EP 100: Navigating Inflation, Interest Rates, and Market Turbulence
The X's and O's
The Retirement Plan Playbook, hosted by Brent Pasqua, Matthew Theal, and Joshua Winterswyk of Evermont Wealth, celebrates its 100th episode milestone.
Reflecting on the journey since its inception in 2018, the hosts discuss the evolution of the podcast through challenges, including a pause during the pandemic and subsequent resumption due to client demand. They reminisce about past episodes, highlighting topics like social security, bond ladders, and selling businesses.
The episode then shifts focus to the first quarter of 2024, exploring major financial themes such as inflation, interest rates, stock market performance, and geopolitical tensions. The hosts examine how these factors influence retirement planning, investment strategies, and the broader economy.
The episode concludes with predictions for the upcoming quarters, emphasizing the importance of planning, staying informed, and seeking professional advice for a successful retirement.
00:40 The Journey to 100 Episodes: Reflections and Highlights
02:21 Favorite Episodes and Listener Feedback
03:32 Exciting Announcement for Listeners
03:39 Deep Dive into the First Quarter of 2024: Economic Insights
08:28 Inflation and Interest Rates: A Closer Look
12:46 The Bond Market Explained: Opportunities and Challenges
18:13 Housing Market Dynamics and Mortgage Rates
21:11 Market Leadership Shifts: Gold, Oil, and More
23:27 Baby Boomers vs. Millennials: Economic Impacts
25:06 The Tech Sector's Winners and Losers
28:22 Predictions for Q2 of 2024: Market Trends and Volatility
30:13 Investment Strategies and the Rise of AI
32:41 Personal Finance Tips and the Importance of Diversification
36:11 Recommends: Personal Stories and Tips
42:49 Closing Thoughts and Future Outlooks
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Transcript
Intro: Welcome to the Retirement Plan Playbook hosted by Brent Pasqua, Matthew Theal, and Joshua Winterswyk of Evermont Wealth. This podcast dives deep into investment strategies, retirement planning, and current events, equipping you with the insights needed to craft a robust retirement playbook adaptable to any political or economic climate.
Intro: Join Brent, Matthew, and Joshua as they guide you through the complexities of retirement planning. Offering expert advice. to tackle challenges and the later stages of your journey. It's time to build your optimal retirement playbook. Now let's dive into today's episode.
Brent: Welcome into the retirement plan playbook this is episode 100 and we actually did it
Brent: I mean, what's your thoughts?
Matthew: It's been a hundred episodes, you know, I didn't know if we'd make it this far when you start the podcast I think we'd start at 18 right 2018 like probably middle of 18. We were really pumped up or excited we hired a podcast producer and I don't think we really knew what the show was going to become.
Matthew: And we were just kind of trying some things and having fun. And then we wrote it up into the pandemic, took a pause, and then we were getting a lot of demand from the clients. Okay. Restart the podcast. So we restarted it. You know, went pretty hard until, you know, midway last year, took a little pause and then started it back up this year and yeah, now we've got a hundred episodes.
Brent: Do you remember what our first topic was? I don't. Do you?
Matthew: I do. Oh, you do? Yeah. My guess would be social security. It was social
Brent: security. Was it? Yeah. And it was very like monotone, like what we were doing, but you know, we've come a long way. We've done a lot of episodes. I think it's a proud moment.
Joshua: Yeah. You know, to, to say that we, we really made it this far and we kind of didn't know what to, to expect when we started it and to make it to a hundred episodes.
Joshua: And I'll just say I've had a lot of fun doing it. You know, I, I looked forward to, to recording and, and doing this with you guys and spreading good information. So it's, it's been a really fun experience and hope we have another a hundred shows in us.
Matthew: I honestly don't look forward to doing it.
Matthew: Sometimes, sometimes I dread it. It's a lot of pressure, you know, on the mic. Yeah.
Joshua: You know, there's that thought right before, but I think once you jump in, like once we actually start recording and having these good discussions and, and doing this
Matthew: I enjoy it. I got a couple of a couple of things for you guys.
Matthew: One of my favorite episodes was when we did the bond ladders. That was actually a really popular episode. I got a lot of feedback from clients. Didn't we do moving out of California too? I, we did. I don't think it was as popular, but one of our most popular episodes has a lot of downloads. I think it's actually our most downloads that we have is eight ways to sell your business.
Matthew: That was one of our first shows too. I think we did that in probably like 2018 or 2019. Right. That was very specific. Yeah. So good podcast.
Brent: I actually, you know, I hope we can bring some guests back. I agree. I think those are some of my favorite episodes is bringing guests on and talking to them about how things pertain to their retirement.
Brent: Yeah. One that sticks out to
Joshua: me is even we had the travel agent. Yes. Oh, that was a good show. That was good. Yeah. It's fun.
Matthew: And now I follow her on Instagram. She's always on exotic trips. It makes me jealous.
Joshua: Yeah, I know. I saw her. She was at the four seasons hotel and it is it Italy where white Lotus was shot.
Joshua: Yeah. Yeah. I saw that. Pretty cool.
Matthew: Yeah. That'd be really cool to
Brent: go there. Yeah. She's always at like bucket list places.
