Investment Halftime Report for 2023

it's time for wise money with poorhorn Financial Group with certified financial planners Kevin corhorn Mike Bernard and Josh Gregory [Music] welcome to another episode of the wise money show with corhorn Financial Group where every week we're helping you take your next wise step in your financial life thanks for being here friend my name is Mike Bernard I'm your host I'm also one of the certified financial planners on the program and with me in the kfg studios my business partners and fellow cfps Kevin corhorn and Josh Gregory well the stock market has rebounded nicely so far in 2023 and better than what most people expected but the question is what's driving the rally can it be sustained and what changes do you need to make to your Investment Portfolio who's in charge the Bulls or the Bears that and more on this hour of wise money uh speaking of animals Kevin said he's got a a hairball in his throat today so if you hear a little coughing or run over to the YouTube uh Channel and check it out we'll see what what comes up here if you have any questions for the program we'd love to hear from you you can call her Texas 574-22-2000 that's 574-22-2000 onlinewise moneyshow.com and then all over social media wherever you're at we are there as well a lot of Engagement comes that way so reach out to us there there's six areas to your financial life there are six distinct areas to your financial life and investment planning is one of them now that gets a A Lion's Share another animal of the of the attention but it's not your overall Financial life your present financial position your your how you manage and transfer risk your protection plan your tax planning your long-term goals like retirement and college and your estate planning they all need to be fused together as you're making great financial decisions so so you don't want to just focus on investments it's extremely important it's just not the only thing so we're going to focus on investments though today and give you an update on the market and things Josh what were you thinking I was just going to comment you you guys weren't in the room this week when or this past week when I was with the interns we've got a whole bunch of them oh yeah this summer and I was asking them you know most of the way through the summer what is your favorite of the six areas of financial planning and Investments was top of the list oh I would have expected uh president financial position budgeting you know the exciting stuff there it it's uh it's enamoring you know of course it's interesting it's always changing but I I love that you said it's not your whole financial life yeah what the market does next is not the determinant on whether or not you're going to achieve your goals well we're going to talk about that because all the fortune tellers were saying that they were all this prevailing opinion to start this year was the first half of the year is not going to be that great but we should start to see a recovery the second half of the Year everyone said that and once again at all times the market is working to try to prove as many people wrong as possible it's been an unbelievable start to the first six months has been fantastic and uh and now everyone's changed their tune they're talking about how soon will we get to all-time highs and when will the s p hit 5 000 as if it's just automatic gonna happen so we'll talk about in a recession risk we'll talk about the you know the election is next year how does that influence the market so but let's start with just laying the foundation where you know your investment strategy should be Diversified and those Diversified components they don't all move in the same direction at the same time or the same magnitude so through June 30th where do the market stand better than expected okay so I would sum it up in fact I I'm one of those guys that uh has been proven wrong if I had to make a prediction coming into this year I was trying to brace myself and anyone who would listen hey just be prepared if we have some headwinds coming into 2023 you know don't don't get too worked up don't get too emotional well it hasn't been headwinds it's been Tailwinds most people's portfolios are performing wonderfully yeah and not all components as you said not all slices of the investment pie are performing the exact same way some are up huge and pretty much if you've got U.S stocks especially the biggest of U.S stocks then you're awfully happy the crazy thing is we we go through and I don't have the chart in front of me but there's this it oscillates back and forth between International Investment outperforming Us in U.S outperforming International if you haven't seen that chart you need to because it is it is pretty unbelievable well we've had this really long stretch of U.S outperforming International and when you look at the underlying earnings you would say well gosh the U.S market might be a bit expensive International is cheap and up until June International was outperforming U.S pretty handily and everyone was thinking yeah this is probably where it's going to go you know the markets U.S markets expensive International cheap International's probably gonna outperform and honestly ever since the rate pause we'll get into the reasons why but the U.S large caps taxes just stood on end by the end of June markets up over 16 percent that's now outpacing International International is only up about 12. small cap stocks are up about eight percent um and so really it's it's large it's the S P 500 that again is is winning and you don't need to win in your investment strategy by picking the one that's going to do the best that's that's not how I would Define winning however if you're if you're just stacking them up yes one has the the highest return but that's what you brag about at The Backyard Barbecue right hanging out with the neighbors with your friends it's you talk about your winners