My philosopher the mark is and in general is I try not to overly time
it. I tend to believe in more of a core satellite approach to investising.
So for those folks that don't understand the lego, essentially that means that
you pick your core holdings. So you are listening to Carrie Lutz's Financial Survival
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Financial Survival Network. I'm your host, Carrie Letz. Well, we got
with us today, Derek Mazaria. Derek, you're a dedicated certified financial advisor
and author and well, seems like a turning point in your life was two
thousand and eight the financial crisis. Tell us what happened then? What did
that? How did that change you? Sure? Well, so back in
two thousand and I was actually my first job out of college is working with
with AFLAC selling them something metal insurance and a lot of that is done through
the employer. So in two thousand and eight, I was actually still struggling,
not doing well, and I lost about a third of my book of
clients because most of them got laid off. So that really shaped a lot
of what I looked about today. And in two thousand and early two thousand
and nine I actually decided to jump in and become a financial advisor because someone
I was na working with thought we might be a good fit, and I
started working as a financial advisor basically ever since then. All right, so
what's your philosophy of the markets. My philosopher the markets and in general is
I tried not to overly time it. I tend to believe it more of
a core satellite approach to investising. So for those folks that don't understand the
lego, essentially that means that you pick your core holdings, so though for
most people it's going to be something like the SAB five hundred, and then
you lend kind of a mix of other asset class around it, things like
small cap and you know, virging markets and overseas accounts, and then you
make small tweaks and shifts based on essentially what your financial goals are, so
you can make some small tweaks around the edges. You know, I'm big
on analogy to carry, So how of the analogy I typically use is set
the house up, design it, then maybe rearrange the furniture and change the
drapes, but don't really you know, redo the kitchen, okay, And
how's that working for your clients? You know, I think it works out
really well. I think one of the things that it really helps solve is
a behavioral issue that we run into a lot with with markets, because in
the short term they can be incredibly violatile, and I mean this year is
probably a great example of that. You know, the beginning of the year
ripped, and then since July we really had a really big come down from
then, and we had an over ten percent drop from July on and then
we were one of the best Novembers we've ever had. So, you know,
people are overly emotional with their investing. There was multiple points where they
would have gotten out of the market and not stated all right, So looking
ahead here, we've had quite a rally atiot theories as to why I think
a couple leagues I think the market in some level what was a little over
sold. I think one of the things we look at when you look at
what happened the beginning of the year, at least the first half, was
a lot of that was really driven by seven companies, so a lot of
it allowed the other companies to catch up, you know. I think the
good news we've seen the inflation numbers start to trickle down from the high nine
point one percent, so that's positively impacting the market returns there. Earnings were
above average. I don't think they were excellent. I don't think there are
anything to write home about, but coming from a few quarters ago when we
had negative earnings, I feel like we're on at least a better path than
we were. You know, a lot of companies in twenty twenty two were
we're trimming the fat, so to speak, so they're doing some layoffs.
A lot of them have locked in debt that's fairly low interest rates. They
lodged in a bulk of money back in twenty twenty twenty one, so I
think for those reasons, we saw a bunch of the pullback. Plus the
treasury rates started to drop a little bit as well, so the idea that
hey, there's money elsewhere that's cheaper or that's lower risk, that is going
to get a good return, it's starting to drop too. So I think
when you look at all those factors, that's probably why the market started to
rebalance a rally a little bit in November. All right, So you think
it can keep going, Well, that's that's the magic question, Kerry.
So I think in general, yeah, well, i'd imagine it's probably gonna
meander for a bit. If I had a guess, I think the rally
was pretty sharp and quick, so that doesn't necessarily mean it's going to keep
going up. And you know, I think when you look at the economy
as a whole, you could probably point to a few things where there are
some risk points. You know, if unemployment starts to creep up at a
faster rate than expected, that can impact the market. If the Fed says,
you know, unequivocally, we're actually going to keep rates higher than people
think, because I think the market right now is pricing in a March or
April drop in rates, So we'll see if that happens. If that goes
sideways, then we'll never know, you know. So those those a few
of the things I look out for I think the other kind of big thing
to look out for is the amount of debt we have as a country.