Matthew: Yeah. Caitlin is her name, I think, actually, you know, my parents used her, she, she helped plan their trip to Portugal. They had a good trip.
Brent: Well, we want everybody to listen to the end of this show.
Brent: Since this is our hundred episodes, we have a surprise at the end that we're going to give away to some of the listeners. But in this episode, we're going to be discussing the first quarter of 2024. We're going to go into the topics that really moved portfolios like inflation, interest rates, stock market performance.
Brent: There's a lot that happened in this first quarter and now some of that's kind of falling into the second quarter. So. We'll dive into that. I'm your host, Brent Pasqua, founder of Evermont wealth. I'm joined here by Matthew Theal, certified financial planner and Joshua Winterswyk, who's also a CFP.
Brent: And together we're here to offer, you know, all the expertise and support as you prepare for whether it's preparing for retirement, transitioning to retirement, or actually really being in retirement and enjoying it. You know, we're here to help with some of those topics that can get you ready for those different chapters of your life.
Brent: So let's let's get into it. Let's, let's talk about you know, this retirement planning corner and let's talk about the 2024 first quarter. Tell us what happened.
Matthew: Yeah. So there's a lot of major stories. I think today we want to hit on, you know, what's going on with inflation. What about the economy?
Matthew: How strong is it? There's obviously a few wars going on that are causing a lot of anxiety with our clients. We're getting a lot of questions about those. And then, you know, lastly, whatever one, you know, the yardstick people use is, you know, how's the stock market do it? So let's jump in, Josh, why don't you tell us just how the SMP and NASDAQ did in the first quarter?
Joshua: Yeah. So SMP 500 finished the first quarter positive 10. 33 percent and we had the NASDAQ up over 9%. So both great positive rates of return in the fourth quarter to start this year.
Matthew: You know, it's interesting, Brent, do you feel like when you're meeting with your clients that that the first quarter was up 10%?
Matthew: Are they, when you're talking to them, are they happy?
Brent: Yes, because I think that a lot of it was a feeling of 2022 was so bad and most of 2023 actually wasn't great. If you look at where we were at the end of October, we were only up, I don't know, two or 3 percent for the year. And then all of a sudden the market just took off at the end of October till the end of March.
Brent: And I think people were really happy that finally after being down for 22 months. And we are finally back to these highs that we originally out before, but some of that has now taken a turn.
Matthew: It has the markets pulled back in the second quarter so far. So we're recording this is it middle of April?
Matthew: Yeah. The 23rd of April. As of today, the S and P 500 is down 5 percent this quarter and the NASDAQ is down 6 percent this quarter. Too much recency
Joshua: bias here. First quarter was good. We're here to recap the first quarter. Don't bring all that negative news. Well, you know, I want to keep the quarter,
Matthew: I got to keep the podcast current, you know, the listeners demand it, but this is the first quarter recap.
Matthew: No, I understand, but we've given up a lot of the gains and it's important.
Brent: Yeah, the, the first quarter ended very, very well and surprisingly, like when you look at a presidential election year, you're not really typically seeing the first quarter be as strong historically as it was in this first quarter.
Brent: And I'm not quite sure why, you know, I know some of the reasons are out there, but I'm, it was, it seemed like it kind of overpushed a little bit.
Matthew: It did. The market got a little ahead of itself which is why, you know, the pullback that we, we've had so far to start this quarter is perfectly normal. Markets pull back all the time on average over the last a hundred years, a market will experience a 5 percent pullback five times per year.
Matthew: So what's happening today is totally average. It's totally normal. There's nothing abnormal happening despite what you hear on the news. You know, the news tries to scare you, they try and freak you out, but 5 percent pullbacks perfectly normal. Even a 10 percent pullback is perfectly normal. And could this
Joshua: be healthy?
Matthew: Very
Brent: healthy.
Joshua: Yeah.
Brent: So when looking at the first quarter, what led to the type of gains that we saw the way that it happened in the first quarter?
Matthew: My guess is FOMO actually fear of missing out like animal spirits. You know, we talked about crypto a few episodes ago, coming back with the Bitcoin ETF everything going on with AI, with NVIDIA you know, that was one of the hot stocks I think is up like 60 percent during the first quarter.
Matthew: You know, meta two, I think meadow is up 30 or 40%. So you have these FOMO's with the max seven everyone trying to make money. Then, you know, what's going on in crypto. You know, I think people felt a little offsides after 2023.
Joshua: And then also the two leading industries were it and communication, which a lot of that came from AI, like that's still very much the hottest topic, in my opinion, for like growth going forward.
Brent: Is it also money coming from bonds into stocks to now?
Matthew: That's a good question that actually the data says no cause all those money market balances, you know, those are still at all time highs. So no, I just think it's people probably repositioning their portfolios a little bit. What did
Brent: we find out about inflation and interest rates
Matthew: this first quarter?
Matthew: So this is a good one. And. Inflation has been a little bit harder to keep down than the federal reserve or most people thought you know last year we spent most of your telling our clients inflation was coming down We were right and at least me and i've been telling my clients. Hey inflation is going back up to start this year and we've seen that We've had 36 straight months of inflation above three percent and then Three or four straight inflation monthly readings where it was above what economists had forecast.
