Stock Talk - Stock Market Insights & Mole Enchiladas Masterclass: Cooking Up Wealth in Turbulent Times

Starting point is 00:00:00 Hey, I'm Chris Parris, Chief Investment Officer at Oak Carbis Financial Group in Houston, Texas. This is our weekly Stock Talk podcast, but we're not in the office. We're not in the studio. Yes, we're at my home. We're in my kitchen. This is the second time in about a year. We're doing a cooking segment along with our stock segment. So I apologize if there's some interruptions.

Starting point is 00:00:20 I have two golden retrievers that might wander in and out of the view here. Their name's Stoli and Bailey. You put them together and you get a white rush. So that's how we named them. They're white golden retrievers, English cream. So hope you're here for a while. Watch us, listen to our stocks, learn a little bit about mole. We're talking about some Mexican food today.

Starting point is 00:00:42 I'm making pork mole enchiladas. I am cheating. I don't make my own moly. For those of you who like authentic Mexican food, you know, a lot of people make their own mole, which is a very long process. It has anywhere between 30 and 10. 100 ingredients. I don't have that kind of time to make that by myself from scratch. So I cheat.

Starting point is 00:01:03 I order some stuff online from Amazon, mix it up, doctor it up, and then make some enchilada. So this might take us about 30 minutes to talk stocks, talk some food. Hope you enjoy it. Looking forward to some comments on this. So first step, I'm going to go back over here to my range. dogs their dogs are going crazy outside I fed them but apparently they don't like to be left out so you're going to see them wandering in here in a little bit so we got the beef tallow here that's going to melt down very quickly and I'm going to add some onions I meant minced last night it's almost you know two cups of onions both red and white we're going to sweat those down in here for a little bit because I like a lot of onions in my enchiladas that'll

Starting point is 00:01:52 take a little bit of time. While we do that, I want to talk about stocks because that's, you know, really what I do at Oak Harvest with the team, which is now five people on the investment staff. We've gone from two to five in just about a year. So we've expanded pretty dramatically to add some additional products and we're going to add some new products in the coming year, which are going to be very exciting things that very few advisors can do in-house. And very few advisors have the tools out of house even. It's just, it's, it's going to be a great opportunity for our clients and prospects going forward into 2024. So let me stir this up a tiny bit here and turn it down and I'll come back over and talk to Eric and catch you up on what's going on in the markets.

Starting point is 00:02:35 Because, you know, back in late June, we did a segment and it was, I think the S&P 500 was at 4,300. It was late June, early July. And we said, you know, we're taking the summer off, which was figuratively, you know, it wasn't literally. I told our team, you know, if we were running a hedge fund, I would pretty much say, hey, let's call it the summer, let's hedge the whole thing up, and, you know, go take some vacation because the market had been up almost 20% in the S&P 500. The NASDAQ stocks were up 35%. Even the Dow stocks, I think, were up, you know, 5%. They had positive returns. So since then, you know, the market actually peaked in mid to late July, 4,600, and we've declined, into early October where we hit 4200 just last week. And early last week, there was a lot of

Starting point is 00:03:27 negatism around the economy and inflation. Sure enough, there was some data on Friday that looked like a great jobs report and the doomsdares were out there talking about inflation, ramping still higher, and that we're going to have to increase rates even higher. Yes, interest rates went up, but sure enough, the market's a reverse course from being down. of your 50 points on Friday morning to closing up about 50, 60 points Friday afternoon, almost exactly the exact opposite pattern that we saw it in late July when the market peaked out. And there was lots of enthusiasm and optimism about AI and earnings. Sure enough, you know, this last Friday on the jobs report Friday, market opened down big, closed up, almost exactly opposite.

Starting point is 00:04:12 So, you know, people were trying to trade things short term. Good luck with that. But so far, very normal year, bottoming when it should, early October, should be a couple more weeks of this messiness. We'll get through some earnings. They're likely to be kind of revised down. And then there are people going to look out to 2024 where hopefully they'll be optimistic, which they usually are. You usually get that fourth quarter rally, which is usually late. It's usually November, late December. Then you're usually beginning of the year sell-off, people taking tax gains. And then you get another ramp up into the end of the first quarter. So that's kind of what we're looking for on the stock side.

Starting point is 00:04:53 No difference than what we talked about for the last month. No difference than what we talked about last June and July when the market was at 4,600. So it's playing out very normal, not fun, but normal. So let me go back here and stir this. So yeah, that's probably a lot of onions in here, but they'll sweat down, they'll reduce a little bit, caramelize a little bit. Smells great. The liquid will create some flavor to go in the rest of the enchiladas here as we move along. So as I said, you know, mole's, you know, it's a thing of Mexico. Each region has different ingredients that go into it. It's usually a combination of spices that have been toasted and then a combination of chilis, at least two, sometimes five, six, ten that have been dried and chopped up

Starting point is 00:05:44 ground in to make a paste. They put that together and then they'll take some dried fruit a lot of times, chop that up, grind that in, and then they thicken it using nuts and seeds. And they grind that up into make it a paste. So you can buy molase in paste form online and then you can dilute them down with whatever you want. That's what I do. I cheat because I don't have time to do all those other steps between 30 and 100 ingredients.

