Transcription:

Episode 11 – Portfolio Review

00:10:17

Announcer: This is Blue Money. A finance podcast made for cops by cops. With us you know your money safe. Lieutenant Jim Donnelley of the Bensalem and police department and cohost Kevin McGarry of Valley Financial group come together to help protect and serve your financial needs. This is Blue Money. 

Jim Donnelley: I want to welcome everyone back to the Blue Money podcast. This your host, Jim Donnelley. I’m here at my co-host Kevin McGarry. 

Kevin McGarry: Jimmy D.

Jim Donnelley: And Kevin for this podcast we’re halfway through the year. I thought it would be a good time to do a portfolio reviews across the board. See where we’re at, see where we’re going. So, I mean, Kevin, obviously S&P500 made a new all time high come January 3rd. But since then it started falling. We entered in a bear market come end of July, beginning of August, where we’re at right now, it started bouncing. The market started bouncing again. So, okay, so far, what do you think at first six months of the market?

Kevin McGarry: If I was given this a grade Jimmy, the midyear review, I mean, it’s been crazy. It’s been a roller coaster ride compared to other markets, but I’m not here to compare other markets. But if you look at this market, like you said, you were at all time highs to start the year, the S&P 500 it’s bear market territory, down over 20%. The bond market basically has its worst market history since 1800s. We’ve seen the index bond index go down over 10%. Never really have saw that inflations at 40 year highs, you have gas prices going through the roof. You have the fed increase in rates quicker than they ever had, higher than they ever had since 1994. So, it was really a knee cap beginning of the year. And then over the last month and a half, you seen things turn around. NASDAQ is over 20%, since mid-June, the S&P500 is over 16%, you see inflation come down from 9.18 and a half for CPI, you see gas prices come down, you see new job of over 500,000 jobs created in July. So, there’s been a lot of positives going out there. So, it’s been an up and down environment for the markets.

Jim Donnelley: Yeah. I mean, when we look at like home base and we’re looking at domestically, what’s going on for the first half of the year, I mean, with the exception of the US dollar and oil, everything’s been down this year. We look at like Bitcoin and other cryptocurrencies, it got killed this year. It’s down 65% from off it high. Stock able flavor sold off substantially led by NASDAQ and small caps, bonds are dropping at the same time. Stocks were, that was very painful using the portfolio when the stocks were dropping, mines are rising, this year they’re both fallen. And lastly gold hasn’t really done well as an inflation hedge this year. It hasn’t really done its job. When we look at like the foreign stocks, I mean, Russia’s economy’s getting crushed down 80%. The sanctions wreck that economy only time will tell if we will recover. The other European country’s got to also hurt because of the war in Russia. And also because the inflation raising rates that are China, Japan, they hurting as well. China is really hurting because the tech stocks plummet this past year because of the Chinese regulatory crackdown. Also Chinese are struggling a little bit because this listing risk of the Chinese stocks on the US market is another thing that they’re looking at. And lastly, I mean, the UK has done pretty good for the political mess they’re in. And I looked at it and see why the UK is doing okay. And the two things that popped out were because there’s a lot of stocks that are undervalued stocks over there and also attractive yields. There are two things that were really jumped at why UK’s floating. So, Kev, how do you think this is going to play out the next six months? I mean, you saw the bounce come recently, but do you think we’re still going to go into a recession or do you think this is going to keep running. How do you see you plan out? You read a lot, you listen to a lot of periodicals. So, how do you see playing? 