Matthew: So it's coming in hotter than expected.
Joshua: When you say hotter though, let's put this into context. You know, we're not talking about hotter going back up to 8%. You're talking about 10 basis points, 20 basis
Brent: points, right? Which are 0. 1%, 0. 2%.
Matthew: It is, but it's unexpected. And, you know, it is a bad thing. And I think a lot of people have recency bias when they look at what happened in 2021 and 2022 with inflation.
Matthew: So I think it makes people scared, but though, you know, the one thing I'll say on inflation, you know, we were building these financial plans for our clients and in the financial plan, the average inflation rate that historically is what 3. 7%, right? So we're at the average right now. Yeah. You're at the average historical inflation rate right now.
Matthew: And I feel like when we talk with clients, when I meet people either new clients, or even talk with my friend group, everyone's mad about prices rising everybody. Same way I hear from everybody, but what we have today is average.
Joshua: We just didn't have that average for a long time. So it's, it's not, you know, something we expected to stick around and we're just not used to it.
Matthew: I agree. I mean, the 2010s will be looked back on, you know, 20, 30 years from now, it was like just a golden 10 year period of zero inflation and very low interest rates where the stock market basically went up in a straight line and everyone made a lot of money.
Joshua: And I think it's also because the federal reserve has set this target.
Joshua: I feel a lot of people even know this target, even through casual conversations, like inflation is still high, it's not down to 2%. Like the federal reserve, you know, set this target too. So it's not meeting the expectation, which makes it even more present in our minds.
Matthew: The one thing too, about the federal reserve they're always wrong, but have they been
Brent: wrong this year and last year?
Matthew: Yeah, they said they're going to cut interest rates six times this year. They haven't cut it once. And we're a quarter of the way through the year. And now the market's thinking, okay, maybe they're only going to cut twice. And I imagine by the time April's inflation comes out, it, that cut is going to go away and now it's going to be maybe one cut or zero cuts, which is most likely,
Joshua: I agree with that.
Joshua: Take two. I don't even know if there's a cut built in for this year. Now,
Brent: do you, do you think that they could have to raise rates this year?
Joshua: No, no, next year. There's just more variables though, that go into, you know, their decision making. And for example, too, although economic growth has been pretty good, you're seeing like savings savings accounts being depleted.
Joshua: You're seeing other factors that might be a little bit more indication of slowing that just haven't caught up yet. We've been waiting for those to actually cause some sort of real effect, but I think that might be coming
Brent: this year. You know, if tensions, Did start to rise again in the Middle East and oil prices were impacted greatly.
Brent: That would, I think probably lead to more cuts potentially this year. But assuming that the tensions kind of relax and we don't have a full blown war back there. I think we're probably in for what you're saying. Consistency was rates.
Joshua: Yeah. I think that also, you know, that's something to be always mindful of.
Joshua: We don't know if those events are going to happen. And one of those events could really drastically change the projection of either interest rates or the economy. So
Matthew: you guys are thinking too hard about this. They're not going to raise rates this year. Most because it's an election year.
Brent: Yeah.
Matthew: I don't think that would raise rates because of that also.
Matthew: Yeah. That's the main reason they're not going to do it. That's what I said, too. Yep. So no raise this year. I imagine even after the election, it could be on the table. Like if things, if things are really hot in December. You know, you could see rates rise then quarter point or something. And then I would definitely pencil one in for the beginning of next year.
Brent: What, what's happening in the bond market? Cause we saw a shift in October of where rates were and now rates are coming, go back up again, and like, we kind of hit this low point of where we were and now we're kind of coming back to these highs. What's happening in the bond market.
Matthew: All right. So you're going to have to ask me a lot of questions right now, because it's really difficult to explain how the bond market works.
Matthew: So that people understand who aren't, don't follow it, but we're in a pretty bad bond bear market over the last three years, we're actually in the deepest bear market ever. So it started 2021 and it's continued to today. We're now, you know, mid 24 almost. And so bond prices have been going down. Bond prices and yields have an inverse relationship.
Matthew: So yields have been climbing and prices going down. So the prices going down part is the bear market aspect of this. That does not mean that if you own bonds today, you're not making money. I know that's really confusing for some people to hear, but like, for instance, let's say we bought a T bill, you know, in one of your clients accounts, Josh.
Matthew: Right. And we bought it for a year, bought it last year. We bought it at 5%. Cause that's where rates were. That's where the T bill was, you know, it came due today. That client made 5 percent on the T bill. They get their money back. They got their money back. Plus 5%. Despite this bond bear market.
Joshua: Yeah, I think another way to put that too is it's the valuation of today, right?
Joshua: You're the valuation of your bond today because rates changing affect the actual price of what you paid for it and what the value of that bond you're existing or you're already Holding but not for something you're potentially going out and buying new and getting that yield for
Matthew: exactly because you bought new So like and there's another example would be like if you bought your bond in 2020 or 2021 Yeah.
Matthew: You're in a bear market. You probably lost money on that bond, but you know, the new bonds that you could purchase for clients today, you could make money on those very easily.
