Episode Transcript
[00:00:00] Speaker A: Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 180. My name is Brian Anderson, founder and creator of annuitystraight talk.com want you guys to remember that it is not all just about annuities. When it comes to annuities, we want to make sure you make the right decision and are most efficient with the money you decide to use. But we promote use of both sides of a portfolio in retirement. And for that to remind everyone and give you some good analysis on episode 180, I got my buddy from California. Hey, John, Say hi to everybody.
[00:00:33] Speaker B: Brian, good to see you again. Appreciate you having me on. Hi, everyone. It's been a long time.
[00:00:39] Speaker A: It has been a while. And I want to remind everybody to like subscribe or comment on any of your favorite podcast platforms or on YouTube.
Schedule a call with me on the top right corner of annuitystraighttalk.com if you want to meet with me. Don't call John. Don't bother him. He's here for a public service just to the listeners of this podcast. And it has been a while. John, I think you're coming to Montana in a couple weeks. We could have waited for this, right?
[00:01:03] Speaker B: I know, but I thought today was going to be timely. It has been a while since we've been on and I know when we went through what the last market downturn starting in March. Gosh. Where I was in Costa Rica and then I was in New York. So I've been crazy busy. I know you've been traveling a lot and so it's good to connect with you.
[00:01:23] Speaker A: Yeah, great. Great to have you back. And I just want to let everybody know we had a date scheduled six, seven weeks ago. Man, I don't want to. I don't want to. I don't want to boost the legend of John Ballmer any more than he already does himself. But I'm telling you guys, he called something that. I bet you wish we would have put that one together because anyway, we're going to talk about the fallout of it today. But what have you. Yeah. What have you seen in the last couple of months in the market and how can you help people make sense of it if possible?
[00:01:51] Speaker B: Man, it's been wild, I'll tell you, with the. With tariffs and wars and rates going through the roof, the market doing an entire round trip from being up 3% on the year in February to down 21 back to break even for the year. It's been exciting.
Little scary at times, but I can walk you through that. Later. But man, it's, this is these tariff talks. News really drives markets and it's certainly doing its job this year after two solid up years of very little volatility.
[00:02:26] Speaker A: Yeah. And no matter how much we tell people we're talking about, I'm doing stuff where people are locking in retirement income plans. It's a lifetime deal making really solid decisions but taking your time to do it.
And everybody has that perspective. Oh, things are good. Generally speaking, my portfolio is in shape. But then they get so fired up and so worried about these temporary swings in the market. And really what we're trying to do is just kind of rationalize that and realize like, hey, listen, don't pay attention to short term moves and if it does affect your long term outlook, then you weren't in the right spot.
[00:03:05] Speaker B: So yeah, I'll tell you, Brian, that's, that's been reiterated over and over again throughout the, this last quarter here. Last year had people who couldn't get enough returns in the market or would be upset that they didn't have enough return in the market. Being fully invested, others have been waiting for this type of pullback. We were able to capture a lot of it. Obviously we want to be cautiously optimistic when the market turns south, 10, 20%, people start to really reevaluate their, their risk tolerance in a very short order. So had a lot of phone calls with a lot of great people. I appreciate them all.
Hopefully we weathered the storm this time. But you never know. This was a V shaped recovery. Dang near. You got to realize that maybe the next one's not going to be in it. You could be, could be in it for the long run. So got to be patient. Investing is a long term game and I definitely think that people have really done some soul searching over the last few years, particularly with this whole tariff cycle and the news, the news that.
[00:04:07] Speaker A: Comes with it, and I said this a few weeks ago, the market is currently higher than it ever than it has ever been, aside from maybe three or four months in history, in all of history. And so once the stock market gets to a certain level, people think that's their bottom line. And when it drops, oh, I'm not. I had somebody, this is interesting. I had somebody who bought a guaranteed income deal last year, didn't want to do everything they needed at once. They said, oh, maybe I'll put a little bit more into work. They said in the past few weeks, oh, I'm ready to do it. But I got to wait till my portfolio gets back to where it was.
And I said, realize that the market's higher now than it was a year ago when you did the first part of this.
And rates are the same.
Oh, but everybody, it kind of locks in, like mentally, you think, oh, that's what I should have.
Fortunately, in the past five years, things have always come back fairly quickly. But you need to position yourself for potentially a time when it doesn't do that. Do it so fast.
