Speaker 1: The recession hasn't happened, and the fear that I have
is that we could still have a recession around the corner.
You know, we had an inverted yield curve for a
couple of years. It's uninverted and when you look at
the history of recessions, I don't want the numbers in
front of me, but many of the recessions happened after
the yield curve uninverted.
Speaker 2: And my fear is that a lot of.
Speaker 1: People think that the stock market is a safe haven,
and a lot of people might think that we're not
going into recession, and that could be a big mistake
because we're not recession proof and it still could be
around the corner.
Speaker 3: You're listening to Carrie Letz's Financial Survival Network, where you
get valuable information you just can't find anywhere else to
thrive in today's trying times. You need the Financial Survival
Network now more than ever. Go to Financial Survivalnetwork dot
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Speaker 4: Ever, and welcome you are listening to and watching the
Financial Survival Network. I'm your host, Carrie Lutz. As we
get into the last week of October, of twenty twenty four.
Speaker 2: What is going on? We all know.
Speaker 4: Elections about to take place, for better or for worse.
There's always one sure loser in every election since I've
been alive, and that is the American public. So I
don't see anything that's going to make this any different
that all the others. The debt keeps piling up, the
economic challenges somehow, you know, Anthony Sacara's with us. Anthony,
you know, I see likes bad things happening to the country.
Speaker 2: We don't need to get into them.
Speaker 4: But yet like these big companies, I think they said
ten large companies are born every decade in America something
like that. Did you see that statistic? So we have
Tesla and Nvidia, we have all these large companies that
really literally came out of nowhere. So in spite of
things being bad, these companies keep cropping up here. What's
your take on it?
Speaker 1: Yeah, I did see that, and I've read other studies.
And by the way, Kerry, thank you for having me back.
Happy Halloween to all of you listening Halloweens right around
the corner. You know, the thing that is interesting about
this is Apple is a great example of a company
that a lot of times people will hang their hat
on We recently had a client that we took on
that invested ten thousand dollars of Apple I want to
say it was like ninety two or something like that,
and he wound up cashing out at one point eight
million dollars when we took it on.
Speaker 2: This was a couple of years ago. And that's the
way that the mouth work.
Speaker 1: And so what I find happening is I find that
a lot of people will hang their hat on a
particular company, and instead of writing a diversified portfolio of
stock to success, they'll hang it on one company. Now,
we have to remember that for every Apple that's out there,
there were probably ten thousand one of the apples that
you know, failed at the same time that Apple succeeded.
And what scares me, and I see this as starting
to be a trend, is that a lot of people
will pick a company Apple back in the day and
Vidia now for their chips and the AI craze that's
going on, and almost looking for that one company to
really ride them all the way to success. And I
think that's a very dangerous approach. You know, if you
take a look at you know, companies in general, they
all cycle. They're companies that are on the perch today
may not have existed twenty five and thirty years ago.
Speaker 2: Think Google and Amazon right.
Speaker 1: And companies that are out of business today were the
top companies seventy five years ago. Think Woolworth right, think Sears,
you know, and so on. And if you look at
the Dow thirty, for example, you know, the thirty biggest
companies in the world. The reality is, if you go
back eighty years and you take a look at the
companies that were in the Dalt already thirty biggest companies
eighty years ago, and you compare that to today, most
of your listeners probably would be surprised to find out
that there are exactly zero companies in there today that
were in there eighty years ago. The last holdout was
GE and GE gut booted.
Speaker 2: From the Dow what three or four years ago. Yeah,
you have.
Speaker 1: And so you know, sometimes people will say, well, I'll
just invest in those companies and I'll just ride that
for the rest of my life. No, if you've done
that eighty years ago, you would be out of luck today.
And so none of the thirty top companies eighty years
ago are in the top thirty today, but it gets worse.