Starting point is 00:06:11 I had some beef stock to it and that's what this. This is just the mollay mix by itself on its own, thickened up already. And I cheat to make it even bigger and I use some just basic enchilada sauce that I make from a packet. Tomatoes, water, sauce. I'll mix those two up and then I will cheat a little more and I'll take some of the drippings from the pork that I slow smoked for 12 hours yesterday and shredded. There that is all shredded up, seasoned up previously.

Starting point is 00:06:47 And this will become the sauce that goes into the pork molay enchiladas. So let me get some garlic to throw in here out of the fridge. And I'm trying to think, you know, people who tune into our videos usually see a lot of stats. I don't have a lot of stats for you, but I saw something super interesting yesterday on LinkedIn, just adding some garlic here for a little more flavor you know LinkedIn you know it's generally a business site but there are a lot of people who post a lot of good economic content that's not government statistics but just stock data and there was a piece yesterday and I'll post it later in the week maybe we'll attach it to this video

Starting point is 00:07:36 as I said sentiment was getting very negative last week and a lot of technical traders will look at things called the put call ratio and other sentiment data, we referenced the investors' intelligence data, bears to bulls data and stuff like that. These people were referencing the put-call ratios. Puts being if you're buying puts, you're concerned about the market, you're hedging, you're buying insurance. If you're buying calls, you're optimistic about the market, you're starting to speculate that things will go higher. So when the put call ratio is high, negatism is high. So a higher put call is more people betting negatively on the market and therefore is

Starting point is 00:08:20 contraringly bullish. You usually get those big high numbers when the market is down and near a bottom. Sure enough, on Friday, it had the highest reading we've seen in like five years, somewhere around there. The data shows during the time periods, Each time it's reached this level, that the return, the average return over the next six months was over 14%. And the number of times it's actually hit this level, it had a 100% hit rate of reaching that average of 14.5%. No guarantees ever in the stock market, but it's just so happens that that 14.5% return over the next six months, which would project out into, say, mid-March, late March, early April, is almost exactly.

Starting point is 00:09:06 what our team's optimistic outlook would be for the first quarter of next year. You know, no, we don't have a magic crystal ball, but we do basically make our forecast based on data that we've seen historically, whether it's from the jobs market, the bond market, sentiment markets. And we kind of triangulate volatility markets is one that I look at all the time. Triangulate where the market can go under optimistic scenario. But it's so far playing out as we expected. I expected to do more of the same, albeit not with low volatility.

Starting point is 00:09:42 The next six months are likely to have relatively high volatility, but I still have a positive outlook on November, December, and into the first quarter of next year. So let me stir this again so it doesn't burn. You got all that going. So Chris, I saw a comment on the YouTube you released yesterday. yesterday. Yep. When are we going to hit 4,800? Yeah, I saw that too.

Starting point is 00:10:07 It's so funny. So, you know, we've talked about that in the past. And, you know, there are no guarantees, obviously. In an ideal world where normal played out, as it has all year, you know, you can get near 4,800 right into the end of the year. I mean, I'm probably like, you know, New Year's Eve, something like that. I'm not saying that's going to happen, but that would be actually what the normal pattern would be. We got some cilantro here too.

Starting point is 00:10:38 I just added some green onions, adding some cilantro. There's that to that side. Gonna add the mixture that was the drippings from the pork to there. And this is just that, this is not canned enchilada sauce. It's made from a packet, but it's, I think, so much better than most of the can enchilada sauce is out there. It's a great starter. We're going to mix in some of the mole, which is usually, like I said, it's all sorts of chilis, Poblanos, you know, sometimes it's havineros, cayenne, nuts, all sorts of spices, and it's thickened, you know,

Starting point is 00:11:28 using the nuts. But I like to dilute it. And, you know, most people think of mole's, they think of chocolate. All molays do not have chocolate but the darker ones tend to have some for the sweetness. They don't have chocolates and normally have fruit to give it some sweetness. So I'm making these for work and you know some people like spice, some people don't. So I'm trying to keep it you know kind of medium as far as spicy. We actually had a contribution from one of our financial planners to the cooking process. Lizzie, thank you and your parents from Nebraska. for shelling out some of the homegrown peppers.

Starting point is 00:12:05 She brought back from Nebraska. Here they are chopped up. I smoked them. They're havineros. I think they're serranos, blablanos, jalapinos. There might have been some cayans in there. I think she brought me like five or six different ones. That's gonna go on top at the end for some of the people who like spice.