Kevin McGarry: Well, so first of all, I mean, are we in a recession now? There’s a big debate over that. Anytime the GDP has two down negative quarters, historically, since 1948, you went into recession. But like I mentioned before, how are you in recession if over 500,000 jobs were created? Unemployment’s at low levels. We haven’t seen since 1969, consumers are spending. It sure doesn’t feel like a recession. People aren’t getting laid off. People are still out there going to restaurants and buying items, buying goods. So, it’s debatable if we’re in one or not. But we don’t have that crystal ball here at Valley Financial group to say, are we in one or not? And what’s the next six months, we have our best educated guest and our best guess is it’s going to be volatile out there. I mean, you think about it. You still have inflation, even though it’s come down at eight and a half percent CPI, that’s heavy. You still have the fed that once they get down that CPI number to two, get inflation down to 2% by 2023. So, they have to, or you would assume they would have to continue to increase rates. And as we spoke about in previous podcasts, you increase rates you’re trying to slow down that economy. You’re trying to get the consumer not to spend the other. The siren that’s going off is, the inverted yield curve between a two year treasury and a 10 year treasury. And what’s the inverted yield curve. All it is when the two year treasury yields or hired in the 10 year treasuries. And since the fifties, since that’s ever happened, that’s been an accurate precursor that we’re going into recession. So, we didn’t hit the averages of this bare market of being down 36%. So, there could be some more volatility there. This could be a balance, but we don’t know, but we expect there’s going to be some volatility with all this noise and with the midterms coming the next few months.

Jim Donnelley: And I think everything you said there, Kevin, it’s going to indicate, it’s going to bounce around again, like it has in the beginning of the year. But I think it’s important for everyone to stay to course, as we always say here at Valley Financial stay in the game. I was listening to a podcast the other day with Dave Ramsey and he was talking about the rollercoaster and we speak about a rollercoaster and think about it. The only time you get hurt on a rollercoaster is when you jump off halfway through the ride.

Kevin McGarry: You ever try that?

Jim Donnelley: No, and I don’t plan on it man. I don’t like them rollercoaster, the ones that strap me in I can’t even get out. But the point of it is that if you stay in the game and you stay until the end of the ride, it’s going to be very productive for you long term. So, don’t try to time the market. Don’t try to put your portfolio money market and put it on hold, stay the course, stay in the game in the long run’s going to happen. So, don’t get caught up. Don’t be checking accounts all time, be patient, just trust the process and see what happens. So, Kev what’s the three things that you want the audience to take away from these podcasts?

Kevin McGarry: I mean, Jim, number one, and we mention this all the time. I think it’s always number one is have a plan. Have a plan for the long term, be diversified to meet your goals and make sure that portfolio and markets like this is, is always rebalancing. That’s the first thing, the second thing don’t panic, like Jimmy just said, you don’t want to panic. If you panicked when the market was down, when the index was down over 20% and you got out in June, well, you just missed a nice return over the last 45, 50 days. So, you missed it. And the other thing is, don’t get overconfident, be patient. A lot of people were fielding a lot of calls. Yes, prices and stocks are lower than they were a year ago. But relative to historical averages, they’re pretty expensive. And you don’t want to grab a fall night where stocks down, but it’s going to continue to go down. And one thing to think about is you got to be patient in this process because if you look at one stock like Microsoft in 1999 in tech bubble, Jim, it took 16 years, the Microsoft to get back to those numbers. So, you have to be patient and not every stock that goes down goes up. So, that’s why we’re big on diversification within the portfolio.

Jim Donnelley: Thanks, Kevin, that’s going to wrap up the Blue Money podcast. This is number 11. We’re at Kev today too. 

Kevin McGarry: Number 11 podcast. AJ brown, man.

Jim Donnelley: That was good. Big time, man. We’re at 11. So, I just want to thank the audience for listening to the podcast today. If anyone has any financial questions or if anyone wants to make us look at the review for the portfolio for halfway through the year, we’re here to do that as well. Don’t hesitate to reach out to Kevin or I. Our contact information to show notes. So, thanks for listening and be safe out there. 

Kevin McGarry: Be safe.

Announcer: Thanks for listening to Blue Money. To learn more about Jim and Kevin or for a free financial assessment, visit valleyfinancial.com or click on the link in the podcast description or show notes. Until next time, safe investing. 

This material is intended to be educational in nature and not as a recommendation for any particular strategy approach, product or concept for any particular advisor or client. These materials are not intended for any form of substitute or individualized investment advice. This discussion is general in nature and therefore not intended to recommend or endorse any asset class security or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment clients as well as all other readers are encouraged to consult with their own professional advisors, including investment advisors and tax advisors. Valley Financial can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.