Brent: Should clients be taking money out of their high yield savings accounts and putting them into T bills?
Matthew: No, not without an advisor.
Matthew: And the whole reason is, is when they come due, the client's going to forget to do it. And so it's going to sit in the cash account or the broker's account. It's also really difficult to purchase them. You have to
Joshua: have a plan. Yeah. If they have a plan of, and a really good reasons of why you would do that too.
Brent: Yeah, I guess if you have extra money sitting in a high yield savings account that you're not actually using, it's not part of your emergency fund and it's sitting there, are you better off having that in T bills?
Matthew: Yes, but with the help of an advisor.
Joshua: And your expectation of where markets are going. There has to be a discussion around that too. Because you're also fixing a term and what other assets could you potentially be buying if you didn't need that money? So I think there's multiple multi levels to that decision.
Joshua: Anything
Brent: else on the bond market?
Matthew: No, I, I just hope we, you know, we made hope, hopefully what we're talking about is making sense to people and resonating that, Hey, we could be in a really bad bond bear market. Like we've been in for the last three years, but it's still possible to make money on shorter term bonds right now.
Matthew: And it's actually very easy, very good money you could be making.
Joshua: Do there's like tips, a good investment now going forward.
Matthew: I don't know. I find them really confusing. That said where interest rates are and where inflation is that answers yes. Cause you're getting real return.
Joshua: Yeah, I predict they become more popular.
Joshua: Yeah now going forward as things kind of maybe even more normalized, right? So so yes
Brent: What are some of the couple of themes that emerged from q1?
Matthew: I think the biggest theme is higher for longer, right? Even though I have some stats here. We've already been higher for longer so historically it takes an average of eight months from the last rate hike to For the fed to start cutting we're 10 months since the last rate hike.
Matthew: So we've already been higher for longer. And you know, like we've been saying, the fed hasn't said when they're going to cut, they said they might do it, but they haven't said it. So we're probably going to at least get to, you know, 12, 13, 14 months at least.
Brent: What, what impact does it have? If the market, if they just keep rates the same, what starts to happen?
Joshua: That's a really good question. I have one take on this too. I think from, from the corporate side, you have a lot of companies that use leverage and debt, right? For financing and we're stock owners, right? We own businesses. And so eventually these tools, these financing tools have a rate that was either fixed or a floating rate.
Joshua: That they're paying on all of this debt to maintenance the business. And eventually that debt is either going to come due and they're going to have to renew the debt at this higher rate. Or the floating rate just stays so high that it really starts to affect these corporations and businesses. And I think that that could be a really big theme going into the next, you know, 18 months of how businesses are really managing their debt with this higher for longer climate that we're in something to be monitored.
Joshua: I mean, even for People personally, right? If you're paying these higher rates, but I think it could be a really big story for the upcoming 18 months for, for businesses.
Matthew: I'll take the personal approach since Josh took the business approach and what Josh said was spot on on the personal side, 80 percent of all outstanding mortgages in the U S are below 4 percent today.
Matthew: Fixed. Fixed. So what that means is that's 80 percent of the population who's carrying a mortgage and they don't really care or have an impact on these higher rates. They're pretty freaking happy that they could deposit their money and get 5 percent from the, from an online savings account or five and a half percent.
Matthew: They're using T bills today. And
Brent: they're paying two
Matthew: and a half percent on their mortgage. Exactly. So like literally today, if you have enough money, you could purchase T bills. And as long as the T bill rate is above your mortgage rate, the interest from the T bill can pay your mortgage rate interest.
Joshua: And we get the question a lot, like, should I take this cash or should I take these investments and pay off my mortgage?
Joshua: And you know, the client has a 2. 99 fixed mortgage rate. Like absolutely not. Yeah.
Matthew: No, please don't do that. So I don't think it's going to impact a lot of consumers where it does hurt people as the new home buyer. I feel bad for all the people who are in homes today who want to be in a home. And I think it's going to be a psychological shift.
Matthew: That's going to take some time for people before they come back into the housing market and start, you know, looking to purchase homes. I mean, as you know, the three of us, we all have sub 4 percent mortgages here.
Brent: Which would you be looking to move anytime soon? No, you have to have a substantial reason to move You're probably not going to be motivated to move just for a different house
Joshua: This is the reason also why I think this is the stat is over 40 percent of new home buyers are Receiving some sort of either down payment or capital assistance to be able to purchase the new home.
Joshua: It's pretty Like interesting, like that, you know, people are struggling so bad that it's taking, you know, parents to help out, whether if it's family, but they're needing some sort of assistance. Cause it is so expensive where interest rates are and where home prices are for someone that's just starting out to try to go buy a home.
Matthew: I would imagine like you're saying for the first time home builder buyers. that sometime within either late next year or early 2026, if rates are still higher, they're going to come up with some kind of government assistance program where the mortgage rate is kind of like blended lower somehow based on income and all these other qualifications to get first time home buyers into the market.
Joshua: Yeah. Or lenders, you know, for, especially in newer communities, you're already kind of seeing that happen. They'll continue to, you know, come up with creative ideas to try to help people with down payment assistance or whatever it is I'd imagine that continues to be popular too.