right uh Commodities which were the really only winner last year in 2022 it's down eight percent those have uh stunk up the house fixed income so bonds are well at least through June we're up two percent they're now flat for the year and bonds are inversely correlated with interest rates and it's interesting we're getting into this but the inflation expectations have come down inflation data has come down I don't know if I believe it completely but interest rates have not come down yet and that means bonds have sort of been flat and so that if for those of you who retirees or close to retirement you're looking and saying well I have a lot of dollars in bonds and they did awful last year and they've done nothing for me this year you know one of the other themes that is interesting to me and and this gets into a little bit of nerdy details but if you are invested in the stock market as I think most people should be at at some portion of their portfolio you've got to have the growth potential that the stock market brings being essentially a business owner by owning a slice of American and international Enterprises right yep um but when you are a stock investor there's a couple different ends of the spectrum as far as philosophy that you might follow on picking those individual stocks and this might mean nothing to you but it does mean something to the people who are managing those dollars for you and what I'm referring to is either being a growth investor or a value investor and if if you're not familiar with those terms again it's something that you want to understand value investing most famous value investor is Warren Buffett he's The Bargain Hunter amongst all bargain hunters right doesn't want to pay full price for any company he's looking for well well-established businesses that are profitable and maybe out of favor like no no one really wants to own them and then growth is is the opposite end of the spectrum where yeah you're willing to pay maybe full price maybe even a little bit of a premium if it's a company that you believe is positioned to reinvest its its profits and expand operations it's going to have a higher stock price in the future that kind of thing but what you need to understand is that these two philosophies these two approaches to investment picking they go in and out of favor one is often leading the other if it was a foot race between the two and right now we're back to a point where value looks cheap compared to growth growth is just skyrocketing and it's some of the biggest companies in in the US that are driving driving the bus right now well there's seven it's really seven companies and if you take the and it's been interesting because you look at different periods with with this S P 500 so think the 500 largest companies in the US those the S P 500 is made up of about 30 technology and about 15 Healthcare wow so that's about 45 of what you would call the U.S stock market and those those seven companies have a market capitalization like if you took their shares outstanding times their share price it's about 11 trillion dollars so the the numbers don't make any sense and when those companies go on the move and there have been times this year where the S P 500 has a a very positive return you take out those seven companies and the s p has a negative return yeah so it's been it's been very very very interesting to watch as these these companies have shot up and I can tell you if if this is a show about financial planning it makes most people not want to do planning it makes most people want to be Financial speculators yeah and say wait a minute there's there's a smart move out there for me I'm missing it I'm getting left behind I need to hop on the bandwagon here somehow somewhere all right so I want to pick back up on those that that the top heaviness of the stock market what that means and what it could mean out there in the future because ultimately where's the market going and what changes should you make if any to your portfolio we're going to help you with that and more coming up on the wise money show with core horn Financial Group hello YouTube thanks for being here this is the wise money show what you're watching right now is our weekly one hour talk show that air is right here on this channel 10 a.m eastern time every Saturday morning also on podcasts at the same time and also on a couple local radio stations to buy the contents broken up the way that it is but make sure you hit that subscribe button turn on notifications we drop new content here every single day throughout the week and uh taking Concepts like Market breadth or valuation PE those sorts of things and other financial planning Concepts applying it directly to your financial life so make sure you hit that subscribe button turn on notifications if you like the content like the content leave comments and questions below as well we appreciate it all right I want to talk about Market breadth we'll get into that and then we'll get into what's driving the market it's sort of like FAFSA I can't say it you really enunciate that word I don't think that your favorite word to say no because it sounds like Market breath it does so and all I can say is the market has bad breath yes it does all right here we go the fact that so few companies have driven the majority of the rally in the stock market should that be a concern for you or is that a an indicator that no things are just taken off we're helping with that more this is the wise money show with cohort Financial Group thanks for being here my name is Mike Bernard with me in the KSU Studios Kevin kohern and Josh Gregory every episode of the wise when he shows on the YouTube channel as well as a lot of other content so make sure you go there check it out go to YouTube search the wise when they show subscribe to it there and you can leave questions comments all that sort of stuff there as well we appreciate it all right we're focusing in