And that is that other than ge, the other twenty
nine companies that were the top companies in the world
eighty years ago are all out of business. They weren't
able to change and adapt, and we are in such
a changing and adapting the top companies today are not
going to be top companies in the future. And you
need to have a diversified portfolio of a lot of
good companies, not one. But I do see a trend
of people taking a lot of money and putting it in
the one stock that they hope is going to win Tesla,
Netflix and Video, and that's a dangerous trend to do. Yes,
you should have some in your portfolio, but don't base
your entire future on one stock. And I see it
people a lot of people wanted to.
Speaker 4: Do that interesting interesting analysis there, and yeah, like the
companies have their twenty thirty year run at things right,
and then maybe some of them go forty to fifty
like gm Ford, and then they then they fall.
Speaker 2: Right exactly right.
Speaker 1: You know, the time the faster chimes change, the more
companies are going to fall. I think Blockbuster right that
you know, Netflix came along and realized that why do
we have to go to a store, Why do we
have to rent a tape?
Speaker 2: Why do we only have seven days?
Speaker 1: And when you look at Blockbuster and you've studied the
history of Blockbuster, what you realize is that a part
of their business plan and a part of their revenue,
a part of what made them good and profitable, was
the fact that they'd charge late fees on.
Speaker 2: The people that didn't bring back these videos in time.
Speaker 1: Now, call me crazy, but setting up a business and
running a business to where your profitability is going to
depend on penalizing the customers for not doing that, that's
a recipe for failure. And then when Netflix came out
and said, no, we're going to produce these things that
we're going to deliver it to you right in your
home and you don't have to go to Blockbuster. Blockbuster
could have been Netflix if they had pivoted, but they didn't.
Speaker 2: Same thing with Kodak. Kodak could have.
Speaker 1: Been in the digital space when it comes to film,
but they didn't. So at the faster things change, the
companies are going to drop off. And with AI and
with the things that are going on today, you're one
hundred percent.
Speaker 2: Right, you have to really be careful.
Speaker 1: Companies that are on top today may not be anywhere
to be seen in a decade.
Speaker 2: You know.
Speaker 4: Interesting you mentioned Blockbuster because that was founded by Wayne
Uzenga and and he is the only person to ever
found three s and P five hundred companies waste management AutoNation.
Speaker 2: So Blockbuster's gone. He was long out of it.
Speaker 4: He saw the handwriting on the wall, and then we
had AutoNation. That's still going pretty good in waste management.
The last I heard, people were still producing garbage at
record rates, right I heard, and still recycling. You know,
it's it's kind of crazy when you think about it.
So let's talk about Federal Reserve. Regardless who wins, we
still got to deal with the Fed.
Speaker 2: Here, right, yeah, one hundred percent.
Speaker 1: You know, Federal Reserve has two mandates, low inflation and
low unemployment. They've had low unemployment for a few years now.
Unemployment sticked up to about four point three percent until
a few months ago was under four percent. Souls right
where it needs to be as far as inflation is concerned.
Their target is two percent in that level now with
the mid twos. Depending on whether you look at the CPI,
the core CPI or the PCE.
Speaker 2: You know, it's all in the.
Speaker 1: Mid twos and they have to make changes before they
get to their target level because they don't want to
be behind a ball like they were when inflation started
going through the roof. So they lowered the fifty basis
points as their last cut. It's widely predicted that in
the next FED meeting or the FED meeting after that,
they're going to go another twenty five or fifty bits,
and then in twenty twenty five maybe another one percent
or so.
Speaker 2: Something like that.
Speaker 1: So it's been predicted that they'll do two hundred BIPs
over the court for the next years.
Speaker 2: You miss them. You missed one thing. Though.
Speaker 4: The Fed actually has three functions. Keep prices stable, keep
employment levels stable, and keep the stock market from going down.
Speaker 1: Yeah, yeah, that's that's what that's what they say, right,
That's what the President says that that's a third function.
But it's an unwritten function that really is not a
part of anything that they're supposed to be considering, and
they'll tell you that they're not.
Speaker 2: But when it comes so the election.
Speaker 1: Cycles, there is this debate about you know, they don't
want the market to fall because of the market falls,
then all of a sudden recency bias comes into play.
Speaker 2: Recncy biases the simple.