Brent: Do we see a shift in market leadership this first quarter?
Matthew: We did see a shift in leadership the first thing Is the big winners have actually been gold and oil so gold's up 12 percent oils up 17% Brent, you hit it about five minutes ago about kind of the geopolitical, geopolitical turmoil we're seeing, you know, on Israel even Russia, Ukraine is kind of still going on.
Matthew: You know, that's driving the price of oil up. Also seasonality factor coming into the summer. Oil usually goes up in the summer. People are driving more. But the big shocker is gold doing well and there's a lot that doesn't make sense in this market, right? We have gold doing well. We have oil doing well.
Matthew: We have stocks doing well. We have bonds paying 5%. Like it's a very weird market. It doesn't all add up. Typically gold does well when I don't want to say financial crisis, but when things are crisis level, right? People want stable. Yeah. Unstable. And then same with bonds. People typically want bonds when things are unstable.
Matthew: And then crude oil, that's like an inflationary asset, right? It goes up when, you know, times are good and people are consuming and same with the stock market. So I don't know, it's a, you know, it's a mix out there,
Joshua: but I feel like there, there is a lot of people out there that feel that we're, we are in a lot of turmoil leading to this increase with gold, you know, although it's maybe not here yet, we've kind of been in this holding pattern for a little while, it seems like.
Joshua: But with the geopolitical events with the expectation for a lot of people out there that we're going to go into some sort of recession or the economy is going to fall. It's kind of leading to this demand for safer assets.
Matthew: Yeah. Almost too early. Yeah. I think you're right there. People are trying to predict the crisis, like time the crisis before it actually happens.
Matthew: Yes. I have a theory on the economy I want to touch on real quick. So do you guys know what the largest generation is? It's, it's our, it's our generation that we passed baby boomers. So it's basically, you know, from 45 to call it 30 years old.
Joshua: Like millennial.
Matthew: Yeah, I quote the Millennials if you want But the second largest is baby boomers Baby boomers, they hold all the all the assets.
Matthew: They have all the money. They have all the money. So baby boomers hold all the money and What we've already talked about savings accounts. We've talked about t bills. They're paying 5 percent right? So for a safe investment right now per million dollars a baby boomer could generate 50, 000 of income On top of their 50, 000 of social security on top of their pension, if they have it.
Matthew: So, you know, if they have a million dollars, they have a pension, they have a social security where they add 150, 000 of income. Plus they most likely have a mortgage sub 4 percent or it's paid off. They're doing well. They're doing really well. And then their kids are the millennials and they're 45 to 30.
Matthew: What happens at 45 to 30 is that's max family formation time. And it's also where you start getting into your highest earning years. So we have the baby boomers who are making all this interest on their money on, then they have their fixed income. And then we have the millennials out there just consuming goods left and right, running to buy houses.
Matthew: You know, making more money than ever and the millennials like to pay for services and they like to pay for services and we have the strong economy and it's just creating this like inflation, tailwind, strong economic growth. And I'm not really sure how it stops. Job loss, job loss, or, you know I guess when the baby boomers slow down.
Joshua: Yeah.
Matthew: Cause I mean, they're out there traveling. It was, what's that cruise line that said they were like booked up for the next year. It's like, I mean,
Joshua: do you remember when they said cruises are going away? Yeah.
Matthew: Another book for a
Joshua: year solid.
Brent: So who are the tech losers though? At this first quarter,
Matthew: that's a big story.
Matthew: So Apple Apple's a stock that everybody has loved. It was one of the best performing stocks of the 2010s People made a ton of money on Apple But unfortunately, it's gotten to a point where it's a little too expensive and it's not growing anymore It's very hard for Apple to grow and move the needle Everybody has an iPhone.
Joshua: I've just been so big for so long now,
Matthew: right? So it doesn't make it a bad stock or a bad investment It's just not gonna go up like it did
Brent: can they grow though if if people are just turning over their products You get every two years you get a new phone. Can you grow as a company that way?
Matthew: Yes slowly Yeah, it's just not gonna be as yours.
Joshua: You're Johnson and Johnson or Pfizer But being that big, they're falling into the new problems, right? Lawsuit in Europe, they're, you know, monopoly questioning all of this stuff is because they've been so big for so long that they're experiencing all of these new issues, which also is affecting the stock price.
Matthew: Yeah. So the stock's down what is it like 12 percent this year? Yep. I had it down somewhere. So essentially though, that doesn't make it a bad investment. It just means you're probably investing more in Johnson and Johnson or Pfizer. If you're investing in Apple today, not the Apple of the 2010s where they're selling a bunch of iPhones and the stock's going, growing like crazy, right?
Matthew: Your expectation needs to be adjusted. Yes. A hundred percent. And then on the flip side, we have Tesla, which is a completely different story. Tesla is down over 40 percent this year. And they're running into a host of issues. But at the end of the day, what Tesla is is a car manufacturer. Mm-Hmm. . And I imagine Tesla's gonna be fine.
Matthew: I would be betting on businesses that Elon Musk is running and he's still the CEO of Tesla. That said, they sold a lot of cars over the last two years. I mean, you know, drive on a California freeway.
