#31 – The Reawakening of the Stock Market: Shifting Away from Tech Dominance

Wes Moss [00:00:14]:
Good morning and welcome to money Matters. Here it is Sunday morning. Your host Wes Moss here every Sunday morning from nine to eleven. This day no different, except we have Connor Miller in studio. Connor, thank you for being here with me.

Connor Miller [00:00:27]:
Thank you for having me back on.

Wes Moss [00:00:28]:
So much more fun. Nobody wants to listen to me drone on for two straight hours. It’s so much better to have you or Jeff Lloyd here in the studio.

Connor Miller [00:00:34]:
Well, it really is a pleasure to be back on. It’s been, been a couple weeks, so I was excited to get back on the radio.

Wes Moss [00:00:41]:
Good, good. Well, the, and I think I learned this over the years from von Hessler doctrine going in to their show. It used to be in the mornings, now it’s in the afternoons. But it’s just so much better. They have such a cast of characters in there. It makes everything exciting. There’s lots of people, lots of thought. And if there’s one thing that we want to do here is make sure we have perspective from at least not just me.

Wes Moss [00:01:07]:
And as the chief investment officer at Capital Investment Advisors, it’s a big deal for you to be able to be here, help and weigh in. There are several really important topics that I wanted to cover here today, and I’ve just been thinking so much about, there’s just so much to write about and talk about this week that I almost don’t know where to start. But I’m just going to lay out what I think I’d like to cover here today. And of course, love to hear your thoughts for you to chime in. But I think the most important piece of the equation, you could argue that it was the Fed meeting and what the Fed said we could start to lower rates. We have room to lower rates. That’s a really big deal. That would be the, they didn’t cut rates this past Wednesday, but it’s a really big deal.

Wes Moss [00:01:54]:
And it’s kind of a seminal change in the interest rate environment, hugely important for the economy, the implications for stocks, et cetera. The other, I would say maybe even bigger story that really happened for much of July. Now we’re here in early August, but what we started to see is this great awakening for stocks. It’s been a very narrow market for about a year and a half and it’s gotten more and more narrow, meaning that the market’s been driven by just a few big technology companies at the very, very top of the capitalization structure, the size structure. And to see in relatively dramatic fashion in the month of July, this reversion to the mean that we talked about two weeks ago here on money matters that has seemed to continue on and on. And we’re seeing, this is the way I look at it, we’re seeing multi billion dollar companies gain some ground on the multi trillion dollar companies. When you hear me say multibillion dollar companies, you think, well, that’s the S and P 500. It is.

Wes Moss [00:02:57]:
But just to give some perspective here, if you look at the very top of the s and P 500, the seven big names that are almost, they’re really, the seven biggest companies are tech and they are so massive that they carry almost a 7% weight. Microsoft is 6.8%, Apple’s 6.8%. And these are, the size of these companies is hard to even fathom. Microsoft is around 3.3 trillion. So I said, okay, that is massive. What about let me go all the way down the list of the 500 companies and go to the middle. I’m going to go pick number, call it approximately 250. So I go down the list of 500 companies and I picked the 250th company on the list, which just so happened to be DuPont.

Wes Moss [00:03:42]:
Conor. And technically it’s Dupont damours. It’s not just Dupont anymore, but that company is about 33 billion. It’s still a multibillion dollar company. It’s massive by almost any, any way you look at it. But the biggest companies like the Microsofts, the Apples, the Nvidias of the world, well, Microsoft and apples of the world are essentially, and this is, I’m just kind of average approximating here they’re approximately 100 times bigger. Just imagine that you’ve got this $33 billion market cap company and it’s right in the middle of the S and P 500. So it’s not small by any means.

Wes Moss [00:04:23]:
But the big guys, they’re 100 x that meaning they have 100 times the influence on the regular cap weighted S and P 500. And what we’ve just started and that has been very narrow and very weighted towards the top over the last about year and a half or so. And really just in the month of July, we’ve started to see this rotation where the rest of the 400, the quote, small companies, the just multi billion dollar companies have really been, they’ve been performing while the top part of that structure has been kind of lagging. And so to me that looks like a broadening and a reawakening for stocks in general.

Connor Miller [00:05:03]:
Yeah. And something that, in my opinion, is really healthy for the market to experience. Even if you own a lot of these names, you don’t want it to be extremely narrow because we talk about.

Wes Moss [00:05:16]:
All the time the market in general, we don’t want to be now.

Connor Miller [00:05:20]:
Yeah, we talk about.

Wes Moss [00:05:20]:
Even if you own these names.

Connor Miller [00:05:22]:
Exactly. We talk about all the time having a diversified portfolio, which includes owning more than just seven to ten names. Oftentimes it’s going to be 20 to 30 individual stocks to try and get properly diversified. And you’re starting to see the rest of those stocks start to participate a little bit, which in my opinion is a good thing to see.

Wes Moss [00:05:45]:
So we’re talking about that market awakening or reawakening of a broader set of companies. I think that’s good news and important for today. I want to go over some just foundational money matters principles. Obviously, we’re now less than 100 days from an election. I’ve gotten many questions this week from families that I work with on really both sides of the aisle that are both nervous, what if the Democrats win? What’s going to happen to the world? And in the same day, what if the Republicans win? What’s going to happen to the world? So I want to talk about the history of politics and markets because we’re in the middle of the crescent. Well, it hasn’t crescendoed just yet, but it’s certainly something we need to talk about. And then, of course, the Olympics and I, and maybe we’ll talk a little bit about that throughout the day. I’m just fascinated by it.

Wes Moss [00:06:31]:
I don’t remember. Maybe they’re doing a better job of the coverage, Conor. Or maybe I didn’t really watch the Olympics four years ago because I guess it was, wasn’t the Olympics postponed and then we had an ad hoc Olympics, and it just, there’s just no way there was as much viewership because of the postponement, correct?

Connor Miller [00:06:50]:
Right. It was two, maybe two or three years ago in Tokyo, I believe. But, yeah, same thing. I didn’t watch nearly as much a couple of years ago as I am currently.

Wes Moss [00:06:59]:
So this week I’ve watched some women’s field hockey, which is much different than I remember. It’s just much, it looks scarier the way they hit the ball and the ball looks dangerous. They hit it what seems to be 60, 70 miles an hour, and they’re right down there in swinging these, these, these wooden mallets right next to people’s faces. So it look, it just looks like somebody’s going to get hit and somebody’s going to get hurt. Men’s volleyball and, and women’s volleyball. Again, an amazingly enjoyable, fascinating sport to watch. They hit the ball so hard they jump so high that that’s kind of an eye opener to me. That just is a fascinating sport.

Wes Moss [00:07:44]:
Some of these serves look like they’re 20 or 30ft in the air by the time they hit them. Handball. Connor. I don’t remember ever watching handball.

Connor Miller [00:07:52]:
That was like a, that was something we’d play in PE growing up. Right. I mean that’s. That’s like one of the more approachable.