Starting point is 00:12:20 Troy, love spice. So I'll save him some enchiladas that have a lot of spice to it. So that's- Can you grow your own spice in that, right? I do. I grow my own tomatoes. I grow my own peppers. We had a drought here in Houston, which is generally pretty good for peppers, but it got a little too hot.

Starting point is 00:12:41 So there's a can of fire roasted tomatoes. I didn't roast my own tomatoes. It's got liquid in it. Actually, I need to pour some of that off. That's got a lot more liquid than I thought. You know, more flavor. And yeah, it's from a can. You know, I didn't do it myself.

Starting point is 00:13:04 You know, I'm busy worrying about the markets most of the time. I do this to relax. So if I can use someone else's product, it's got good flavor. It's easy. I do it. So 4,800, you know, I think we said it early. I think I said it last October. You know, when the market was making its lows, that the optimistic scenario from volatility and stuff had the market nearing new all-time highs into the year end of this year. Do I think it gets there and stays there? No, not for long. You know, there's going to be, I think, a fair amount of volatility coming in December, coming in the first quarter. But maybe in a good way. I don't see it playing out as like 2017 or volatility was high and then it just collapsed and just kept ratcheting down to, I think, the VIX got to seven and a half, which is historically unheard of. Normally it gets to about 12 and that's about as low as it'll get. occasionally 10. So I'm not expecting, you know, a 2017 just stair-step market in 2024. Too much economic uncertainty. We've raised interest rates too much. There's a lot of geopolitical tension between China and the U.S. Still inflation concerns because what's going on with,

Starting point is 00:14:25 excuse me, oil with labor markets and with the number of labor strikes, whether it's the auto workers, or now I think there's the health care workers, at Kaiser Permanente in California. All these things are inflationary to the markets. EVs, very inflationary because they cut back on the number of production of internal combustion engine vehicles, which they've been making for 60, 100 years. Now they're trying something new. Costs go up. You know, it's inflationary to consumers. Now, the good news is for retirees or new retirees, there's actually now a return on bonds. People are saying it's the end of the 60-40 portfolio. Our team does not agree with that

Starting point is 00:15:11 because the 40, which is usually people talking about bonds, our team has had our clients who are in a blended portfolio of 6040 or 70-30. That bond component that we have has been largely short-term solutions. So government bonds, zero to two years, a mutual fund that we use, zero to three years in duration. So as interest rates have been going up, the price of the bonds haven't been going down, they reset. You know, God forbid, you bought the Australian, Austrian 100-year bond that was issued five years ago. It ended up getting priced at like 200. It now trades at 60. So if you bought it at the lows of interest rates, which was the high-end prices, because bonds prices move opposite of interest rates, you would be down 60, 70%, which is every bit as bad as a bad stock.

Starting point is 00:16:10 So if you keep your maturity short and you're not getting greedy trying to stretch for an extra 25 basis points, which we had a lot of prospects who said, hey, you know, we want more on our short-term money two years ago, three years ago. You know, they didn't like it. They were only getting 25 or 55 basis points. that's a half a percent on their money. So they decided, you know, we're going to take the money away from you or, you know, invested in a five or 10 year instrument that paid you a percent.

Starting point is 00:16:47 You know, the longer you've gone out in duration, that's, you know, five, ten, 20 years, the more money you've lost on a price component over the last two years. Now, you know, you'll get your money back if you hold that bond all the way until the end. if it's a treasury, but along the way, it's going to look like 100 down to, I don't know, you know, 60 or 70, back up to 100. And you'll just get the coupon, you know, every quarter or every six months, however it's paying you along the way. So you're going to have statement losses if you have those long-term bonds. If you hold them to maturity, unless you own like junk bonds and stuff, you own treasuries in the U.S. government, you're virtually guaranteed that you're going to

Starting point is 00:17:31 your entire principal back at the end of the period without a default. So we've kept the maturity on our bond portfolios as short as we can. You know, now you can get a two-year treasury that yields over 5%, you know, six-month treasuries, I think might yield even more than that, five and a quarter, something like that. So, okay, so we got the ingredients going over here at the stove. I'm to walk over here. You might see the dogs show up. I just had to let them in. They wanted to be part of the filming. That one's Bailey right there. She's the girl. and Stolley's hiding, but he'll be back over here. So here's the pork, already seasoned, chopped up, shredded.