Speaker 1: Fact that we tend to act on what happened recently,
and if the market fell recently by before bad time,
making a good effect the election.
Speaker 2: So yo.
Speaker 1: So they do have that in mind, they're not supposed
to have that in mind. You can't keep it out.
It's all intertwined, and lowering by fifty bits is certainly
going to help the stock market. That's why the market's
hit some record highs other than the you know, a
few bumpy days that we've had. But you're right, it's
really not a mandate of theirs, but it's kind of
implied into what they do. But it has been predicted
and hand it is forecasted. They're going to lower by
two hundred myths over the course of the NXT couple
of years. That could be good for the stock market.
Is it going to keep us out of a recession?
That's a big question that consumers are asking.
Speaker 2: You know. The reality is is, you know, we don't know.
Speaker 1: They've been talking about soft landing, they've been talking about
hard landing, they've been talking about no landing. It's this
the longest tide period that I remember where we've been
talking about a recession and the recession hasn't happened, And
the fear that I have is that we could still
have a recession around the corner. You know, we had
an inverted yield curve for a couple of years. It's
uninverted and when you look at the history of recessions,
I don't want the numbers in front of me, but
many of the recessions happened after the yield curve uninverted.
Speaker 2: And my fear is that a lot of people think.
Speaker 1: That the stock market is a safe haven, and a
lot of people might think that we're not going into recession,
and that could be a big mistake because we're not
recession proof and it still could be around the corner.
You need to invest, so whether we have a recession
or not, you're going to be just fine. And I
find that a lot of people are investing in a
way to what if the stock market does bad, it
goes against them, It's going.
Speaker 2: To wreck their retirement, it's going to wreck their future.
Don't do that.
Speaker 1: Invest in a way that's right for you for your
phase of life. So you have the ability to win
no matter what. If you're invested right, that's what should happen.
It shouldn't matter who wins the president, and it shouldn't
matter whether we have a recession as to whether you
to be able to accomplish your goals or not.
Speaker 2: It shouldn't.
Speaker 4: But but if you're later in life and take a
big hit, that's going to make a big difference in
your life, isn't.
Speaker 1: It one hundred percent? Which is why you shouldn't be
in a position to take a big hit. And this
is something that I talk about on my radio show,
my podcast, and talk about on my book. You have
to be invested properly for the phase of life that
you're in. If you're invested in such a way to
where you can take a big hit, and if your
retirement is going to be invested, If your retirement is
going to be affected if you take a big hit,
then you are invested wrong. You need to be invested
in such a way to where you're going to be
able to retire when you want, or you're going to
be able to stay retired if you're already retired. I
don't want you invested in such a way to where
If the market does well, you can travel. If the
market does well, you don't have to get a part
time job. If the market does well, you can do
the things you want. I want you to be able
to travel and not have to get a second job
and not have to keep working in retire on schedule
regardless of what the market does, even if that means
you have to get your portfolio more conservative, so you
have to be invested properly for your phase of life.
Should not be in a position to where your retirement's
going to get wrecked if the market doesn't do what
it's supposed to do.
Speaker 4: So but over time, and now we've got hundreds Well,
in the US we've got the it goes back to
the eighteen eighties, the advent of the Dow Jones index.
But in Europe it goes even further. But since since
the advent of the Dow Jones, you know, a dollar
invested would re rep huge returns. We still have never
found a machine that creates wealth like the financial markets,
especially the stock market.
Speaker 1: Have we Well no, when you look at you know
the history of investments and what investment has done the
best over time.
Speaker 2: The stock market is certainly in that category.
Speaker 1: And you know, you look at the past one hundred years,
you know, the Dow Jones going back to late eighteen hundreds,
I know it's going to average somewhere between you know,
eight and ten percent a year. But the fact is
that there are long periods of time where the market,
including the Dow Jones, is flat, and then there's long
periods of time where the market does fifteen percent plus,
like we've had for the last dozen years. And it
depends on what generation or what decade is going to
be next. But the history of the market tells us
that there's bad decades followed by good decades followed by
bad de gades. Even if you go back to the
last twenty five years, we're coming up on twenty twenty five.