on on the markets today and taking a financial planning approach but sort of dissecting what's going on why and then where might the market be going for the rest of the year how do you prepare for next year with the election blah blah blah and we left off on something called Market breadth which is very hard for me to say so it's like Market breath um no but it's this concept of well at certain points this year and for the majority of this year yes the S P 500 was positive the U.S stock market was positive but it's because the S P 500 is a cap weighted index what that means is Apple is worth three trillion dollars now so apple as one of the 500 companies in the S P 500 that has a really big weighting because it's important it's because it's so big it's not just one five hundredths it's based on its market value and so when you look at you know apple and Amazon and Google and Facebook and Tesla they actually now how much those let's just say the top ten the top 10 companies out of 500 what weighting what percentage of the overall 500 do they make up at the beginning of the year it was around 25 percent today that's amazing it's over 32 percent I believe that's close to a record 32 percent of the entire stock market is made up of 10 companies and you can dissect it further the you know the five make up a disproportionate amount so it is enormous and you might say well yeah those companies their profit has been growing right so that's why their stock price has been growing that's why they make up a bigger portion no their profits have not been growing it's purely that their prices have been bid up so that when you've got just a couple of companies really driving the rally that is narrow or weak or shallow Market breadth guys that is a classic classic warning that a rally may not be sustained now we are not forecasters guys you you know that um but I would say that is a reason to be a bit cautious I'm not pessimistic but that would be a reason to be a bit cautious is is how much I mean some of these names I think I've I think I've got it yeah Nvidia is up over 200 here today at the time we're recording this Facebook up 160 I don't even know what they do what's a meta what's the metaverse I have no idea right Tesla Tesla's up 126 Amazon up 60 Netflix up 50 and it turns out Netflix hey cracking down on password sharing didn't even work didn't work their profit shrunk and yet the Stock's up 50 here today so it's interesting Apple's up 50 it's interesting so it just points to the fact that there can be a disconnect between a stock price and the underlying business that that stock represents right the the business could be temporarily in a decline and the stock price could be skyrocketing just because people are bidding the price up and I remember when I first learned about a cap weighted index and I'm like what why why does it why does everything in the financial world have to not make sense like like it wouldn't you just take 500 hundred companies so it to me what's fascinating is through the end of June the equal weighted S P 500 return was seven percent yeah so the so still a great half a year sure that's right oh if you if you took that and doubled that I'd take 14 of your every year absolutely but I mean do you see the difference there I mean it's seven percent for what if you took every company and said that their return is one five hundredth versus uh taking the cap rate the cap waited yeah all right so what's really driving this though because if it's not earnings it guys it's not it's not the the stock market never got to cheap last year and it's not wildly expensive like bubble right now when you look at forward PE but it is I would say it's expensive it's not wildly so but I would say it's expensive so earnings haven't been driving this yet and ultimately earnings will drive the market that's it it that is it all everything else is noise so but what's Driven in the short term to me everything changed everything changed when inflation data came down and the FED started saying they were going to pause their interest rate hikes and then they did now they're saying they're going to be raising more throughout the rest of the year or a couple times this year but to me that felt like it it was you know what was it the green flag on in at the racetrack you know it's like all right go as soon as that happened it was like okay go yeah I I question whether or not the markets are are getting it right but we'll see I mean ultimately it's almost like the pause is being interpreted as a stop like they're not going to pick back up which would imply you know if if we did have some sort of an economic slowdown or a pullback um that's usually what causes the the FED to start actually lowering lowering interest rates and if you just look at the interest rate environment it is predicting the fact that yeah rates are going to be lower at some point here in the near future isn't that crazy let's just think about that interest rates we had we had an individual come out and talk to our team of advisors the other day and about some investment uh tools and whatnot and it was sort of like laughable when you say you think interest rates are going to be here next year you know and it's everyone is ah interest rates are going to be lower a year from now oh my goodness they're going to be so much lower they don't just lower out of good news interest rates don't go down from good news they don't right they go down from terrible news bad like the economy is in bad shape we need to lower interest rates if the economy is fine and everything's coming along interest rates are going to stay right where they are or go higher or go higher that's right so I I don't understand the either the bond markets are wrong or the the stock market's wrong it feels like yeah how can they both be right uh that's a tough environment to to align I think I've been doing this for 29 years this month and I've never been as confused