[00:05:04] Speaker B: I would agree.
I've been in the business a long time and remember, please, this is not advice. But 2007, 2008, 2009, when the market dropped nearly 50% or it had a 50% drawdown, I believe it had a annualized return. It was down a lot.
Break even was 2013. So think about waiting nearly four and a half years to break even on your money. Going back even further, the beginning of my career, back in the dot com bust, I'd been in the business about two and a half years and that break even NASDAQ hit a record level of about 5,000. I think it took 12 or 13 years to break even on that. Had you bought at the peak now, hopefully you didn't. That's when the mania started. People had to get in and they had to buy tech stocks. And so we've seen a lot of that, people that have been super aggressive with their portfolios. Obviously tech drives innovation, drives the economy. It's seemingly like you can never have enough.
Yeah, it also, we had, we saw some individual stocks draw down 60, 80% in this last drawdown while the, while the market was only down 21. So had you owned some of those individual stocks, that could have been a really painful ride. That's how fast it can go.
[00:06:26] Speaker A: Yeah, that's right. And, and if you think about it like that's a good timeframe to go all the way back to 2000, 2001, because a lot of the people, like our demographic, the people we're catering to with this information, really got into their saving years and investing years 25 years ago. And so absolutely, someone who's 55 right now, really, they started really being able to save when they were about 30. And that's the diligent person that got into a career pretty quickly after graduating, whether it's a doctor, a lawyer, an engineer or whatever, first five years. And by 30, that's when you really start throwing it away.
And so a lot of people still have that perspective. And again, this is totally different. But a lot of the investment managers that are in have weren't around to see that or weren't in the business to see that don't have that perspective. They're looking at the last 10 years. Oh hey, the market's always generally pretty good. It always rebounds quickly. But I in my career did kind of what you did where we had two really prolonged recoveries in the market and that's in 2001. Their stocks that just disappeared.
[00:07:29] Speaker B: Oh yeah. I mean talk about CGMI, DS, Uniface, pets.com.
there's a lot of those. There's a lot of Johnny come lately. Think about, remember the whole marijuana stock craze back about I don't know, maybe six, seven years ago.
All of those stocks that.
It's the new hype. It's. It's quantum computing or AI or there's always a Johnny come lately that moves really fast and then also just disappears after a while. That can name countless stocks that came onto the scene during, even during the pandemic. Think about beyond meat. I don't even know if it's around.
[00:08:09] Speaker A: Anymore but we knew that was never gonna last.
[00:08:12] Speaker B: But it sure was a hot stock and if he got into it, timed it you.
[00:08:18] Speaker A: I'm not a vegan, John. You can tell by the prop I've got with me. Okay.
I would never recommend a, a plant based meat stock. So.
[00:08:27] Speaker B: That's true. That's true. You want to talk rates? Yeah, talk the markets.
[00:08:33] Speaker A: Let's do a little bit of both because a lot of people are making decisions right now. Business has been slower. I think a lot of people are frozen and don't really know what to do to make changes. A long term deal and what I kind of like to let people do it, like do whatever you think. Everybody that's doing business right now is very, very intentional, very calculated. But I would say overall economic sentiment, I think you're going to see more. Correct me if I'm wrong, but the interest rate story is going to tell you more about what's happening in the economy than simple day to day prices in the stock market or stock prices. Right?
[00:09:07] Speaker B: Yeah, absolutely. We've seen rates at the beginning of the tariff cycle. We had this. What did he call it? It was Liberation Day. Hell of a name for a, for an announcement. But Liberation Day market was down 10% the following two days or so and we saw rate. We did see some news about a week or so after that market was really starting to crater. But the really scary thing was the bond market started going up. Really per Tip is the 10 year note was at 3, 9 and over the weekend went to nearly 4 to 4 3. Correct me if I'm wrong, someone stepped in and that's where you got the real, the pause on the tariffs. The 90 day pause is what they called it because some somebody, Japan, China, somebody was aggressively dumping bonds onto the open market.
U.S. treasuries and that, that caused a lot of concern.
So here we are. The 10 year government bond right now sits at just shy of four or five and the 30 year just over the weekend. In fact Today's high was 5%. It's not good for mortgages, it's not good for corporate borrowing, it's not good for consumers, it's not good for auto loans, credit, car. It's not good for really anything. You got a high interest rate environment at some point that could also break the market. So just buyer beware, be cautious of that.