Wes Moss [00:07:58]:
Olympic sports when you say approachable meeting that you could just walk in and kind of hang out and maybe get in on a game with the hungarian team and kind of hang with them.

Connor Miller [00:08:07]:
I don’t want to overestimate Norway.

Wes Moss [00:08:09]:
I played. I played. I played handball in pedest. Think you could let me on the court? That’s what you mean.

Connor Miller [00:08:15]:
Yeah. Look. Swimming, water polo. Those are completely off the table. But handball feels just a little bit more approachable to me.

Wes Moss [00:08:23]:
Hey, I could. I could get in there on, on handball. The. Maybe this, this struck me this week watching some handball. Is it too easy to score in handball and then too difficult to score in ice hockey? It was so they, they were lauding one of these goalies. I don’t know, it was like maybe the Norway goalie or hung I can’t remember but he had like 33% saves which was like astounding. And one of the, one of the players had a 90% hit rate on shooting. So it’s.

Wes Moss [00:08:51]:
I think it’s just too easy to score. The nets too big. The nice hockey. It’s. It’s. I know that’s a winter sport of course, but I think it’s too difficult. So anyway, so handball was fascinating to me. Badminton, it’s so fast and so slow at the same time.

Wes Moss [00:09:07]:
It’s mesmerizing to me.

Connor Miller [00:09:09]:
It really is. I mean it’s an amazing sport to watch and something that, you know, again we talk about approachability completely off the table like we would never be able to compete with any of those guys.

Wes Moss [00:09:21]:
And then. And I actually didn’t love the doubles badminton because it was too quick. It was like Bing bing bing bing bing and point. Bing bing bing bing. Point that one again. It’s a fascinating sport but difficult to watch. I loved watching fencing. I grew growing up.

Wes Moss [00:09:34]:
My dad, my dad still, my dad said a hip replacement and he still fences. He still does the. I guess there’s three there’s three different kinds. There’s. There’s. There’s foil, epe and saber. I think they’re all Olympic. I don’t know if I, I’ve only, I think, seen the, maybe it’s the saber or the epi where you can kind of hit with foil.

Wes Moss [00:09:53]:
It’s just the poke. You have to hit the end of the, the sword to get a point. But epe is the one where just anything goes slap hit anywhere, point, side. So that, to me, I didn’t realize the celebration levels of those teams. Every time one of these teams would win, they scream like something went wrong. Wait a minute. Is that a celebration? Are you mad? Oh, no. You won the celebration.

Wes Moss [00:10:19]:
It actually, it rivals. And maybe it’s even a bigger celebration than a goal in soccer. Connor.

Connor Miller [00:10:24]:
So fencing is one. In full disclosure, I haven’t watched the one, though. To me, that’s been the best backdrop of any olympic sport, surfing. So I don’t know if you know this. They’re doing it thousands and thousands of miles away, actually doing it off the coast of Tahiti, which is a, you know, famous surf spot. The waves are perfect, and they, sometimes they’ll pan the camera around and you can see just the mountains in the background. Looks like they’re.

Wes Moss [00:10:52]:
Wait a minute, that’s not Paris.

Connor Miller [00:10:53]:
Looks like they’re surfing in Hawaii. It’s French Polynesia. So that’s how they get away with it. But.

Wes Moss [00:10:57]:
Oh, that’s how. So I’ve only seen some clips, but the waves do look incredible. It looks like an american express commercial.

Connor Miller [00:11:03]:
Yeah, it’s, it’s the best to watch by far.

Wes Moss [00:11:06]:
Then some of the other ones, I would say boxing, that kind of looks as if. As remembered kind of boxing. And then tennis looks kind of as remembered. But the majority of these sports are. I’m surprised, and I, and I know that we there. I’ve seen some athletes that are trying, and I actually think this has a really good shot at catching on because live sports is such a big part of television today because it’s one of the few things it can draw a viewer in and force people to watch commercials. And that’s part of the reason we’ve seen the NFL become so popular for advertisers. It is so must watch tv, and it’s almost as though sports is the only thing left for that.

Wes Moss [00:11:48]:
I could see some of these amazing sports having a long Runway to, to get more tv coverage. I could see volleyball getting tv coverage. I could see badminton getting coverage. If they would do fencing in slow motion. I could see that getting coverage because you can’t even see what’s happening. It’s so fast.

Connor Miller [00:12:08]:
I wonder if we’ll get, and of.

Wes Moss [00:12:10]:
Course, track and field, I think, and track and field. Think about how much we love track and field. It’s fascinating to watch. It’s amazing to watch, but you really only watch it every four years. How’s that possible?

Connor Miller [00:12:21]:
I know.

Wes Moss [00:12:23]:
I think the demand is there and I think somebody’s, I know that there are people working on that. I would not be surprised if you start to see some of these other leagues pop up that have more frequent sports that we’re kind of getting reminded of here over these couple of weeks in these just fascinating Olympic games and just the thought of how much it brings the world together. That to me is kind of the coolest part of it is. Yes, I know that there’s some countries that are not necessarily participating, but the vast majority of the world is. And it’s just the togetherness of that is that the underlying tone to me is fascinating. It’s kind of one of the amazing parts of the whole games. With that, we’re going to run to a quick weather track. Then more money matters right here on WSB radio, straight ahead.

Wes Moss [00:13:42]:
Good morning and welcome back to money matters here Sunday morning. Your host Wes Moss, along with Connor Miller. Welcome to the studio, of course. Thank you for being here. Always much better to have you and or Jeff Lloyd here in studio. It makes it more fun. I’m not as lonely on a Sunday morning. And during the break, producer Mallory was saying, wait, guys, you’re talking a lot about the business of the Olympics.

Wes Moss [00:14:01]:
How does that tie back to money matters? Well, here’s how it ties back. Here’s the money matters take on the Olympics, and it has to do with the money that some of the athletes get from some of the countries for performance. There is pay for performance, at least from some of these for medals. If you get a gold medal or a silver medal or a bronze medal in some of these countries, it’s a big deal. Conor Miller, who is the biggest payout? I don’t know if I sent this to you.

Connor Miller [00:14:27]:
I think from what I could find, the biggest payout, at least monetarily, is Hong Kong. You win a gold medal for Hong Kong, $768,000.

Wes Moss [00:14:40]:
And this is, we translated all this back into us dollars just to give some perspective. Silver. How much for silver in Hong Kong?

Connor Miller [00:14:47]:
$384,000. And then Singapore is actually right behind Hong Kong. Gold medal, $745,000 silver $372,000.

Wes Moss [00:14:57]:
And that’s coming from the government if the athlete gets the medal. Kazakhstan gold, 250k silver, 150 bronze. This one is interesting. In Malaysia, yes, they compensate for the athletes for medals. This is going to come from the government. So as far as the US. The us government doesn’t give away prize money, but the USOC, the United States Olympic and Paralympic Committee, they give financial bonuses to athletes who win medals. Those are evidently funded through private donations and sponsorships.