as I am right now well that'll happen when you when you print five trillion dollars in a couple months and stuff it down everyone's throat that's what that's what'll happen so inflation and the fact that the data suggests it's cooled has really driven the markets the rate hike being paused at least that's driven the market I mean what about uh the debt ceiling issue that also was happening around the same time inflation data was really showing that things cooled and that also really led to a surge in the market or at least helped with the surge in the market I would I would say that's that's been a contributor as well I I agree and that's that is happening all the time in history it's not the first time that Congress has played a game of chicken with the debt ceiling and it just creates This Cloud over the market and then when they finally in the last hour get some sort of a deal worked out politically then the markets you know breathe a breath of of relief and they're off to the races again I don't have the data in front of me but I believe within a month after the stay hey we're not going to worry about the debt ceiling within a month I think we borrowed another trillion I'm pretty sure I'm pretty sure it was another trillion within a month I don't know where it is exactly right now and they they kicked the can down the road until right after the election but before the you know before the new term so how how are they going to figure anything out then they won't yeah yeah guys it's a disaster okay um the other thing that I would tell you that's driven the markets when the Federal Reserve has to fight inflation that's one of two mandates they've gotta they they're they're tasked with stable prices and maximum employment okay which at times can be at odds with each other when when prices have not been stable they've got to get that under control and that can mean creatoring jobs or cratering the economy well guys the labor market has been unbelievably resilient yeah given what is supposed to be sort of a softer time in the markets uh it's the labor Market's been pretty strong and I think even though the economy has been potentially soft that's been a sign of uh of resiliency that's one of the factors because the rising interest rates were supposed to kind of tear down the labor market and it had almost no impact on the labor market that we can tell yeah all right so chant of a recession and should that influence what you do with your portfolio I've talked about the the election a couple times what does that normally mean so what should you be doing with your money we're gonna we're gonna hit that as well as what are some of the other factors to look out for for this you know that could drive the markets for the upcoming year so we've got that more coming up on the wise money show with corehorn Financial Group what do we need to hit next um I would so what's likely to drive the market for the remainder of the Year chance of a recession should we worry about the upcoming election I would bundle all those together and I bet they're this segment and then after that it's well what should you do action items or your personal financial life rebalancing you know those sorts of things so my guess is that's the fourth segment so this we're going in the third segment I think it's what's going to drive the market from here moving forward and then we'll pointedly discuss order the chance of a recession and then should people be wary of an election next year sound good okay all right what's likely going to be driving the markets moving forward chance of a recession upcoming election those sorts of things and and how does that impact you what should you be doing with your money we're helping with that and more right now this is the y20 show with corehorn Financial Group thanks for being here my name is Mike Bernard with me in the kfg studios Kevin corhorn and Josh Gregory stay up to date on all wise money content find Us online wisemoneyshow.com and then all over social media wherever you're at we are there as well search the wise money show okay guys we've said inflation Cooling and the FED then trying to or pausing the interest rate trying to slow that down uh the the interest rate hikes has really helped provide you could almost say a floor in the in the stock market maybe a trampoline um and so what do you think is going to be driving the markets the rest of the year I think it's more of the same personally I I think if inflation has been the theme over the past couple years you know first criticism for the FED that they were behind the eight ball they they were behind schedule on doing battle with inflation then you know are they ever going to win this and now a sign that oh maybe there's some some good Trends developing with inflation and even to the point where they could take a break from raising the the interest rates well watching the inflation data I think is going to continue to be an important uh indicator of what what are they going to do next ultimately can they raise rates again or a couple more times this year which is what they've sort of tried to indicate if inflation continues to come back down I mean we're now what around three percent is what it's saying can they even raise rates and what how would the market react your thoughts yeah I I it seems to me as though they're going to continue to raise rates it and it feels like we're trying uh us to solve the problem with tools that won't solve the problem that's my humble opinion and that's a different show altogether so who knows we'll see what happens but the the the the the increasing interest rates are all these things that they have to balance right because if they raise rates too fast and people realize hey I'm I'm getting Point nothing on my savings and I could move my money out of my bank and get four or five percent if that starts happening I was just looking at the statistics at how many people have how