Brent: Yeah. It sounds like they're making a bunch of internal changes right now anyway.
Matthew: Yeah, they're laying a lot of people off.
Matthew: They're, you know, they're making changes. I would imagine the story with Tesla starts up again here in another year. Year and a half when people really start talking about robotics,
Joshua: but also like they cemented themselves as the EV leader and you're, it's like becoming more and more clear as you're seeing Apple, you know, exit the car manufacturing market.
Joshua: You're seeing. Divisions of these big automakers basically give up on their EV products because Tesla has such a stronghold. So as a car manufacturer, though, those are like good signals, right? But maybe if you're looking at it as like a growth tech company. Maybe it's not.
Matthew: But the other way to look at it is what they're seeing is Tesla and Musk in that company. They think they're a lot closer to full self driving today. Then they were a year ago, which seems to be the reason why they're not going to make a cheap car. They think people aren't going to be driving cars like that anymore.
Matthew: So it's kind of like you got the stocks going to go down in the interim because earnings are going to be really bad.
Brent: So what do they think people are going to be driving?
Matthew: Autonomous vehicles. Spaceships. Yeah. Cars that basically drive yourself.
Brent: But let's talk about the predictions for Q2 of 2024. What are your thoughts on, you know, , when we look at historical data again, in presidential election years, most of the returns have historically , happened in the back half of the year, quarter three, quarter four, or in quarter two, or two is generally a little bit more of a quiet .
Brent: Where do you think this quarter goes?
Joshua: I think I'll take it first. And, and just one thing that, you know, there's a lot of things that are kind of uncertain, but one thing that stood out to me about this first quarter as well is that the VIX, which is the measurement of risk in the markets is well below its average.
Joshua: So I think not only in quarter two, but going forward, I do expect some more volatility. Just to kind of regress to that mean of there being a little bit more risk in this market than we've seen over the last, you know, six months. So I think it's just more of a comment of like, be prepared, right? Don't lose sight of, you know, the future because you know, there could even be a little bit more risky time ahead.
Matthew: Yeah, I agree. What I will point to is. It's all in the corporations now. It's all in corporate America. We've seen the economic data. We know it's strong when inflation is coming in. Like it has been, that means we have a strong economy. It's not a goods based inflation like we had during COVID where there's supply chain issues.
Matthew: It's a strong economy based inflation because people are making more money. So it's on the corporations now to come out and deliver good earnings. So their stock prices look cheap. If they deliver good earnings, stocks are going to go higher from here. If their earnings are poor, stocks are going to go lower and be more volatile.
Matthew: Like Josh said, it's, it's pretty simple here for the next few months until the election.
Brent: Are there certain sectors that we think could be strong in Q2 or Q3?
Matthew: I like oil. I think oil is going to play the seasonality lines up. There's, you know, a lot of, you know, geopolitical events going on right now.
Joshua: Kind of like the leaders, gold, oil, Bitcoin. I'm trendy, man.
Matthew: I'm a trendy guy. Oil stocks like on a multiple basis are pretty cheap.
Matthew: And here's one thing I'll say about my, my own personal portfolio is it's very heavy tech weighted. The one area of the market that has a negative correlation with tech is actually oil stocks. And when you're building a portfolio, you want assets that are negatively correlated. It means they don't move together.
Matthew: So you could create a smoother ride. So for me personally, I like oil socks. I think they can make sense for some clients too. It's pretty
Brent: hard to not be tech weighted or more heavy weighted in tech. Yeah. The tech drives the U S economy.
Joshua: Has been for a while too and AI is not going away Oh, it's really helped 2023 and the start to this year in my opinion and you you know, you can't fall in love with the current leaders And I think that probably leads that you're us to your next question of like you need to be diversified so even if you have strayed away from some of that diversification and kind of leaned on the some of these other sectors a little bit more now's a good time to get back to that diversification foundation.
Matthew: The AI bull market's just getting started. None of the private AI companies that like you hear about like perplexity, chat, GPT, Grok, none of them have even came public yet. We are just getting started. Really the only tip of the iceberg. Yeah. True AI plays out there right now is like Nvidia for the chips.
Matthew: And then, you know, Mike Ron Dell, who are really just making like components. We don't even have any of the good AI software companies public yet.
Joshua: Google.
Matthew: Oh yeah. There's Google and Microsoft and you know, meta has, has, there's a lot of people are talking about, but all the startups are still in startup land.
Matthew: They'll probably come public within the next two to three years. Data bricks is another one that has a big valuation. We're just getting started on this AI bull market
Joshua: what I hear you say those it's good for investors There's you know, there's more
Brent: opportunity out there. When do people know to get into those the stocks?
Brent: Yeah
Matthew: The so the publicly traded ones. Well, there's two to it depends on your personality. So personality one is Just buy it You know, you don't care about the price you buy it because you understand the theme and you know You understand you're gonna be in it for you know, five to seven years. Great personality two is you buy on a pullback.
Matthew: It just depends on your personality. If you don't know your investing personality, hire an advisor, they'll help you out.
Brent: Yeah, I think that's critical because you know, most people's money has a place in a purpose and it's not just for everybody wants to make money, but you want to make money the right way and you want to make money to achieve your objectives and just randomly, you know, putting five, 10, into one stock.