Wes Moss [00:15:28]:
They’re not through the us government, but in Malaysia, if you win this. So in addition to getting these, this prize money, 215 grand for gold medal. Additional rewards include luxury service departments, foreign made cars. I didn’t. Maybe it’s because I don’t. I don’t know of any cars that are made in Malaysia and then free. Tay Tariq for life. What’s Taytrik? It’s a hot milk tea beverage for life.

Wes Moss [00:15:58]:
And I guess the restaurants just know this. And anytime you go in there as an Olympic medalist, you get hot milk. This hot malaysian milk beverage for life. Here’s my favorite. Here’s my favorite. It comes from the country of Indonesia. If you medal in Indonesia, if you’re a gold medalist, Connor Miller, in Indonesia, you get a new house. That’s cool.

Wes Moss [00:16:21]:
I get it. You also get a meatball restaurant.

Connor Miller [00:16:24]:
That’s pretty vague. Do you have to run the restaurant? Is it a full service restaurant that you just get the proceeds from?

Wes Moss [00:16:33]:
And you also get. This is a part of the prize. You get five cows. You get five cows. But as in bovines. So I looked this up just to kind of get some perspective on what that’s worth. In Indonesia, the price of cattle is around one dollar fifty cents to two bucks per kilogram of cattle, which translates to about $1,500 for the typical cow in Indonesia. And maybe that’s part of how they run their meatball restaurant.

Wes Moss [00:17:04]:
But again, to your point, do they have to run the restaurant? I doubt.

Connor Miller [00:17:09]:
I think I’d rather be a citizen of Hong Kong.

Wes Moss [00:17:11]:
So that’s some of the business. I know. It’s a better prize structure, the business of the Olympics. Fascinating. We’re going to talk about the business of the world markets, and, of course, we’re in the middle of an election cycle. What does that mean for stocks? We’ll talk about that after news, weather, traffic and more. Money matters right here on WSB.

WSB [00:17:39]:
It’s WSB’s money matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:17:53]:
Good morning and welcome to money matters here on a Sunday morning. Your host Wes Moss here every Sunday, nine to eleven along this Sunday with Connor Miller in studio. Connor, welcome. Thank you for being here.

Connor Miller [00:18:04]:
Thank you for having me.

Wes Moss [00:18:05]:
It’s not, it’s not too, not too far away for Georgia football to start. So we go down to an hour in during football season. That’s about only, gosh, a couple weeks away.

Connor Miller [00:18:15]:
I think we’re, yeah, what is it? I, three, four weeks.

Wes Moss [00:18:19]:
Three or four weeks. I know that dog nation is excited, but here’s the other news topic that the whole country standing on pins and needles and that’s we’re within 100 days of the next election. And the question is did, and this is really what I wanted to say straight out of the gate here. Yes, politics. Yes, politics don’t matter. You thought Conor Miller, I’d say, well, they matter.

Connor Miller [00:18:47]:
You got me.

Wes Moss [00:18:48]:
So, okay. Of course they matter. Of course they matter to the world. Of course they matter to you and me, all of us. But they shouldn’t matter when you’re making investment decisions. This week in the same day. And the reason I wanted to talk about here on this Sunday morning, this past week, I had two separate families I’ve worked with for many, many years. One’s a staunch Democrat and one is a staunch Republican.

Wes Moss [00:19:14]:
And they, they asked essentially the same flavored question, what’s going to happen if they win the other side? What’s going to happen to the Democrats? What’s going to happen to the Republicans? Won’t it be awful? One of them said, will my money be safe? Will my money be safe? And although you may not like the political result, markets over time tell us explicitly, explicitly. That doesn’t matter. It doesn’t matter who’s in office, who’s in the White House. Red, blue, red, blue, red, blue. If you go back to the forties and this was, I believe I got this from truest or schwa, this from truest. But just the visual of seeing from go back what, 70 some years and you’ve got a blue line, looks like blue and red wallpaper. Blue, red, blue, red over the course of economic history. And then just chart the market and guess what the market does? It just slowly goes up over that entire course of time, regardless of if it’s in the blue phase, regardless if it’s in the red phase.

Wes Moss [00:20:15]:
Markets are, yes, there are days when markets will react to politics and there’s weeks when the markets will react. But fundamentally, markets look past who’s in the White House, they look past who’s in Congress. They look past who’s in the Senate. And we’ve talked about that now every election cycle. Here’s another way to look at this that I, this is the first time I’ve seen this, and this comes from Liz Ann Saunders, who is one of the chief strategists for Charles Schwab. And she looks at if you’re really nervous, and again, I get the nerves here, Conor Miller, and the anxiety around having the other party that you don’t like in office. I get it. But what if you were to only say, okay, I’m only going to invest if I’m a Republican.

Wes Moss [00:21:00]:
I’m only investing when a Republican is in the White House and, or if I’m a Democrat, I’m only going to invest when a Democrats in the White House. What does that look like? So let’s break this down. And Liz Ann Saunders did this study. If you had invested $10,000 in the s and p 500, this is back in 1961, all the way through today, and only invested when a Republican was in the White House, your investment would have grown to 102 grand by, call it the end of 2023. So 10,000 to a little over 100,000, thinking, I’ve only got to be invested if a republicans at office. Alternatively, if you only invested during democratic presidencies, $10,000 would be worth $500,000. So it’s, it’s more. But that’s not the point of the story.

Wes Moss [00:21:46]:
Here’s, here is the real kicker of this. The real moral of the story isn’t about picking sides. It’s about investing regardless of what side’s in office. That same $10,000 invested in 1961 would be worth over $5.1 million. Again, just s and p 500 if you’re just invested the whole time, regardless of who is who in power, again, invested the entire time, not choosing sides, $10,000 to over 5.1 million. And so, so I, you look at these charts, you look at this data, and it just emphasizes the, this is the fundamental principle of investing. Don’t let politics sway your investment decisions. Stay the course.

Wes Moss [00:22:29]:
And the way to make money in stocks is to not get scared out of stocks. And this is one of those periods of time, Conor Miller, where people get nervous about the political climate and it makes them think that the economy is going to go sour and they get out of equities. And that’s a mistake. So we’ve just got to remember that as our emotions and our tension gets higher and higher over the course of this next call it less than 100 days. Yeah.

Connor Miller [00:22:55]:
And that’s not to downplay any of the, the personal impact that certain policies may have. But all we’re saying is, look, these massive companies are really good at adapting to whatever policy or legislation is introduced over time. And really the only option here is to stay invested. I mean, there really is no other option because trying to time it, you’re going to end up with, with way less in the long run.

Wes Moss [00:23:25]:
And I just think it’s a good reminder, because we talk about, we talk about this every couple of years. We talk about it during midterms, we talk about during the presidential cycle. And as much as we get emotional, people, I know families get emotional about this, and you’re right. And by the way, that was a very politically correct statement you made, Connor, which is, it does impact us and politics do matter in our lives. But strictly speaking of investing, we’ve got to stay the course and not get scared out of stocks. Now, the big market story, I think, over the past month, here we are in early August, July was a real eye opener. COnor Miller, for something that has not happened for the better part of, call it a year and a half, and that’s that the average stock has not really participated in full force. It hasn’t really, I think of it as it’s been sitting on the bench.