much money earning absolutely nothing right now right that won't last forever and as people re wake up to that reality and begin to move their money out of the banks especially the the some of these smaller Regional Banks could get really hurt and then you look and you say well then what else and what else well if the there's a there's a whole bunch in the next six months of loans commercial real estate loans that are going to need to be renewed and if the if the people that own the real estate can't make those deals work and they give those properties back to the Banks Banks don't want to own real estate so I mean who knows what is possible and so I think this is this is where and I know that we're going to talk about this in the next segment but this is where you're like none of this really makes complete in total sense and I can I can listen to a smart guy and be persuaded that his opinion is right and this guy and that guy and listen listen Okay um but really it needs to be based on principles how in the world do I make my decisions because you listen to somebody like wow that's gonna that is gonna happen well it doesn't happen or the people that were right about the great financial crisis were talking about it in 2006 and seven way before it actually way before it it actually happened and you would make the case that you know the economists have predicted you know 13 of the last four recessions so so who do you listen to when do you listen to them and and what do you do with what you hear I don't see how they raise interest rates I'm and this isn't a hot take so don't you know clip this and send it back to me after they do I just don't see how they do I think they need to because it the asset bubble hasn't burst and and if they don't raise interest rates more the asset bubble is going to get worse I mean already guys so 20 22. was the worst year in the bond index ever the worst year in bonds and 100 years or so it was the seventh worst year in the stock market in a hundred years so this is this is not it's a it's a feature of investing but it wasn't fun and you know there was a decent amount of Panic by a lot of people a lot of people saying I'm gonna stop investing my 401K or would I invest them just putting it into Cash because I I don't trust this thing and how quickly we've turned I spent a lot of time on the road recently with travel baseball saw my first billboard for uh trading stocks is easy click here how were that gone over last year that would have not I mean no one would have done that and yet that's sort of normal and everyone's talking Euphoria and I just the the asset bubble has not burst the asset bubble is still there and it's still being inflated I just don't see how they raise rates I just don't to me that is why I I think they're going to need to as well yeah I know that you're saying hey I don't think they're going to but they need to yeah and it is because every time there's any kind of positive change in Direction it it feels like this is just anecdotal evidence just kind of observation that people are quickly right back to optimism and spending and same old uh behaviors that you would typically see in a strong economy it's like the the horses still want to run you know like we we haven't calmed down or slowed down the economy enough to begin lowering interest rates it would be recession type um news or or data that would cause them to lower rates I don't see them staying put because that again it's it's like staying put is just giving the the would you say the green flag at the at NASCAR or something to say hey go go right right um and and that can't keep on continuing so what are your thoughts in a recession recession risk at the beginning of the year seemed pretty pretty high uh just about every Big Wall Street firm is saying recession risk has come down I wonder if it's because I don't I wish I could give credit to whoever said this I don't even know where I heard this term but the idea of a rolling recession uh you know kind of like rolling blackouts uh during um I don't know California's Heat Wave or something you know um this concept that it's like there's a recession coming to an industry near you sometime soon right and I I don't know like there are some industries that are hurting right now like they are feeling it partly because you compare today's environment to what you know the the record all-time historical highs that maybe they enjoyed a couple years ago so coming back down to earth and then also going into recession feels even more dramatic for some Industries but the the question is are they going to kind of cycle through slowly over time that's an interesting concept and certainly there are industries that you could make the argument there that's where they're at yeah I I would I would agree with that I think ultimately the FED with raising rates is pushing the economy towards slowness towards a recession I don't know it does feel like the there's been some resiliency here so Josh I would agree that maybe there are Pockets that would definitely say oh recession RV RV yeah we're in a recession but we're really not there's other areas that are that are very hot yeah I think stagflation is more and again that's a that's a that's another show but I mean that you you just get into this morass where wages are not keeping up with prices I mean uh my wife just went to Mission Barbecue and picked up two pounds of brisket because we were having some some guests over it's 55 bucks yeah I yeah I did two pounds of brisk but it's it's worth it yeah it is pretty special but um I'm telling you things are not getting cheaper no and and that's a reminder in relation doesn't go away when prices go back to where they were I wish that's how it worked that seems logical no inflation goes away when those when that brisket costs only fifty one dollars next year right or fifty two dollars it doesn't need to go back down to 35 right so I think one of the