Brent: What does that really achieve? But if you're looking at it from an overall plan and some allocation balances, you can make money off of a stock. If it has a good purpose in your portfolio.
Matthew: That's a good point. And you know, I was meeting with a client yesterday and one of the first things he said to me was, I guess he bought Nvidia in his self directed IRA.
Matthew: You know, so obviously he's pretty excited. He's feeling good about himself, but he comes into the office and says, Oh, did you see a video is down 10 percent on Friday. And then he kind of goes on like a mini rant and I told Josh about it and Josh goes, dude, why is that client worried about what NVIDIA is doing?
Matthew: He should be out enjoying his retirement.
Brent: Yeah. And I think that's where a lot of people get caught up when they're trying to self manager, make decisions about certain stocks or they're overanalyzing overwatching. It just takes the joy out of what you should be doing. You know, we're never going to be able to control the market.
Brent: I have a theory, like I never, ever check my portfolio when the market is down. Cause why would you want to do that? You're just subjecting yourself to some negativity and you probably make some bad decisions. I
Matthew: didn't
Brent: know you did that. Yeah, I only look at my portfolio. If the market's up,
Matthew: see, I like the pain.
Matthew: I just like to look at all the money I've lost. I can't even tell you guys how much money I lost last week on, I think it was Thursday or Friday. I won't say the exact reason why, but geez, yeah. Markets
Brent: has had us a couple of few, few bad days.
Joshua: No, I actually like, I like looking at it when it's down.
Joshua: Cause it motivates me to like, Go seek more knowledge and research and I'm like kind of even more engaged when it's good And then when it's going up
Brent: when the market's down a lot. I always just add shares though I mean that is a motivating factor for me to just start buying you've helped me become a
Matthew: You've helped me become a better investor, but by teaching me that, cause I, you guys have seen me on this podcast.
Matthew: I get up and down a lot. You're trendy, man.
Brent: All right. So any closing thoughts on Q1, Q2,
Joshua: keep planning.
Matthew: Yeah. I have a few. You just want me to roll through them. So like Josh said, yeah, I have a plan. That's important. But you know, the next thing is realize these higher rates are going to be here for longer Though interest rates of the 2010s are not coming back.
Matthew: We're in a different economic environment now But that doesn't mean we can't be successful can't have successful investments for most of the 1990s we had Inflation like we have today and high interest rates around five six percent The economy was fine. It was booming. We had the PC revolution. There's no reason why we're, we can't have another big AI revolution on top of, you know, everybody making a lot of money in the stock and bond market.
Matthew: It's a really, really good time to invest. And it's a great time if you don't understand this to start working with an advisor who could help you out.
Brent: Great point. All right, let's get to recommends. Matt, what do you have for us?
Matthew: All right. Geez. Where do I start today? I'll tell you. So I went to Costco Saturday.
Matthew: I have two stories on Costco. Story number one is I had bad kids at Costco. First time in my life, my kids had a temper tantrum in the store. How old are they? Four and one. That's normal. Yeah. Well, not for me. And I didn't know what to do anyway. So I apologize to anybody who's at Glendora Costco on a Saturday and my kids were crying in the freezer aisle.
Matthew: It was annoying to me too. Don't worry. Number two. So on the Costco trip, I found a pan, a carbon steel pan that you put on a barbecue. It's an OXO. Carbon steel pan, like a stir fire pan for vegetables. Yeah. You can use it that way. And yes, that's how I used it. So I got it. You put it on the barbecue, you can pull the handle off.
Matthew: You could clip it on and clip it off. So the handle doesn't get hot. Yeah. You close the barbecue. You let like your vegetables cook or, and the picture they showed them cooking like shrimp on it. I bought it, it was 1999. Used it sundae to make some broccoli and to make some roasted peppers. Really, really good.
Matthew: I like it. Good product.
Joshua: I have to go to Costco,
Matthew: maybe I'll check it out. And I felt like 1999, I don't know. To me that feels cheap for a pan. And it's OXO too is a good quality brand.
Joshua: Yeah, that's not bad. The thing about Costco though, is everything's at least $10. So like you go there and you just get a few things and you know you're gonna spend a hundred dollars no matter what.
Joshua: Oh, easy .
Brent: Yeah, for sure. So you guys know my rule that's the only place I'll give in an instacart is Costco because I'm not dealing with that I'm not dealing with the crowd. I'm not going there to buy a bunch of stuff. I don't need here's a tip I just instacart what I need and I call it a day. That is that is the one luxury move I will make I will not instacart anything else.
Brent: So I ain't don't I ain't paying for I have a tip for you Friday night
Joshua: Okay, tell your wife that you're gonna take her to a member exclusive club Go hit Costco on a Friday night and it's dead. Really? Yeah. It's the best time to go to Costco. Like in the later, the later you can wait, like closer to the
Brent: closing, the less people are there.
Brent: I'll probably even spend more money doing that than just Instacart. Yeah,
Joshua: you would. But then you can go hit the Costco food court too. There you go.
Brent: Next time.
