over time, you're trying to smooth out that ride and you know, kind of go on the escalator slowly upward uh over time.
18:24
SPEAKER_01: That's not every moment, that's over time.
18:26
SPEAKER_01: So always have a good personal reserve.
18:29
SPEAKER_01: Uh, always be mindful of diversification that pieces of your portfolio, um especially the longer-term portfolios have some things that uh will go up in different markets and then go down in different markets, and that's okay.
18:45
SPEAKER_01: That's what diversification is all about.
18:48
SPEAKER_01: Um, make sure you have uh appropriate time frames for each pot of your money in your financial plan.
18:53
SPEAKER_01: I say this all the time.
18:54
SPEAKER_01: If somebody comes to us and says, hey, I might need this money in a year, it's not sitting in the stock market.
19:00
SPEAKER_01: Um, so be very, very clear and honest with yourself.
19:03
SPEAKER_01: Say, hey, these are these are my goals as I know them right now.
19:06
SPEAKER_01: I you know, I want to have a 35-year retirement.
19:10
SPEAKER_01: Uh, I want to buy a piece of property a year from now.
19:13
SPEAKER_01: I want to buy a new car probably, I'm guessing, three years from now.
19:16
SPEAKER_01: You know, and work with us to make sure that you have those um those goals.
19:22
SPEAKER_01: Of course, a financial plan is like any other plan, it's very dynamic.
19:24
SPEAKER_01: It's a living document.
19:26
SPEAKER_01: It changes on a regular basis.
19:28
SPEAKER_01: Uh, but those longer-term goals, make sure you have your pots of money, your personal reserve, your short-term money, your medium-term money.
19:35
SPEAKER_01: Let's call that three to 10 years, uh, medium term and then your long-term money.
19:40
SPEAKER_01: Um, in doing that, when the market does have its corrections or its fits or that um exogenous event that nobody can predict, does appear and does affect all of these things that you could sit back and say, hey, um, do I need to adjust my plan?
19:57
SPEAKER_01: Have my personal goals changed, and uh, let's work with my financial professionals to make any adjustments because it would be adjustments at that point, and that's what you kind of want to look for, not a major overhaul.
20:09
SPEAKER_01: Holy heck, the market's been going straight up, now it's going straight down.
20:12
SPEAKER_01: I got to change everything.
20:13
SPEAKER_01: You don't really want to be in that position.
20:15
SPEAKER_01: Um, that would be at the detriment of the uh your current and future self.
20:22
SPEAKER_01: So that's where the financial fits in.
20:24
SPEAKER_00: Brian, we're we're potentially in the start, not for sure, of a pullback of some extent.
20:29
SPEAKER_00: And we've had pullbacks in the past.
20:31
SPEAKER_00: If you would have to pick a client mix of ours based on what type of assets they have that don't get as concerned as the person that's all in the market, what would you say?
20:42
SPEAKER_00: What what segment is that?
20:43
SPEAKER_00: Is there a certain product that they have or um asset class?
20:50
SPEAKER_01: Uh no, it's the folks that we have worked with and are willing to work with us most closely to uh identify their goals, manage their goals.
21:00
SPEAKER_01: Um, you know, I I would say folks that have a higher percentage of what I call assured sources of income, uh, that would be Social Security.
21:10
SPEAKER_01: And you know, most people don't think of that as assured.
21:13
SPEAKER_01: I I'm very comfortable that Social Security is gonna keep sending things out, but there's a little uncomfortable about that.
21:19
SPEAKER_01: Uh certainly the folks that have pensions, uh, which we see less and less of, and they just don't exist uh for as many people as they used to decades ago.
21:32
SPEAKER_01: Um and then for people that it fits into their financial plan that they have assured source of income from you know, possibly an insurance product, an annuity, cash value, life insurance, which isn't as assured.
21:46
SPEAKER_01: But um so, you know, the folks that I as a general category, if I can narrow it down, it's the people that live off a higher percentage of assured sources of income, where they can sit back and say, I don't really, it doesn't matter as much to me what my portfolio does, because I know next month this is what's coming into my household.
22:08
SPEAKER_01: Um that's my personal observation and working with our clients and working with our clients during downturns, and the people that uh are the first to call and say, Oh my gosh, the world is ending, and the people that say, you know, hey, it's okay, things go up and go down.
22:25
SPEAKER_01: The people that say, it's okay, things go up and go down.
22:27
SPEAKER_01: And and I've been through this before are usually the ones that have a higher percentage of their uh monthly income that is assured.
22:37
SPEAKER_01: And that's so and there are ways to do that above and beyond just social security and pension, uh, if it's appropriate, if it fits into the planning, if it fits into the tax picture, and so on and so forth.