Wes Moss [00:24:18]:
You’ve got 500 players in the game, 500 in the s and P 500, only looking at the s, p 500, and you’ve only got seven guys out on the field. That’s kind of what has been happening that, and they’ve been the biggest. They’ve been the mega, mega, trillion dollar companies that have kind of been running the show. And it’s been a little frustrating for diversified investors because the rest of the group, and this is the vast, vast majority of the group, kind of like not even on the playing field, not doing a lot. And that really has started to change in, I would say, almost dramatic fashion over the course of much of July.

Connor Miller [00:24:52]:
Yeah. I mean, if you go back to, you know, you go as far back as early 2022, and throughout that year, you had the average stock that held up a little bit better than some of the big tech names. And then early 2023, they started to rebound. Really the inflection point there was the introduction of, of chat, GPT when that went live, and we all saw the potential impacts that artificial intelligence could have on our daily lives. And then those seven companies just blew past the rest of the market. And really, like you said, for the last 18 months, those were the only ones that did anything. You had some pockets where the average stock did a little bit better. But in terms of a sustained rally, it really was the seven.

Connor Miller [00:25:32]:
And over the last month or so, as we said earlier, it’s an encouraging sign to see the rest of the market participating in the rally.

Wes Moss [00:25:40]:
Well, here’s the statistic. I think, that really points out what you just said is that really the last three weeks of July, there’s more than, more than 70% of stocks within the S and P 500 did better than the S and P 500 itself. It means the tiny little multibillion dollar companies are essentially trying to play catch up with the multi trillion dollar companies. Think of it this way, and this is one of the best performances we’ve seen in years from the overall market. And that’s a good sign for the market itself. When you get call it through seven months of the year and the S and P 500 has done what is done, it bodes well for the rest of the year, at least based on history. But again, now we’re seeing the average stock. And I charted this out, and this was as of the end of July, in the beginning of July, the spread, and this is when I know we’ve talked about this over the last couple of weeks, is looking at what’s called the equal weighted S and P 500, where every single stock has just the same exact weighting.

Wes Moss [00:26:45]:
So even the giant companies that normally have a seven or 8% weighting versus a .2% rating, everybody’s got a 2% weighting in the S and P 500, equal weight. And it’s very telling when the, when the S and P 500 is performing differently, which it has been. It’s been outperforming the equal weight for about a year and a half now. And as of, and I charted this over the last three months. As of just the beginning of July, the or really almost mid, call it early July, the S and P 500 in the prior going back to May was up 9%, equal weight, totally flat. Conor. So I did a three month chart as of the end of July. So you look through this, and from May through early July, up 9% for the S P 500 and totally flat for the equal weight.

Wes Moss [00:27:37]:
That all started to change in the latter months of July. And we saw that. So it’s a 9% difference, or 9% spread. As of earlier this week, that was down to 2%, meaning the S and P 500 came down and the equal weight has been rising. So now the tiny multibillion dollar companies have been playing catch up to their trillion dollar cousins, all in the same index. And the other thing, the last time we saw this in full force was back in 2001. So I went back to 2001, Conor, and looked. And essentially, this was after the tech bubble.

Wes Moss [00:28:15]:
And if you start in February of 2001, so you’d have about a year worth of tech bubble carnage. The equal weighted. The average company started doing better than the S and P 500 itself, and that continued on for a very long period of time, all the way till 2007. I charted this from zero one to September. Of zero seven. The equal weighted index was up about 95, 96%, while the regular good old fashioned s and P 500 was up only 67. So once we started to see the market broaden out, it stayed in a more broad posture relative to the narrow posture we’ve seen for the last, call it, year and a half or so. It did that for a long time.

Wes Moss [00:28:59]:
Now, I’m not saying that this couldn’t be just a head fake. We could get halfway through August or the end of August and just say, oh, the tech trades back on. But there are reasons for it, number one. And we can explain some of the economic reasons why we’re seeing some broadening out, or it could simply be. And this is. This is one variable that I would. I would say it’s got to be at least partially, this just good old fashioned reversion to the mean. Connor Miller.

Connor Miller [00:29:24]:
Yeah. And I would say, look, this. You know, this environment really does require being somewhat selective in what you own or maybe just not being as concentrated like the top of the market is, which we are not. And so we want to be selective. We believe there’s a lot of quality companies out there that have still done well, but just have a lot more opportunity ahead of them than maybe the.

Wes Moss [00:29:48]:
Broader market, perhaps some more room to run. And putting this size into perspective, first of all, you take the top seven companies in the S and P 500 and look at their weighting. It adds up to almost 30%. So seven companies out of 500. That’s what one? That’s about one. One. 2% of companies have 30% of the horsepower or as far in the market cap weighted S and P 500. And if you put some size into perspective, Microsoft’s over 3 trillion.

Wes Moss [00:30:18]:
Number two, around 250, which is Dupont, in the middle of the S and P 500. And just kind of looking at these educational. For educational purposes only, it’s about 33 billion, meaning that Microsoft is about 100 times the size and 100 times the influence for the regular weighted cap weighted s and P 500. I think it’s a good sign to see the average company really starting to participate, at least so far. Well, at least for the month of July. August could be a whole different story. With that, we’re going to run to weather, traffic and more money matters straight ahead. Good morning, and welcome to money matters here Sunday morning.

Wes Moss [00:31:27]:
Your host, West Moss, along with Connor Miller. Connor, as we were wrapping up our, before we went to break, we were talking about this market broadening out, and producer Mallory brought up a good point. She asked really, a couple of weeks ago, we started talking about the billion dollar companies that people have never heard of. In the Russell 2000, which is an index of about 2000 companies that are considered, quote, small. They’re generally in the half a billion, to call it $5 billion range. And that’s considered small cap. We’ve got multi trillion dollar companies and multibillion dollar companies, of course, in the hundreds of billions in the S and P 500. But she said, well, what are some of these other areas that are broadening out? And I know that during the break you brought up a couple of these sectors.

Wes Moss [00:32:13]:
And to set the table on that, looking over, call it the last month or so, tech is down about, call it 7%. If I’m looking at the tech sector. What about some of the other sectors that have gone the other direction?

Connor Miller [00:32:25]:
Yeah. So really the sectors that have led the way over the last 18 months, technology, communication services, consumer discretionary, think of Amazon and Tesla. It’s really the other eight sectors that have led the way. And so you’ve seen a big move in. Utilities up about 8%. You’ve seen real estate.

Wes Moss [00:32:46]:
So think of it this way. So tech down seven or eight, utilities up.

Connor Miller [00:32:49]:
That’s a big 15% difference. Materials, real estate, financials have done well. Healthcare have done well. Really, most of the sectors outside of those three have broadened out and started participating a lot more.