Matthew: Next time I see your kids, I'm going to tell them about Costco. And how you want to personally take them to Costco. Oh man, they'd
Brent: love it. I don't think either of them have been to a Costco since pre COVID.
Brent: So yeah, I love it.
Joshua: Samples food core.
Matthew: Oh yeah. And we were also parked by the pulled pork station and my kids were just like going ham on pulled pork and the free samples, the free samples, just
Joshua: speaking of food, my recommends is I hadn't been to Me and my wife, you know, like to go to LA to go try new food and stuff.
Joshua: My recommends though is we like the area, the arch district down in LA, a lot of good restaurants. But my recommends is to get out and go explore again. Cause it seems like. You know, LA is getting a lot of good new restaurants again. And we tried the sushi hand roll spot that was in the arch district down there and really, really good.
Joshua: Had a lot of fun. It was good. I hadn't been down there in a while.
Matthew: I have a comment. Yeah. I went to LA this weekend too, but just for my son's doctor's appointment, I haven't been in a while. Economy's booming.
Joshua: It was packed. Yeah. There's people
Matthew: everywhere, people everywhere, but also like we saw a lot of construction.
Matthew: A lot of old buildings getting torn down and new buildings popping up a lot of new businesses like you're saying, like that's not a sign of a slow or economy that's about to fall off a cliff. People.
Joshua: And it even seemed like hadn't been down there in a while. So like there was also not only just like re new restaurants and new buildings with restaurants in em, so they're expanding that area.
Joshua: But there was also like new parking and like, oh, finally like other like stuff that signaled that that area is like coming back to life. And it was nice and the food was great.
Matthew: Well, I'm glad they got parking 'cause it's always miserable to park in the arts district.
Joshua: Yeah. So they have like a couple, there's like a new lot.
Joshua: I think there's even like a structure. That's cool. So.
Brent: I love hand rules and I would love to try that place.
Joshua: We'll have to go. Well, I thought of you when we went to, it's excellent. We'll have to go try it out.
Brent: I really liked it. My recommends is to go on Instagram and follow us at Evermont wealth.
Brent: We're putting out new content starting in the next couple of weeks. And if you do go to Evermont wealth and follow us and you call into the office, we're going to be giving away a few new era, Evermont hats. We have a big release of we ordered some new era hats. We do have a limited supply to start.
Brent: But if you do follow us and you're one of the first ones to call us, let us know you listen to the show. You're following us now on Instagram and Facebook. Make sure you're following us on Facebook. So we're going to be releasing. Some of that new content and we'll send you an Evermont hat. So we've got some new merch.
Brent: We have new merch. We ordered our merch for our golf tournament. We're going to be playing in two golf tournaments. We've got some Evermont polos and some things that we needed. So we're, we're diving in and finally getting into the merch game.
Joshua: Oh, I'm so excited with our new logo on them. Oh, it's been a
Brent: long time
Joshua: waiting,
Brent: but
Joshua: I'm, I'm,
Matthew: I'm ready.
Brent: I'm, I'm
Matthew: ready for it. I'd say a big chunk of our client base are avid golfers, you know, and us mentioning the polos mean you're going to start getting a lot of ass for, you know, some Evermont golf polos. Yeah, we're going to, we're going to figure
Brent: out how we're going to solve the, the merch issue. Cause I know there's going to be demand for merge, but we'll work on it.
Brent: We'll figure that out. We're kind of already starting to get our feet wet with just getting some stuff and then we'll go from there.
Matthew: That's cool. On the Instagram, why don't we tell people what we're doing too? So we're doing short form videos, right? So it's not going to be like pictures we're posting.
Matthew: Like we're actually doing educational videos. We did the first shoot this week 10 videos going up and you'll see those going out through the, through the month of May. So we're really excited about it.
Joshua: Yeah. We'll share some pictures of our first day. Everyone looking real nervous to be on video. Yeah.
Joshua: It's hard.
Brent: It was different than here. Cause like here we don't have a camera in our face. We just have the mics, but you know, you put a camera in your face and the lights are on. Like that's a, that's a something I wasn't used to.
Matthew: Yeah. Yeah.
Brent: I felt like I was a primetime news anchor.
Joshua: And you looked like one.
Joshua: So just to summarize, following us on Instagram, the first five follows that we get that call in are going to get a free new Evermont hat.
Brent: Yeah. And they have to call in let's just say that they could DM us, right? Oh, that's a good idea. Yeah. So you don't have to bother calling us. Just DM us. We'll, we'll we'll, we'll send it out.
Brent: Hats the first five. That sounds good. Any closing thoughts on today?
Matthew: Good show. Episode 100. We made, we made it guys to a hundred more and to a million downloads hopefully soon. So let's keep it going.
Brent: Well, as advisors, our passion lies in helping others. We help people prepare for retirement, transition to retirement and help them truly enjoy what retirement is supposed to be at and be like, if you're interested in arranging a meeting with any of us, please reach out to us at evermont.
Brent: com to book a complimentary consultation, or you can call us. And if you would like an ebook, please go directly to our website and it has further insights and guidance on retirement planning. And for access to this episode, show notes or more, head over to retirementplanplaybook. com. Thank you for listening into the Retirement Plan Playbook.
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