22:50
SPEAKER_00: So as we're coming to year end, any any advice for people regarding taxes or what they need to do before year end?
22:59
SPEAKER_01: Yeah, absolutely.
23:00
SPEAKER_01: You know, we've been working with a lot of folks to make sure um, depending on their age, if you have uh retirement accounts and you have required minimum distributions, that could be from a beneficiary uh IRA that you receive from somebody.
23:14
SPEAKER_01: Uh that could be if you are in the old rules, 70 and a half, and you're older now, and you've been had a required minimum distribution distribution since 70 and a half.
23:23
SPEAKER_01: Most folks now at 73, it's going up to the age of 75.
23:27
SPEAKER_01: We covered that on a couple different Friday lives.
23:30
SPEAKER_01: So uh, you know, make sure you're getting your RMDs done.
23:33
SPEAKER_01: Uh, those gotta be out.
23:34
SPEAKER_01: Uh they have to be how about that for an articulate?
23:38
SPEAKER_01: They gotta be out.
23:39
SPEAKER_01: They uh those uh need to be out of those accounts by the end of the year.
23:42
SPEAKER_01: For the most part, there's some other, but just think of it as the the end of the year.
23:46
SPEAKER_00: Uh I think any advice for those people that don't want to pay taxes on the full amount?
23:51
SPEAKER_01: Yeah, there are ways, yeah, there are ways to do that.
23:53
SPEAKER_01: Uh we work with a lot of folks that do what's called a qualified charitable distribution.
23:58
SPEAKER_01: So you can take money out of your IRA and send it directly to a charity.
24:04
SPEAKER_01: Um, so for um for investors that the RMD, the required minimum distribution out of a retirement account, is just a hassle.
24:14
SPEAKER_01: Like, uh geez, I don't really need the money.
24:17
SPEAKER_01: Um, and it's just a way for the IRS to get into my pocket.
24:22
SPEAKER_01: Um, there is a way to take money directly from an IRA, it has to come directly from an IRA, cannot be something you receive in hand and then send it to a charity.
24:30
SPEAKER_01: So it's got to come directly from the IRA.
24:33
SPEAKER_01: It does help to satisfy the required minimum distribution amount, and it goes directly out of your IRA to the charity tax-free.
24:41
SPEAKER_01: So think about if you are regularly contributing to a charity from money that's already been taxed, sitting in your checking account, and you are contributing to them anyway.
24:52
SPEAKER_01: And if you're somebody that has a required minimum distribution, uh, there's a caveat on this.
24:58
SPEAKER_01: You can actually do the qualified charitable distribution if you're 70 and a half and older, even if you haven't reached that required minimum distribution age.
25:06
SPEAKER_01: But in any case, um, if um, you know, you're thinking, geez, I'm getting all this taxable money, I don't really need it.
25:14
SPEAKER_01: So really my financial plan has worked out, it's just a hassle to me.
25:18
SPEAKER_01: Uh, I'm giving money to a charity anyway.
25:20
SPEAKER_01: You might want to consider taking money out of the IRA and send it directly to that charity.
25:25
SPEAKER_01: It's called a qualified charitable distribution.
25:28
SPEAKER_01: You can do that if you're 70 and a half or older, even if you haven't reached the required minimum distribution age for your birth year, but 70 and a half and older.
25:38
SPEAKER_01: And this year, I believe you can send a maximum of$108,000 to charities.
25:44
SPEAKER_01: So you can go above and beyond just the required minimum distribution, but whatever you're sending does count for uh required minimum distribution.
25:54
SPEAKER_01: I personally love that strategy.
25:55
SPEAKER_01: It's not for everybody.
25:57
SPEAKER_01: Um, you know, if you're taking a regular distribution out of your IRA to pay or your retirement account, uh, to pay for living expenses and you know, just keep the lights on and food on the table, then keep doing that.
26:10
SPEAKER_01: Uh, but if you're somebody that says, geez, I don't really need this and I give to charity anyway, that's something to consider.
26:16
SPEAKER_00: Okay.
26:18
SPEAKER_00: All right.
26:18
SPEAKER_00: And then we do have uh David will be hosting a webinar next week in Sarasota.
26:26
SPEAKER_00: So if you haven't registered yet for that, uh, you can go to our website, go to resources, and then the events tab.
26:33
SPEAKER_00: It's gonna be at Cooper Hawk, it's gonna be a happy hour, um, specific for women building financial independence.
26:40
SPEAKER_00: So he has some guest speakers in that should be pretty informative.
26:44
SPEAKER_00: And then Brian.