Wes Moss [00:33:05]:
Okay. Outside of tech now. And if you look at what we talked about a couple of weeks ago, which is the small cap indexed, that has gone a little bit in the different direction, too. So as big, big, big cap tech has fallen, money has flowed to some of these smaller companies and they’re net positive during that same period of time. And I think this goes back to the Fed meeting that we had this week where Jerome Powell came out and said, look, we’re making, the Fed knows they’re making progress. They have two jobs, price stability, which is really inflation, and they want inflation around 2%. And maximum sustainable employment. They don’t want to see the unemployment rate rise all that much.

Wes Moss [00:33:48]:
And now they were okay with the rate rising from, we were sub three and a half percent a little over a year ago, which was absolute historic 50 year low. Only three and a half. I think we got down to 3.4% for the unemployment rate. They felt like that was so low they had room for that to go up. And they realized that if rates stayed high, which they’re still high, that would put pressure on the economy. It would slow inflation, but it would probably increase the unemployment rate. And to some extent, both of the two have happened. We’ve seen a huge reduction in the rate of inflation.

Wes Moss [00:34:27]:
Now, I understand that doesn’t really help a lot of Americans because prices haven’t gone down, stop going up at a rapid rate. And we’ve also seen the unemployment rate rise kind of consistently from the lows. So what they said on Wednesday was, hey, both things we were trying to do slow down inflation, knowing that we’d increase the unemployment rate a little bit. They really both happened. And that’s why, Conor, you’re seeing the probability of a Fed rate cut at the interest rate cut at their next meeting really kind of go through the roof. It’s something like an 85% probability of a quarter of a percent reduction in rates according to the Fed fund futures, and a 15% or so probability of an even bigger cut. So the market is really expecting now to see interest rate cuts, and there’s certainly some implications there around why that is potentially given a little bit of a tailwind to some of these other companies besides large cap tech. But we’ve got to run to a quick news.

Wes Moss [00:35:32]:
Weather, traffic. Then in the 10:00 hour, we’ll talk about this market rotation, stocks awakening, and some money matters foundational principles. We wanted to go over all of the 10:00 hour. Stay tuned. More money matters straight ahead. If you’ve ever done a Jane Fonda workout, or if you remember as a kid rocky running the steps, and if Michael Keaton is still mister mom to you. But guess what? It’s officially time to do some retirement planning. It’s Wes Moss from money matters.

Wes Moss [00:36:25]:
Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead. Schedule an appointment with our team today@yourwealth.com. dot that’s your, yourwealth.com dot.

WSB [00:36:41]:
It’s WSB’s money matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment investment advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:36:55]:
Good morning and welcome to money matters here. It’s Sunday morning, it’s August. And football, SEC football, only a couple of weeks away, of course. We’ve been talking about the Olympics in the 09:00 hour. We are fascinated by some of the Olympic prizes. Connor Miller joins me in the studio here, chief investment officer at Capital Investment Visors. What’s your favorite prize?

Connor Miller [00:37:19]:
Connor Miller has to be, look, I would, I’d probably rather take the cash from Hong Kong, paying out $800,000 for a gold medal, but that’s a no brainer. Indonesian course, the indonesian prize comes in a close second, getting five cows, a meatball restaurant, what was, and a new house. Right.

Wes Moss [00:37:38]:
It’s so well thought out. It’s such an entrepreneurial package. It’s, we’re going to give you a house, then we’re going to give you a meatball restaurant and then we’re going to give you cows to supply your meatball restaurant. So kind of a fascinating, well thought out gift from the country of Indonesia. If, if you were a gold medalist. Doesn’t seem like it’s gold. It’s only gold if you want a meatball restaurant and cows.

Connor Miller [00:38:01]:
It’s really the teach a man to fish or I guess teach a man to herd prize.

Wes Moss [00:38:07]:
I’m glad you brought up fishing because I, this is one of these things. So when I was in Michigan for a couple of weeks this past summer, we did a show for Michigan when Jeff Lloyd was up here, we were talking about fishing. And for all the years I’ve been in Michigan, I’ve never really, I guess a couple times I’ve gone fishing, but it kind of has skipped my mind and I haven’t done it for many years. And my brother on this family reunion said, hey, do you guys do fishing up in Michigan? And we did it. We did a 05:30 a.m. 530 Saturday morning, it was dark. We get to watch the sunrise. We went out not that far, maybe 2 miles, and did a fishing trip.

Wes Moss [00:38:49]:
And I kind of forgot how awesome fishing is. You’ve got twelve lines in the water. My kids caught up a salmon, a lake trout. We ate them for dinner. I had a salmon they thought was a salmon on it. It took the real, I don’t know, 100 yards and then it snapped. That snapped and got away. The fish, the big fish story that got away.

Wes Moss [00:39:11]:
It was just really cool. My kids loved it. It was one of these things where I love it. I could see it, like, as a future core pursuit in my life. But maybe it’s. Cause it’s just, it’s not a easy thing to pick up doing on your own. I actually had a, had a guide, a local guide, take us out. It seems really hard to do it right without somebody who really knows what they’re talking about.

Connor Miller [00:39:31]:
And really, you think about it, there’s nothing better than being able to go out there, do something fun, be with good people, and then catching your own dinner, too. There’s just something very special about it.

Wes Moss [00:39:40]:
My kids ate it, and it was their favorite. They were saying that for when we were in Michigan, the number one moment of the trip, catching that fish. Really pretty cool. So anyway, with that, I want to go Conor Miller into just a, you know, we’re in this period of time where anxieties are going up, right? This past week, the reason the fed is starting to maybe take their, their foot off the brake pedal and the reason the market’s now expecting rate cuts is that inflation has come down and the unemployment situation has gotten a little worse over the last, call it year or so. Inflation down, unemployment up. And that’s what the Fed was trying to engineer so that they could then go and start lowering rates. So then, of course, the question that we’ll be talking about now for the next several months is, wait, is the economy slowing down too much? Is the soft landing? Did it land in quicksand? Are we going to go into recession? There’s always these worries around where we’re headed. I wanted just to reflect for a minute, and this is really reflecting, I was reflecting this week around what are the foundational principles here on money matters? What do we believe it reflecting back what we’ve been through as investors for the last 25 years or so.

Wes Moss [00:40:57]:
I think that gives us some clarity on what we’re trying to do here on the show and help us tune out that noise, the scariness, as if the world is burning down around us. Everything is awful. Everyone is awful. The world’s broken, like the media would like us to believe. So one manufacturing report that’s light, and all of a sudden, wait a minute, is the US going into a recession? And I think about all the craziness that we’ve been through, or I’ve been through just in my career, and you, too, Conor, most recently. What has it been? So what are the crises du jour over the last couple of years? Hyperinflation. That’s obviously been on our mind then we’re currently in this unprecedented election cycle where, again we’re less than 100 days out. That includes an assassination attempt on a former president and an incumbent dropping out only a few months before the race.