Good for annuities though.
[00:10:36] Speaker A: Good. Yeah. It's good for long term income planning. So that's, that's like, that puts people in a hard spot. It like might not be good for short term valuations and securities growth but hopefully if you already have the money you need to create an income plan, then hey, at least you're getting a good deal there. So yeah, for sure.
[00:10:54] Speaker B: Yeah, went. We also went from potentially having three rate cuts this year to probably only having one. And that could come in December, maybe late September. I don't see it hitting the September meeting.
It probably will hit in December, so we'll see where that goes. And obviously when the Fed cuts rates that has an effect, but that's really more so the overnight rate, you know what, the rate that the banks borrow at, inflation has come down. You've seen oil prices come down which has boosted the market's recovery. But keep an eye on rates. It's something that I look at every day before anything happens is rates. Where's the dollar going? What's the 10 year doing, the 30 year, the two year. It's really key. And the market will key off of those numbers.
[00:11:41] Speaker A: It's the cost of doing business is what it is. So, all right, so what do you see? What do you see going forward? I know as far as rates go, a lot of people rates are going to drop. I don't know. I never press people that tell me why do you think that?
But because I don't, I'm not sure.
And it's not to say anything bad about anybody. They probably don't know really why they say that.
I try, I trust you. I listen to my buddy Ross. That's the swaps Trader on Wall street, like he'd give me a read on, give me a good read on rates. Like he knows what he's talking about. But what do you see in the near future? Because I guess like what you're talking about, John, we're probably looking at with you typically 60 to 90 days out to see what you expect and what you can show us, maybe the charts or the re. The readings. What's the short term look at markets, overall economy from your perspective. That's going to get us from now until whenever you can be back on here.
[00:12:37] Speaker B: Sure. I think you definitely want to pay attention to rates. I think we bumped up against that four and a half level. Should rates go north of five, five and a half, six, then you start to have some real problems in the market. Liquidity is also a concern that people like myself, we pay attention to. When looking at not only the bot. The equity markets or the stocks, but also the bonds going. It's, I would say we're. It's tough to tell. We had Moody's downgrade the US Government to a notch level than where we were. I don't think it was that big of a deal. We're still the safe haven for the world's, the world's borrowing, so to speak. A lot of people want to own our debt because we actually repay it back. But in terms of the market, I could share like a quick chart with you. I don't want to go too heavy into rates because that's a big if out there. That's not something that I would want to really speak on at this point in time, but just I would tell people to keep an eye on rates, see where they go over the next three to four months.
[00:13:37] Speaker A: Yeah, it'd be nice to have some stability. Just don't get that right now when there's so many things changing. So, yeah, I'd say, John, we got three, four minutes left if you want to show us something real quick. And we'll, we'll be on that. Give everybody something as he gets the screen ready. Remember, John's not here to like drum up clients. He would maybe do you a favor if you want to talk to me, and I think it's worth his time to chat with you. You can get a hold of me first. Do not look him up. Do not bother him. Do not. He's a family man. He's busy. Got a lot of things going on. And maybe if you call when he's here in a couple weeks, you can. Maybe he'll be sitting here I'll let you chat with him for a second. So anyway, what do you got here, John?
[00:14:13] Speaker B: Yeah, let me take a look. So this is the S&P 500. You can see this vertical line here. It denotes just January 2nd. We chopped sideways, hit an all time high in February. On the 19th that was 61.47 on the S and P. And then we immediately started trading down.
It was almost like it, it tried to break through it a couple times.
I had written a newsletter thinking we could get to 6,500 and then a move down to 4,800.
Obviously I was wrong. I always admit that we got the move down to 4800 first. But I did say we would move to 4, 800. We did hit 4835, so I was 35 points off. A lot of that came right after what we call Liberation Day. And that was this move down. Once we broke the 200 day, we really couldn't. And this red line here is the 200 day moving average. So we broke through the 200 day down, tried to recover up and over what I call, what I call a bull trap. Really had no chance.
Wednesday was what we call Liberation Day, or what the administration called Liberation Day. We then saw a very precipitous fall for the next three days. The following Monday we did hit what, 48, 35. We actually hit 48.17 in the pre markets. But I can't show that on my chart. Then we had a really nice recovery followed by a really awful day. And then we had the, and that was over the weekend when we had that rate cut, pause and the market actually just went through the roof. It was an absolute Picasso thinking one day The S&P 500 gained, gosh, 10 and a half percent on the day. Retrace some of that. And then we've just continued to grind higher.