That's thing that probably not enough people are talking about. So looking at how
is that going to impact spending in the future, that's definitely something to keep
an eye on for sure. All Right, So, yeah, the debt
is definitely out of control. Spending is out of control. Doesn't appear that
anybody wants to do anything about it, does it. No, I'd agree
with that, and I think that you can you can talk both sides about
that one, because I think if they're really serious about it, they really
look at what they're over spending money out and in different ways to the cut
costs. I mean, that's that's one of my jobs in general with individual
folks is how do you how do you look at what's what's working, what's
not working, and how do you make it changes. It doesn't seem like
they're really interested in making any changes on you know, either side, especially
with the mixed Congress. I mean, good luck at actually anything done.
So that's gonna be other challenge in terms of getting a budget in order.
In general, leave this for the short term, Yeah, so eventually something's
got to give, right, I would say, so. I mean,
one of the things I've been talking to a lot with clients in terms of
preparing them is the Tax Cuts of Jobs Act is going to expire in twenty
twenty six. So that means a number of people are going to have increased
taxes come twenty twenty six. So I'd imagine if the debt's still really high
and the spending is still high and I haven't done much with it, one
of the only only levers they can pull is getting more revenue in the door
daily. Way that the government really does that is taxes. So if they
say, look, we're just going to let this sunset and not you know,
reset the tax rates to wherever they are today and let that increase happen,
then that's one way it can impact potentially your listeners in terms of,
you know, maybe reducing their ability to spend because they are paying more taxes.
All right, Well, maybe maybe something will happen and we'll all be
surprised, Right, that's a possibility for sure. All Right, Hey,
so looking forward to the new year, with all this uncertainty, where do
you put your money? Well, honestly, Kerry, for me, that
that depends on where you are. It's really hard to say specifically. You
know, I still would believe in the market. If you're investing long term,
short term, you probably want to be in fixed investments, especially bonds
right now with this market environment. When the Fed does dromp interest rates,
those are well positioned to do our perform well because typically the increase a rate
dropping environment, you'll see positive bond returns in that cycle. Okay, so
bonds are back in fashion. What about higher yielding stocks, dividend stocks well,
so those tend to do poorly when there's higher interest rate bonds available,
So i'd watch off that. The thing that you would really want to focus
on, especially in a shakier marketing cycle like this, is now necessarily dividend
painting stocks for quality companies. So companies that have high free cash flow,
have cash on the books. Most of them often do pay dividends, but
they're not you know, quote unquote the high dividend paying stocks, So be
looking for some form of income with a little bit more of a kind of
risk buffer. Quality stocks are probably the way to go in that regard because
they tend to do well in shape here markets, and they still offer that
income potential for you, all right, and steady away from small cabs,
you know, not necessarily, because the one challenge you've seen with small caps,
especially in the past year and a half, is they tend to do
very poorly in higher interest rate environments because they tend to take on more debt
than a large cap stock would, and they take on debt that's not as
favorable. So they really tend to struggle with higher interest rates. So if
we see a rate drop coming in the future, that could be an opportunity
for folks to invest in small caps. You know, we've actually his steed.
From a valuation standpoint, small caps right now are actually at a pretty
i want to say historically lobal value, but they're relatively low value from where
they've been the last ten to fifteen years. All right, all right,
So anything else, any other pearls of wisdom you have for as Derek that
we can take to the bank here, you know, I think the other
thing I really just said it is the end of the We're getting close.
I would just really pay attention to some tax moves you can make, so
you know, with the volativity market, I would look at things like potentially
tax lost harvesting. You can look at, you know, making gifts to
folks, putting those last five Tory nine contributions in before the end of the
year, because those things, as much as we love the market investing,
those can really be something that we have control over and provide a positive ROI
for us of the long goal. So I'm just generally doing some tax plannings.
I think that I see is offer and overlook with a lot of folks.
All right, I think we got an idea of where you stand there.
People want to find out more about you, connect with you on the
web. How do you do that? Sure? So, as you mentioned,
I do have a book out that's called just Retire Already, So you
can go to just Retire Already dot com to either check the book out or
if you did want to work with me, or check me out even more.
I do have a contact page there, so feel free to reach out.
I'm also pretty active on LinkedIn and just Derek Mazarella on linked In there,
and that's probably the best two avenues to check me out. All right,
Hey, well, link to Derek sites on the show notes of this
interview on Financial Survival Network dot com. While you're there. Sign up for
our free newsletter. If you got any questions for Derek or myself, shoot
me an email kl atcarriluts dot com. Appreciate you coming on, Derek.
We'll talk to you again soon. Thanks, Kerry, appreciate it. I'm
great today. You thanks for listening to Carrie Lutz's Financial Survival Network your solution
to today's trying times. For the latest, go to Financial Survivalnetwork dot com.
Financial Survival Network now more than ever,