Wes Moss [00:41:52]:
If we go back further chronologically, we faced a global shutdown for the Covid-19 pandemic. Stocks were down over 30% in the span of just a month. Then before that, we were really, we were still kind of recovering from the global financial crisis and a complete housing meltdown in the United States. That was through zero seven. And all the way through zero nine, stock prices went down 55%, 55% lower during that period of time. Then, of course, before that, their kind of not to be outdone was the.com bubble that burst, where stocks were down again about 50% in 2000, 2002. That’s all within just the last 24, 25 years. At the start of all of this, and I go back to right as we were going into the, right before the tech burst, the Dow Jones industrial average had finally arrived right around that 10,000 level.

Wes Moss [00:42:53]:
And despite all the carnage that we’ve seen that I just went through here, we said the Dow was over at one point this week, over 41,000 on the Dow. So 10,000, lots of anxiety, terrible events, markets down 50% two separate times, down 30% another time yet, the Dow Jones over over 40,000, that’s a total return of over, call it 490%. That includes dividends, or nearly six x your original money. If you’ve been in the Dow that whole period of time, it’s an almost identical story for the S and P 500. If you’ll go back to January 2000 till today or through the, till the end of June of this year, over 280% higher in price and over 490%, including dividends, almost, almost identical to what the Dow’s done during that period of time. Again, six times your original money. And all of that, to say investing isn’t rocket science, but it takes a really strong stomach and an enormous dose of time and patience. And in a lot of cases, maybe you call it, Conor, mental endurance, mental toughness for the really big bumps and the declines that are going to happen along the way.

Wes Moss [00:44:10]:
So here’s what I would call a few important financial pieces to the equation to survive that journey. And I think of these as foundational principles for what we talk about here on Sundays. Conor. One, I would call this stocks, call this equity market stock ownership, but with this caveat, mostly, mostly, I’m a believer in us equities over time. I believe that’s our best tool to combat inflation and rise above the pace of inflation. But I also realize that if we were to be for most people, that all in strategy, that just doesn’t work for most people, or it doesn’t work for everyone. So I believe that we can use some of these other areas for diversification, including safety assets like fixed income bonds, cash in a certain percentage so that we can maximize our equity exposure to whatever is tolerable for us and our overall planning. So that means if you can’t have 100% in stocks, and most people don’t like that feeling, how much in safety assets does it take for you to feel comfortable to have a certain percentage in stocks? That might be simply three years worth of dry powder.

Wes Moss [00:45:25]:
That’s a topic we’ve covered here on the show we call dry powder or safety assets. You can get to if the market is down, this area should not be down, or if it is all that minimally. And the dry powder principle is take your annual spending, let’s call it $100,000 round number, multiply it by three. That’s $300,000 that you would want to have in dry powder. If you have a million dollars, that means you’d want 30% in your safety net, three years worth of spending. The rest can be inequities to protect against inflation over time. The dry powder part protects you mentally, protects you from getting shaken out of stock. So that’s.

Wes Moss [00:46:03]:
That’s number one. Number two, Conor, would be patience and longevity. Aren’t we always reminding each other around patience? Think about the last year and a half where the market has been so narrow. We’ve had to continue to be patient with that. This one’s a hard one, isn’t it? Because this is just human behavior. This isn’t really even about investing.

Connor Miller [00:46:22]:
Yeah, it’s really been. It has been a test of patience. Again, we talked earlier about having proper diversification, owning more than just the seven names. I think it’s been, you know, a test of patience from our advisors, from our investment team, and really trying to encourage each other to look at the longer picture of longevity and just stay invested. And it’s going to turn around.

Wes Moss [00:46:46]:
I think about the quote, the shade that we’re standing under right now was because somebody planted a tree a very long time ago. Not just like a week ago, not a year ago, but a really long time ago. And that is a factory growth like a massive white oak tree. It simply takes years and decades to really produce massive shade and protection. That’s just the reality of the world. And I think it’s a very important corollary for investing. So think about patience and longevity. Both of those are purely behavioral and have very little to do with picking any investments.

Wes Moss [00:47:26]:
Number three, a large dose of diversification. 30 and 40 years ago, highly diversified mutual funds. I think those were an essential component to any long term investing strategy. Today that has largely shifted to ultra low cost mutual funds. Ultra low cost cousins, exchange traded funds, a collection of ETF’s that typically include several hundred stocks each, should give you the massive diversification oriented chassis that can allow you to go on a very long drive. And I certainly still think owning some individual companies can be fine, but not at the expense of massive diversification. Number four, Connor Miller. And again, I think this is a principle of what we’re navigating the world we’re navigating in right now.

Wes Moss [00:48:16]:
I think investing today is both easier and harder all at the same time. It’s easier and harder at the same time because information today is totally free. It’s nearly limitless. Investment options are highly accessible. Diversification through the evolution of those financial products have become extremely inexpensive. However, all those positives have led to more and more confusing and challenging environment. To have the patience for Connor Miller, we’ve got to run to a quick weather, traffic, then more of the foundational principles. What are we trying to solve for here? And help with on money matters right after weather traffic, more money matters right here in WSB, straight ahead.

Wes Moss [00:49:26]:
Good morning and welcome to money matters here at Sunday morning. Your host Wes Moss along with Connor Miller in studio here on the Sunday. So I’m not lonely. And thank you for being here.

Connor Miller [00:49:37]:
Connor, as always, thank you for having me, having fun today.

Wes Moss [00:49:41]:
The foundational principles of money matters we’re talking about and we had a big sell off in markets on Thursday. We clearly, there’s always anxiety around the corner and there’s an election. The market has been hoping and just hanging on every word of the Fed, hoping the Fed would lower rates. But at the same time, the reason they’re thinking about lowering rates in September and they’re open to it, as Jerome Powell said this week, he really said the word could multiple times and room for interest rate cuts, even said that it would be a process, meaning that if we lowered rates a quarter of a percent, it would be the beginning of a multi step process to do that. So he really said that there’s some room for that. But in order to get here, you’ve got to have a slower economy, you’ve got to slow down inflation, unemployment’s got to go up a little bit. And all of that’s happened. Then, of course, the next worry over time, Conor Miller, would be, does the economy slow down too much? That’s what, of course, markets are worried about.

Connor Miller [00:50:37]:
Yeah. I mean, if you look at, we talk about the dual mandate of step one being price stability, or at least step one over the last couple of years, the next one is maximizing employment. And so where I think the Fed has been hyper focused on the inflation picture over the last couple of years, they actually just changed in their most recent statement that they came out with on Wednesday, altered it to basically say, instead of just focusing on inflation, we’re going to focus on inflation and the labor market now.

Wes Moss [00:51:09]:
Thank you, Fed. Now we’re worried about that side of the equation now with all of that, and we’ve been going over the foundational principles for money matters. What are we doing here on Sunday mornings? What are we trying to help with? Again, as a recap, one, stocks mostly. Number two, patience and longevity. Three, a large dose of diversification. And before the break, both easier and harder, meaning that investing has gotten less expensive, it has gotten more widely accessible, more available, more information. So all those things are great. It’s easier to be an investor today, but at the same time, I think it’s even harder because there’s so much choice and there’s so much information.