We did have a gap above, back above the 200 day. And I want to show you, if you come in, you probably saw this price action last week. We came right back down to the 200 day. We were overbought up in this level, held the 200 day very nicely. Had another gap up today. Had a really strong day in the market today.
Where do we go from here? So the market is up 0.31% year to date despite having a 21% drawdown from peak to trough.
It's pretty remarkable.
It's. I think it's pretty amazing. I look at it, talk to a lot of people about measured move. This yellow box here is a Measured move. Where do we go from here?
Probably Nvidia's earnings are tomorrow.
Comment on a specific stock.
Nvidia is a large AI infrastructure company. They make GPUs, graphic processing units. I think Nvidia if, and this is a big if, they have a really good guidance. You could see all time highs at 6147. Next target upside is 6500.
And then if I just use a measured move and Brian, I've showed you these measured moves before.
If I just take a move from the bottom to the top measured move, I think within the next 12 to 24 months we're, we get to about 74.50 on the S P.
So 24 months out we could be significantly higher. Maybe a thousand points. Remember we've rallied a thousand points in like a month and a half. Unbelievable.
[00:17:47] Speaker A: Right?
[00:17:48] Speaker B: So I just want to show people that, show them what the potential is.
[00:17:51] Speaker A: And I'll shut up but then obviously. No, that's good right there. Obviously if it does go that high, if you're calling that in 12 to 24 months, there's a bit of a.
I support you in giving yourself a little bit of wiggle room on that 12 to 24 months.
But generally the sentiment is increasing values. But imagine the ride it's going to take to get there. John, you're going to have a lot of these ups and downs right along the way.
[00:18:17] Speaker B: Yeah, absolutely. It's not going to come without volatility. Obviously we knew this from the last administration, prior to the last administration. Volatility kind of comes with this president. That's something you have to be patient with.
We'll see. We have a big tax bill coming through. I think it just passed the the Congress. It's heading to the Senate or passed the House heading to the Senate. We'll see. That debate, I haven't read it, don't know much about it, but we'll see if that passes. I should do some reading on it and then we can form a, form an opinion on where we go. I do think a recession is probably off the table. It may blindside us at latter part of the year. But I think with the tariffs being paused for a while, I think that's brought a lot of people to the negotiating table. But we'll see. Anything can happen.
News trumps everything.
[00:19:08] Speaker A: Yep, exactly. If the tariffs are back on the tables, here we go. Look for a little, look for some volatility. Until then that's solved and that's going to be fine. And yeah, long term perspective. Don't get swayed by the short term stuff.
[00:19:21] Speaker B: So yeah, yeah, true. If you have a plan, stick to it. If you think you're over allocated after this whole episode to stocks, revisit your plan. Revisit individual stocks that you might own. Maybe consider funds or into or individual indexes. They're not going to fall as much as or have as much drawdown.
[00:19:42] Speaker A: Yeah.
[00:19:44] Speaker B: Here to help.
[00:19:45] Speaker A: Same. Yeah, the same advice. Just consistent advice over time. Yeah. Be thoughtful about what you do and don't just chase the trends. Put some reasoning behind it. John, thanks so much for joining me on this one. Episode 180 Brian, appreciate it.
[00:19:58] Speaker B: Thanks for having me on. Look forward to seeing you soon. I'll see you in two weeks.
[00:20:02] Speaker A: Yeah, he's got, yeah, I'm going to get back from Alaska. He's going to break my truck out of the long term parking spot, take his boys to see Montana for a day. And then you're picking me up on my way back from Alaska.
[00:20:11] Speaker B: That's right. That's right. I won't be late.
[00:20:14] Speaker A: Hopefully I'll have some good stories for everyone when I get back. But guys, this has been episode 180. Like I said. Like subscribe or comment on any of your favorite podcast platforms or on YouTube. Top right corner of any page on annuitystraighttalk.com if you want to chat with me about your plan and figure things out, I'm here and would love to speak with you. Thanks again so much everybody for joining us. We'll be back next week with episode 181. Have a great day guys. Okay, bye. Dude.