26:46
SPEAKER_01: You mentioned webinar, but that's an actually an in-person event.
26:50
SPEAKER_01: Yeah, yeah.
26:50
SPEAKER_01: So seminar.
26:52
SPEAKER_01: It all comes webinar seminar.
26:55
SPEAKER_00: And then next month we're gonna be doing a webinar, not seminar.
26:59
SPEAKER_00: Um, a presentation about taxes.
27:02
SPEAKER_00: Uh, Brian, you want to talk about that a little bit?
27:04
SPEAKER_00: It's about the different um tax strategies you can do at different stages in your life.
27:10
SPEAKER_01: Yeah, you know, you've got uh we can really simplify these things, and we really pride ourselves on taking what um many people try to make very complicated and simplifying them.
27:21
SPEAKER_01: And so if you kind of think about different phases of your life, um, you know, you have an accumulation phase.
27:28
SPEAKER_01: This is where you're saving a lot, hopefully, you're saving for your future.
27:32
SPEAKER_01: I always talk about that kind of um short-term sacrifice, long-term gain concept.
27:39
SPEAKER_01: Short-term sacrifice in the accumulation phase is you don't spend the money today.
27:44
SPEAKER_01: The long-term gain is that you're kind of negotiating with your future self.
27:48
SPEAKER_01: Say, if I save this today, my future self has more money to live the way they want to live into the future.
27:54
SPEAKER_01: Uh, so you have your accumulation phase, you've got a distribution phase.
27:58
SPEAKER_01: This is all these things that you've collected.
28:01
SPEAKER_01: And uh now that is how um it's easiest to think about in terms of work.
28:07
SPEAKER_01: You know, as you're working, you're using your intellectual and human capital to fund your life because you're working.
28:14
SPEAKER_01: And um your um your expertise, your intellectual expertise, your physical abilities get you a paycheck.
28:24
SPEAKER_01: Uh, but you're gonna, you know, you're gonna transition to a point in your life where your intellectual and your physical and your professional uh capital decreases just in time.
28:36
SPEAKER_01: And that's just the way life works.
28:38
SPEAKER_01: And um what you're gonna be using is your accumulated capital, your accounts, IRAs, 401ks, 403Bs, 457s, that kind of thing, that becomes the capital that you use to uh to fund your lifestyle.
28:54
SPEAKER_01: Uh, so you've got accumulation phase, you've got distribution phase, and then you've got a phase that when you're not here, where do all of these things go?
29:04
SPEAKER_01: That's something that you uh contemplate during your accumulation and your payout phase.
29:09
SPEAKER_01: Each of those phases have um different tax considerations.
29:14
SPEAKER_01: You know, where do I put money that I can save on taxes now that I might have to pay taxes later?
29:19
SPEAKER_01: Where do I want to put money that uh pay taxes on now, but maybe never have to pay taxes on that again?
29:25
SPEAKER_01: And where do I put money that's taxed along the way, but is super flexible to me?
29:31
SPEAKER_01: So there are with each of those phases, there's different tax considerations.
29:36
SPEAKER_01: And uh it's really uh is where the financial planning is coming to narrow down specific amounts and specific action steps for each of those phases.
29:46
SPEAKER_01: But that webinar is going to talk about, in general, considerations for each of those.
29:51
SPEAKER_01: Um you know, again, you know, you look at retirement plans, and it often comes down to when do you pay the taxes?
30:00
SPEAKER_01: Pay it now and not pay it again.
30:02
SPEAKER_01: Um, pay, don't pay the taxes, get a little bit of break on my taxes now, but pay taxes later.
30:07
SPEAKER_01: And um, so that webinar is going to talk about all of those concepts and those considerations, regardless of whether you're in accumulation, distribution phase, or if you're looking at the phase of your life where you are going to uh pass money along to others while you're here or while you're gone.
30:26
SPEAKER_00: So except for HSAs, you may never have to pay taxes on that.
30:30
SPEAKER_01: I love the HSA.
30:33
SPEAKER_01: I mean, it it it is really it is absolutely a wonderful account.
30:38
SPEAKER_01: Uh I think you know, I haven't read every line of the tax code, but it's has to be one of the most advantageous uh accounts available in the uh in the tax code.
30:50
SPEAKER_01: Uh that's true.
30:52
SPEAKER_01: There, there are these little exceptions out there if it you know if it fits into a financial plan.
30:57
SPEAKER_01: Certainly uh certainly something to consider.
31:01
SPEAKER_01: I happen to love the HSA.
31:03
SPEAKER_01: Again, a personal professional observation, but I know.
31:07
SPEAKER_00: Brian, any any big plans this weekend?