Wes Moss [00:51:47]:
How do you sift through it? Can you invest through these principles completely on your own? I think the answer is absolutely yes. We don’t know the exact numbers, but many people do. Maybe it’s 50%, maybe it’s two thirds of folks. But I’ve never gotten a perfectly acceptable answer on the amount of investors who end up using some sort of guidance or coaching. But we do know that investors in the United States, a lot of the population, does get some help in some coaching because things have gotten so difficult. But probably most importantly, number five on this list of money matters foundational principles is know where you are driving towards, aka a plan. It may not be the most fun thing in the world to do a financial plan and write down exactly your exact money and life goals. However, this is an exercise that is absolutely critical to the long term success you will have or not have.

Wes Moss [00:52:45]:
As Benjamin Franklin once said, if you fail to plan, you are planning to fail. But we’re not going to do that here on money matters. That’s why we’re paying attention. And we will continue with fundamental principles of money matters here after news, weather, traffic right here on WSB. Stay tuned.

WSB [00:53:14]:
It’s WSB’s money matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:53:28]:
Good morning and welcome to Money Matters. Here it’s Sunday morning. Your host Wes Moss here every Sunday morning along with Connor Miller this Sunday. Connor, welcome. Thanks for being here, man.

Connor Miller [00:53:39]:
Thank you. Been a lot of fun.

Wes Moss [00:53:41]:
Money matters foundational principles so far. We’ve gone through and again, we’ve been through so much in the last 25 years, multiple financial crises, multiple huge bear markets. We’re in a period of time, the market at a rough spot this week, of course, where what the world has been cheering for and investors have been cheering for lower interest rates. Now all of a sudden, wait a minute. The reason the Fed could potentially lower interest rates is because things are slowing down in the economy. It’s just be careful what you wish for and we’re in that scenario right now. So there’s always this worry. Conor Miller around the corner.

Wes Moss [00:54:13]:
And we know investing isn’t easy, but investing maybe not, maybe relatively simple, but it’s not easy because we’re always worried about something new. And I wanted to go through, after all we’ve been through and now we’re headed into this, we’re within 100 days now of the election. And I know temperatures get high, anxiety goes up. I wanted to go over just the fundamentals of what you really need and what can potentially really work over time as a successful investor. And we’re going to get to number five because I want to expand on that one through four. Very simply, we’re one, mostly stocks or stocks mostly. We think that’s really your best bet against inflation. But it doesn’t have to be the only bet and it’s not for everyone and certainly not 100% in stocks for most folks because of the volatility that goes along with that.

Wes Moss [00:55:02]:
I think the combination of having some dry powder safety assets almost allows you to invest in stocks, which really should be the horsepower to outpace inflation. So it’s stocks mostly but not necessarily all for all folks. Number two, patience and longevity. These are just behavioral traits. We almost have to have to be good long term successful investors. This has almost nothing to do with picking any investments. It’s really about maintaining your patience and maintaining your longevity. Three, massive diversification.

Wes Moss [00:55:32]:
I think that’s just a no brainer, but the, the news cycle and what starts to do really well and stays hot in markets draw people into one particular area and it reduces people’s diversification. So I want to make sure people don’t forget about that. I try to remind myself of that over and over again. Number four, the investment landscape, I think, is both much easier than it’s ever been and probably much harder than it’s ever been, all at the same time. Cost is lower price points. To get to become an investor, you can now start with $50. It used to be a wealthy person to have any sort of financial advice, plenty of online resources, plenty of planning tools, but it’s also maybe way more complicated in the world we live in. So much news, so much information, some of it different, disinformation, which is wrong.

Wes Moss [00:56:21]:
So it’s really hard to know if you’re on the right track because there’s so many voices. Again, just open up a social media feed and you’re going to get hit from all different directions. So it leads us to number five, Conor Miller. And I know you do a lot of this. You have to in your role as a chief investment officer, is you’re looking way out into the future, you’re not looking at what’s going to do well over the next week. You’re looking way down the line. And I think we really need to do the families that are planning for retirement over the next several decades. This is so important.

Wes Moss [00:56:57]:
And that’s know where you are driving, where you’re headed, aka some sort of plan. And it may not be the most fun thing to do, but I think almost any sort of plan is, is better than no plan at all. It kind of reminds me of the, the John Bogle from Vanguard quote, the enemy of a good plan, or really just any plan is the dream of a perfect plan or really the perfect plan that you never get around to do. And that, to me, is just a huge part of the equation.

Connor Miller [00:57:30]:
Principle number five, knowing your plan, it’s really the glue that holds everything else together because it’s the thing that informs every other decision you’re going to make. Going back to number one, stocks mostly, having that plan is going to inform whether you have 80% in stocks or 60% in stocks. It’s going to give you the perspective to have patience and longevity. Um, if you’re a long term investor, being properly diversified, you know that’s going to be the best move for you, even when you see individual stocks that go up 100, 200% in a year. And it really just provides the clarity and perspective that you need in order to execute on all the other principles that you mentioned.

Wes Moss [00:58:16]:
And there’s a lot of resources around this, and this is why I brought this up. Is that it doesn’t have to be the perfect plan. You can do this online. There are tons of financial planning tools that you can find online. You can write, I love writing financial plans literally just by hand, drawing them out with a couple different colors and some timelines. But if you think about what’s in any sort of plan, it doesn’t have to be massively complicated. It’s, hey, what’s my spending goal in the future? I’ve got to account for inflation. I have to assume some sort of rate of return, which then, to your point, Conor, goes back to what’s my allocation going to be? And then some sort of probability of success.

Wes Moss [00:58:54]:
So it’s a couple really important variables that will at least put you in the right direction. So you can find tools for that course. You can use a financial advisor. You can sit down with you and your spouse and just do this together. Here’s just another option that we’re trying to come out with for folks, that it’s not going to cost anything. And our team has been working on what I would consider a simple yet interactive financial planning tool that pairs what I think to be the most critical. There are two parts, lifestyle habits of being a happy retiree and then how to fund it financially through this interactive retirement planning tool. The result is, we don’t call it this necessarily, but I think it’s really just a happy retiree roadmap that’s meant to show you where you are today on the lifestyle habits of potentially being a happy retiree and then how much you’ll need to fund it all in kind of just this one five page financial plan that you can just do on your own.

Wes Moss [00:59:57]:
It’s simple to do. It can be done in less than five minutes. Of course, you go back and modify it, but as I talk through this again, of course you can go back to modify it, but I kind of go back to this thought of just getting something down and done. On paper, it doesn’t have to be the perfect plan because no plan could ever be because the plan doesn’t see the future. It just linearly projects the future. Any sort of planning, I think, is a huge step in the right direction for most retirees. Connor Miller and we’ll let, we haven’t launched that yet, but I’d say in the coming weeks we’ll have that on the website at yourwealth, your wealth.com dot and Conor, what’s the point? What’s the point of this whole thing? Well, wealth accumulation is not just about wealth accumulation. It’s about the freedom from worry we all seek.