reasons why also it it's unclear whether or not are we in a recession maybe we're insulated from it is just simply if you were to lose your job because of recession there's still another job waiting for you right now yeah job openings are kind of masking some of this as well yep all right so risk of recession still there a little bit lower what about what sort of impact could another very Fierce and contentious uh I'm sure presidential election coming up next year what does that mean what could that mean for the markets and ultimately what should you be doing right now with your Investments we've got that more coming up on the wise money show with corehorn Financial Group I think my kids are probably sick of it I just I can't I know it's not good form to say ah that's so expensive ah this was this price X you know years ago yeah it's not it's not fun I I do I feel that I want to stop it but I I have been saying that more and more and more I I find myself yeah I I can't out of principles spend that on this item and I have to pause and say this is the new reality that item is not going to come back down in price it might stabilize or slow down its growth but we didn't talk about liquidity and we're not going to so slight bonus content um during the the the stimulus fueled rally of second half of 2020 and early 2021 when it was like gosh we're still semi shut down how's the market doing this you'd look at charts and you'd see the liquidity and how much money is out there and correlated that with the S P 500 it was almost perfectly correlated well now yes feds raising rates but they've been trying to pull some of this money back out they started that late last year and then when Regional banking crisis hit they all the money that they had pulled out of the economy they stuffed back in well now they've pulled all that money back out and they're they're trying and it'll be interesting if they actually aggressively start well I wouldn't say making things illiquid because it's still pretty flush but pulling money out of the out of the system what that does so all right fourth segment land on the plane presidential election and that that ties right into what should you be doing so what action items all right here we go thanks for being here this is the wise money show with cohort Financial Group my name is Mike Bernard with me in the kfg studios Kevin cohern and Josh Gregory if you listen to podcasts every episode of the wise Bunny shows on podcast wherever you listen search the wise money show subscribe or follow whatever platform uh the subscriber follow the show and rate the show as well that's helpful feedback for us we appreciate that all right it's getting down to you know we've been talking about the markets and everything but ultimately it's about it's about investor Behavior not investor return it's it's about investor Behavior so what should you be doing about it but as we sort of wade into that I also want to talk about the election and we're probably just we're probably a touch too early talking about it but that's all you're going to be thinking about come the fourth quarter and certainly all of next year is well should I keep investing you know we've got this election and things are pretty polarized they've been polarized for a while and what if this and what if that and blah blah blah is now a good time to invest there is the presidential election cycle in the presidential election Theory and I'll just um give you the cliff notes every year of a president's term when you average it out it's a good time to invest it's a good time to invest well what about if it's blue yeah it's a good time to invest if it's red yeah good time to invest so I'll spare you that right now if you were to look at well which of the years is normally the best year it's the third year this year right now buy a landslide actually on average about 16 percent positive return uh in the third year um but what about that election year what about that fourth year I mean certainly that one with all the uncertainty I mean that one's that one's bad nope nope on average about seven percent for a new president on average about 12. and so so so this is why you have to go back to principle investing because I was talking uh with my son Joshua last night and he went to a conference in Chicago um there's a company that we work with called dimensional advisors and DFA funds and he came back and he was talking about how really the goodness that that comes from an investment strategy comes in a 20-year swath sure so it's not hey I've got a good idea a good strategy I'm going to put the money in today and by the end of the year I'm going to recognize the goodness of my strategy it's no I'm going to chart a course in over the next 20 years because it's it's principle based investing or they have a fancier term for that uh what's what's dfa's line something based investing evidence-based evidence-based investing yeah but it's a it's a it's a 20-year swath so the reality so you're saying I can't eat healthy this morning and run this morning and be healthy by dinner that's correct that I have to do those things you woke up you have to do those healthy habits every day for a long time in order to receive the benefits right yeah investing the same way finances the same way and and so I would I would encourage you if you're listening to uh this show ignore the everything up until now and just know that you need to have a strategy that will work over the long term and apply it to your financial life that's all you need to know because who knows who's going to get elected um if you're a fiscal conservative you look and it was both parties that raised the debt ceiling and they're they're everyone's guilty yeah so if you want to talk about politics I don't this isn't a show about politics and so we're we don't have and uh we have lots of opinions but not for the show so what would you do if an election is coming up and I've