31:10
SPEAKER_01: No big plans this weekend.
31:11
SPEAKER_01: Uh I'm gonna go watch uh the University of Pittsburgh play hockey uh tonight and tomorrow.
31:18
SPEAKER_01: Uh and that's about it.
31:19
SPEAKER_01: Winter is coming to Pittsburgh.
31:21
SPEAKER_01: We they're they're talking about a little bit of a possible overnight uh snow flurries uh over the weekend, which I love.
31:28
SPEAKER_01: 35 degrees this morning.
31:30
SPEAKER_01: Go out, take a little walk.
31:31
SPEAKER_01: Sun is beautiful.
31:33
SPEAKER_01: Um, so I'm all for it.
31:35
SPEAKER_00: You know, I think we're getting down to 40 on Tuesday in North Florida.
31:39
SPEAKER_01: Ah I love it.
31:42
SPEAKER_00: Don't worry, I'm preparing.
31:43
SPEAKER_00: I called the gas company.
31:44
SPEAKER_00: I'm getting the propane tank filled, filled, gonna get that fireplace going.
31:49
SPEAKER_01: Well, that sounds wonderful.
31:50
SPEAKER_01: How about you, Mike, newly married man?
31:53
SPEAKER_01: What's the uh the what are the newlyweds uh what are their plans shortly after?
31:58
SPEAKER_00: I think we're gonna take it easy tonight, and we're gonna I think babysit Corinne's niece and nephew tomorrow.
32:05
SPEAKER_00: Um, as uh they were both in the wedding, and the niece got her wedding present already, but the ring bearer hasn't gotten his yet.
32:14
SPEAKER_00: We promised him a new Lego set.
32:16
SPEAKER_00: So I think we're taking him to the Lego store, and then we're gonna have them both come over and play with my old hest trucks and that kind of thing.
32:23
SPEAKER_01: Yeah, it sounds like you or somebody in your life who's trying to prepare you for your future.
32:28
SPEAKER_01: So uh, so that's about it.
32:31
SPEAKER_01: Hey, uh, let's close out.
32:32
SPEAKER_01: We got important disclosures coming up.
32:35
SPEAKER_01: Um uh hope you found this to be helpful.
32:38
SPEAKER_01: Again, we're gonna have Market Monday, Tax Tuesday, uh wealth planning Wednesday, and think ahead Thursday.
32:43
SPEAKER_01: So take a look at those quick glance if you prefer just to get the the cliff notes and uh prefer to hear us talk about we do that uh Fridays, 12:30 p.m.
32:52
SPEAKER_01: Eastern Standard Time on Facebook.
32:55
SPEAKER_00: Um then uh Tuesday, I believe, is Veterans Day.
32:58
SPEAKER_00: So stock market will be open, barn market, I believe, is closed.
33:02
SPEAKER_00: But we'd just like to thank all the veterans out there.
33:04
SPEAKER_00: We really appreciate your service and you putting your lives on the line for our country.
33:10
SPEAKER_01: Yeah, it's an incredible amount of sacrifice, uh, not only for those folks that are in uh combat zones, but for all the folks that have uh spent time in the service.
33:21
SPEAKER_01: It is a an incredible time sacrifice.
33:26
SPEAKER_01: Uh there's a lot of uh pressure uh that goes uh on the families of those folks.
33:34
SPEAKER_01: And um, you know, for me, Memorial Day, Fourth of July, and Veterans Day are my three favorite days to just kind of sit around and be thankful uh for a lot of folks.
33:46
SPEAKER_01: And so I I certainly plan to do that.
33:48
SPEAKER_01: Whether the market's open, the stores are open or not, I will be thoughtful and uh and thankful.
33:57
SPEAKER_00: Yeah.
33:58
SPEAKER_00: All right.
33:59
SPEAKER_00: Well, everyone have a good weekend.
34:00
SPEAKER_00: I'm gonna flip on the disclosures and then we will see you next Friday at 1230 Eastern time.
34:07
SPEAKER_01: Security is offered through LPL Financial LLC, member FINRA and SIPC.org.
34:12
SPEAKER_01: Advisory services offered through LPL Financial LLC, a registered investment advisor.
34:18
SPEAKER_01: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
34:24
SPEAKER_01: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
34:33
SPEAKER_01: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
34:40
SPEAKER_01: All investments involve risk, including the possible loss of principal.
34:44
SPEAKER_01: This communication may include links or references to third party websites.
34:47
SPEAKER_01: These links are provided as a convenience only.
34:50
SPEAKER_01: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
34:55
SPEAKER_01: Brian, Mike, and David and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.
35:04
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