Wes Moss [01:00:51]:
Most of us, not not all of us, but most of us. We see wealth as freedom. Even if you have plenty of money and you still worry and you don’t feel financially free, then you’re not really all that wealthy. The goal of planning and investing towards your goals is to put you in a place where you’re able to sleep well at night and have a true sense of financial freedom. Part two of wealth, again, that’s the glide path that it can create as it begins to work for you the same way you worked when you were in your teens and twenties and thirties and forties and fifties and beyond. And then I think part three of that, of course, would be legacy. Now, again, this is important to some, but not important to all, to have your next generation at least have some sort of financial leg up, some sort of financial freedom as well, or just at least a little bit of help in an increasingly, what I would, I would say I feel like the world doesn’t get any easier. An increasingly difficult world.

Wes Moss [01:01:48]:
And then again, this all goes back to these three fundamentals, time, patience and planning. Of course, some of this has to do with investing. We do have to know something about that. But the greater part of the equation is how we behave as investors. Time, patience and planning, let’s call that maybe that’s 80% of the entire battle. So yes, we certainly have to spend some time talking about and trying to remind ourselves, me included, about the power of time, patience and planning. It’s a little less exciting to talk about here every Sunday morning. A little less exciting than what’s happening currently in the world news markets, the economy, the Olympics, the Fed, geopolitics, economics.

Wes Moss [01:02:32]:
But we’re also doing a show here, Connor, and I’m not sure I could spend two plus hours every week simply talking about patience. We’d be one of those shows that’s like the, you put it on at night just so you go to sleep.

Connor Miller [01:02:45]:
That in itself is an exercise of patience.

Wes Moss [01:02:49]:
So the bottom line here, and as a recap, we want to be equity investors. We think that’s one of our real antidotes to inflation. Two, patience and longevity. That’s behavioral. Three, a large dose of diversification. These are fundamental principles that we believe in here on money matters to help investors be successful long term. Four, the world’s both easier and harder all at the same time. And five, because it’s gotten harder and more complicated.

Wes Moss [01:03:19]:
We need a plan, some sort of tangible financial plan that you can refer to every once in a while. You don’t need to read it every night at dinner, but it’s something you can refer to once a year, twice a year, and particularly update when something big happens financially or just lifestyle change for you and your family. So that’s why we’re a mix here on money matters. Of these two really big categories, the foundational behaviors we need and then the general market instruments that we can use, that should give you us, me, you, me. Conor, a good chance. Nothing in this world is guaranteed. There’s no definite in investing, but it should give us a good chance at that financial freedom we’re all looking for the sleep well at night when it comes to money sense that so many of us think. And Connor, I think that’s money matters.

Wes Moss [01:04:11]:
I think that’s what we’re trying to do here. I think that’s all it is. It’s not magic. It’s not hype. It’s just the boring essentials that we need for this financial journey that we’re on together. Connor, did I emphasize boring too much?

Connor Miller [01:04:28]:
Not at all. You did. You mentioned, you know, money matters. And I think one thing which we’ll get to here, probably explain more in the next segment is you kind of caught me off guard earlier. You said, yes, politics don’t matter. And I think it’s, I think it’s.

Wes Moss [01:04:46]:
Important and politics don’t matter.

Connor Miller [01:04:50]:
And what we were just talking about of anything that’s going to catch you off guard or take you off guard from your financial plan, specifically talking about longevity. There’s a lot of politics in the news these days, and I think reminding everyone of whether a Republican wins in November or a Democrat wins in November, staying invested for the long term really is what matters.

Wes Moss [01:05:17]:
And this is this cool study by Liz Ann Saunders, published. It was the Schwab center for Financial Research and Morningstar explained by Lizanne Saunders, essentially just saying, if you only chose to invest under one administration, either democratic or republic, your overall investment returns are just absolutely trounced. There’s just no competition versus being invested both through blue and red and blue and red all the way through. And we’re here to remind our listeners considers that. Connor, you and I are here to remind ourselves of that here on this Sunday morning. We’re going to run to a quick weather traffic. The more money matters right here on WSB radio. Straight ahead.

Wes Moss [01:06:27]:
Good morning, and welcome back to money matters. Here it’s Sunday morning. Connor Miller, thank you for being here in studio. And I’m your host, Wes Moss. Here every Sunday morning. We went through a lot today. I think my favorite, well, what was your favorite part of money matters today?

Connor Miller [01:06:43]:
Oh, man, I love talking about the Olympics, all the different events, the different payouts, both monetary and livestock.

Wes Moss [01:06:52]:
That’s right. Five cows. Five cows.

Connor Miller [01:06:56]:
Five cows. Meatball restaurant and a house.

Wes Moss [01:06:58]:
That is kind of, that’s kind of to me the most fun. I kind of like it. Just a heartwarming, it’s kind of a fun economic stat of the week. The prize money from Indonesia if and only if you end up with a gold medal. And that is coming from the government. Now, our athletes do get some compensation, but it’s from the believe it’s from the US Olympic Committee, not, it’s certainly not coming from the government. So yet other countries, Hong Kong is, looks like they’re the highest paid. They do reward their athletes if they strike gold, silver or bronze.

Wes Moss [01:07:31]:
We went through the foundational principles of money matters today. I don’t know if we’ve written that as an article. CONOR Miller we’re obviously going to do that and we’ll have that published@yourwealth.com. doT and then I think the biggest market news of the week that has also been driving the largest market trend of the last month or so is the Fed now very open to lowering interest rates because inflation has come down and unemployment continues to eke higher. That is, they’re open to cutting rates. And it’s to some extent gotten a bunch of stocks that haven’t participated as much in the market. It’s gotten them off the bench. So we’ve seen lots of sectors like financials, healthcare, utilities perform pretty well, particularly on a relative basis, relative to the big winners over the past year and a half, largely in tech.

Wes Moss [01:08:24]:
So we’re seeing at least some awakening in markets broadening out. We’ve seen a strong relative performance from smaller companies. We talked about that a couple of weeks ago here in money matters. That’s continued to some extent. Now this could all be one big head fake and the whole market go right back to only eleven tech. However, we can ignore what’s happened over the past month. It’s been, I’d say it’s a decisive rotation, a decisive broadening out. Something like 70% of stocks within the S and P 500 over the last three weeks or so have outperformed the S and P 500 itself.

Wes Moss [01:09:00]:
How can that happen? Well, we’ve got big, a few big names really carries the percentage move. You could have lots of smaller companies within the S and P 500 do really well, even though the top line s and P 500 number might not. That’s why we like to see the equal weighted S and P 500 doing well on a relative basis. You can find our team the money matters team@yourwealth.com comma, find Connor Miller and our whole team on our newly updated website where we will also have our happy retiree planner tool launching in the next couple of weeks. All@yourwealth.com that’s your yourwealth.com dot. Connor Miller, thanks for being here, man. Thank you and have a wonderful rest of your Sunday.