had people smart people um with strong convictions saying hey if this person gets elected I can't I don't know how I will be able to go on and I certainly don't see our economy moving forward get me out of the stock market and to a person to a time it's been a mistake yep yeah and that's hard to hear but that is history that is the truth and and that's what we see every single presidential election right if your staff strategy will only work if your team's Jersey is hanging in the White House then boy you're going to have stretches of time where you just feel like nothing's working or nothing could possibly work and it is wrong and it's the long-term strategy that survives um the red and blue stretches of time as as you were referring to so what should you do what what are the action items right now in your portfolio Josh I know you say you give yourself license to change Investments or tune into your portfolio twice a year around July and around January so what do you do right now yeah to me when the market like in a year like this we we talked at the beginning of this show about how not all areas of the investment world are performing the same way some are booming some are kind of lagging there's even some that are down and in an environment like this where there's such range of performance your portfolio can get out of balance the good stuff has gotten to be a bigger portion of the pie and the things that are lagging behind they on a relative basis they seem like a smaller portion of the the portfolio right now and what is one of the it's one of the oldest adages of investing that you want to buy low and sell High so the stuff that has grown so much and has become a bigger portion of the portfolio rebalancing means skimming some of the gains off of that area and buying the things that are still cheap or that are might maybe even down in value right now it's again one of the most disciplined things that you can do and it's so counter-intuitive because what's what's Your Gut telling you I need to buy I wish I had owned more of that good stuff that's running so well right now um so I better buy more now while while I still can but the the opposite may be true knowing what is the right mix of Investments what's the recipe that you should be following so that over the Long Haul over your long goals that you're trying to achieve you have the best shot at achieving them that recipe you want to be kind of snapping back to periodically because you can get out of alignment with it well I think not just that but I'd actually take it one step further rebalancing back to where you should be I would agree if you stayed where you should be I think it was it was very tempting through 2022 and even at the end to say well I should be taking a certain level of risk I just don't like the results of that so I'm going to reduce my risk and now that that hasn't worked out for you and the risky stuff that you got out of has come back I think there is a tendency to over correct to now say well let's just for example supposed to have 70 in stocks I really didn't like that I moved that down to 30. well shoot now I need to play ketchup I've got to move it up to 90 or 100 and I would argue that is a that's a big risk you need to work with your certified financial planner what is the right recipe for you not the perfect recipe the perfect recipe is the one that finds in that Diversified portfolio the winner every period and and predicts that perfectly that's not possible it's not possible so work with your cfp based on your goals and your financial plan what is the right risk level for you don't over correct and just get back to that point in a balanced way and the problem is right now so the so the S P 500 let's go on a little journey January 3 2022 the S P 500 is at 4 800. okay I know we're not supposed to talk about numbers but on the radio but let's do it it goes from 4 800 to to in October of last year 3600 so that's a meaningful 1200 points down from January 22 to October 22. yes yeah okay so then what people say is okay I need to go from 70 equities to 30 equities because the only way I can see it going when it's gone down 1200 points it further down 1200 points more in the wrong direction so I trim back my equities positions and I'm I'm doing this stuff to try and respond well then I watch it go from 2200 to 4 500 and now I'm saying now I've got the confidence to get back into the stock market and this is what the dolbar studies say this is why the Vanguard studies say it's it's 300 basis points of alpha to work with a financial advisor this is why you want to have someone giving you the the plan the path and the confidence to stay on it and if you are lacking that confidence are are strong strong strong conviction is that you need multiple strategies diversification alone can fail during times when you need it the most and so consider adding strategies like hedging right now with oh gosh we've got all these challenges still can't believe the market is back up to where where it is right now and how do I protect against that downturn bonds might not do it look at hedging look at some other strategies as well work with your cfp on that all right that's all the time we have for today on behalf of Josh Gregory all of us at cohort Financial Group have a great weekend we'll see you next Saturday for the wise money show with corehorn Financial Group Securities offered through Silver Oak Securities member finra slash sipc The Advisory services offered through kfg Wealth Management LLC doing business as corehorn Financial Group kfg Wealth Management LLC and Silver Oak Securities Incorporated companies are unaffiliated

Channel: Wise Money Show

Views: 2,300

Keywords: wise money show, korhorn, financial, stock market, investment halftime report for 2023, how have stocks performed in 2023, stock market performance today

Id: 3TxnitIJX-8

Length: 45min 55sec (2755 seconds)

Published: Sat Jul 29 2023