Let's go back to the turn of the century and
kind of see what's happened there. From two thousand to
twenty thirteen, we had the crash of one and a recovery.
We had the crash of eight at a recovery for
thirteen years. If you draw it out, it's a big
w there's no growth in the market.
Speaker 2: For thirteen years.
Speaker 1: And if you wanted to retire in two thousand and
you were planning on following the rule of four percent
and selling, you know, spending down your portfolio for the
next thirteen years, you would be really close to running
out of money because there was no growth in the
market over that thirteen year time period. Compare that to
the last thirteen years. The market's up fifteen sixteen percent a.
Speaker 2: Year on average. So when you average the two together, the.
Speaker 1: Reality is is that is that you wind up with
YO seven eight percent a year. You throw in some dividends,
you're going to be nine to ten percent a year.
But averages can be very misleading in the way of
the stock market. The first decade and a half was horrible,
no growth. The last decade and a half was great.
But it's misleading even though we can say it averages
eight or nine percent a year. I can tell you, Carrie, truthfully,
a good example of how how misleading averages can be
in real life. In my example, my wife and I
run about the average about ten miles a week. The true,
but the reality is that's not the whole story. The
way I get there is that she actually loves to
run it. She runs about twenty miles a week and
I don't run. So the reality, though, is don't we
average ten miles to good average? Though we have a
great average. But the reality is when you know the
rest of the story, it paints a different picture. And
it's the same thing with the market. If the market
does in the next fifteen years what it's done in
the last fifteen years, I don't care what you do.
If you're spending down your portfolio, if you're following the
rule of.
Speaker 2: Four percent, you're going to be fine.
Speaker 1: But if the market does in the next ten or
fifteen years what it did in the first thirteen years
of the century, and you're spending down your portfolio, you
could be out of money and you could be in trouble.
And that's what I don't want to happen to you.
So yes, if you're trying to accumulate, you have twenty
or thirty years ahead of you.
Speaker 2: Be in the market, be in mutual funds, rate strategy.
Speaker 1: Over time twenty thirty years, you'll average eighty nine percent.
There's never been a thirty year time period of the
market that it hasn't done that. But if you're in retirement,
you can't afford that. The next decade or decade and
a half. The market's going to be shopping and no
growth and be selling assets. At the same time, you
have to be focused on living off the interest and
dividends of your portfolio so that you can protect your principle.
And if that means less return, so be it. It's
accomplishing your goal.
Speaker 2: Well, it reminds me.
Speaker 4: I think John Maynard Kane said in the long run,
we're all dead.
Speaker 1: Right, that's exactly right. But some people are dead with
more stress than others. Yeah, running out of money if
you're if you're invested wrong in, you're selling shares, you're
following the rule of four percent and the market tanks,
and now you get to sell more shares and you
know you're in a race against time because you're cannibalizing
your principle. That thought, knowing that you have to die
before you run out of money, that thought can't actually kill.
Speaker 4: You, yeah, or make you wish you were dead anyway. Well, Anthony,
just tell us where do we find you? How do
you connect with people? How can we how can we
connect with you?
Speaker 1: Yeah, I think the safest way to go is you
can go to Anthony scar dot com.
Speaker 2: My businesses are there on the website.
Speaker 1: Providence Financialinc dot com or if you just search Providence Financial,
Woodland Hills, which California, which is where we are.
Speaker 2: We come up all over the place.
Speaker 1: And if you have any questions your listeners, any questions
about anything, recite more than happy to.
Speaker 2: You'll answer those questions as well to here.
Speaker 4: So all right, Well, the link to your site is
in the show notes of this interview on Financial Survival
Network dot com, so just go there and click it.
While you're there, please sign up for your free newsletter.
Got a question for Anthony myself? Kl at Carrie LUTs
dot com is the place to send the email. Always
appreciate you coming on, Anthony. We'll talk to you aga
in real soon.
Speaker 2: Thank you for having me, Kerry, appreciate being here.
Speaker 3: Thanks for listening to Carrie Letz'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