Starting point is 00:18:11 I bought, so viewers, this is probably one of the cheapest meals you can ever make to feed 20, 30, 40 people. This 12 pound pork shoulder was on sale. It was 89 cents a pound at Randalls, which is one of the more expensive grocers here in town. So you can find ways to make a lot of food our friends who generally love it. You can do it economically if you look around. So let me go ahead and push this stuff in here. I'm going to probably make a mess. I'm doing this while my

Starting point is 00:18:43 wife is out of town. So it's just me and the dogs and Eric drove over and this isn't working. So I'm going to reach over here some other stuff. Yeah, this pork shoulder took about 12 hours. I slow smoked it. Got it up to about 205 degrees. Then left it wrapped. Let it set for a couple hours to let the juices come back into it. And then shredded it last night. And I don't even think I'm going to use all of it

Starting point is 00:19:22 because I'm going to save some of this and just take it to work like this. And then got some street taco sized tortillas over here that are white corn. And if some people don't like enchiladas because all the cheese and the spice, they can just make some of their own pork tacos. So, no, I do not make my own tortillas. I don't make my own masa. You know, if there's someone out there who wants to volunteer and send me some, a sample, you know, send it to O'Carvus or volunteer and maybe next time we can do a group cook. So I do like cooking for other people.

Starting point is 00:20:00 I tend to take over people's kitchens during the holidays instead of sitting around. I kind of have to be doing something. So I'll end up in the kitchen. Generally with whoever's cooking, trying to learn and, you know, trying to be helpful instead of just sitting around. So a little more here. So I have to mix this up a little. So right now it shouldn't be too spicy because there's not a lot of pepper. in there. I mean, I did put some on top when I was smoking it, but, you know, the oils do smoke

Starting point is 00:20:42 down and you lose some of that. So we're going there. And so I'm trying to think here, you know, people ask, well, you know, if you have a positive outlook on the markets, what do you think works? So what works at the end of the year? Normally what would work would be what's been working year today, which would be largely energy stocks, large cap technology stocks, large cap service stocks like Netflix and those. Last week, we had a bunch of the staple stocks and utility stocks fall off dramatically. It was a little more than normal, but those stocks usually do not perform that well at this part of the economic cycle because interest rates have gone up.

Starting point is 00:21:29 People are worried about consumer spending, and the dollar has gone up dramatically since July. And so, you know, there was a lot of talk about studies, about all these weight loss drugs are going to make people eat fewer salty snacks or go to McDonald's less. That's all anecdotal evidence and I don't believe any of it for a moment. I think it's a convenient excuse. These stocks are going to go down anyway. And once they start going down because of the dollar going up or consumers cutting back because they raise pricing too much last year because of inflation, then they come up with all sorts of excuses. So They were down more than I expected, but that's because they largely are now packaged in

Starting point is 00:22:13 ETFs. So whether you like Pepsi or not or Coke or not, the stock is part of an ETF and if someone wants out of that ETF, they sell the ETF and your Pepsi goes down, your Coke goes down, your McDonald's goes down. They're all one stock because they're all on that ETF. So we try to use a lot of single stocks in our portfolios. We own some of those names. Those, you know, we're down last week with everyone else.

Starting point is 00:22:37 Because we own broadly diversified portfolios currently for our clients. So let me go back here, stir this up. Start to season and flavor. And then the last thing we add is cheese. And I use a combination of just Mexican cheese. And then I use some Cahito cheese, which is just a dry Mexican type of cheese. It's almost like a Parmesan from Mexico. I don't want to make these too wet because then they get kind of sloppy and they're hard to serve.

Starting point is 00:23:18 So just enough to season the inside and I'll save the rest of the sauce, can it or later. So I'm trying to think of other stock things that questions we got. You know, we did a piece last week on the government shutdown, which I think lasted like, you know, know 12 hours or something or maybe it was averted you know historically government shutdowns are actually good for the market the less government operates you know historically the better the stock market is done so usually when the the folks in DC are on vacation the stock market goes up and the stock market tends to go down when they're trying to do their business because they're

Starting point is 00:24:01 generally meddling and things that create friction for the public equity markets, the public bond market. So it's not that they're not trying to do their jobs, but you know, anything that increases the marginal cost of a company to do business ultimately takes away from an investor's return. So the Fed, raising interest rates, that interest that a company has to pay on their income statement is after all the expenses, they pay their employees for labor, they pay the cost of goods sold to make the product. And there's an interest line. If that goes up, you know, the shareholder doesn't get paid until all those other people get paid.

Starting point is 00:24:43 So if your interest costs are going up, the money left over, the cash left over for the investor in equities goes down. So these companies with really high debt loads, those stocks have been going down pretty significantly over the last six months to a year and a half because this interest rate increase, even though they may have fixed cost debt currently, eventually they're going to have to refinance that. their costs are going to go up, which will hurt the equity investor. Increased regulation, whether it's banking or energy, increased regulation, increase the cost of doing business. Those costs usually are passed on consumer by way of inflation, or they come out of the investors incremental returns. So your marginal return and invested capital goes down.

Starting point is 00:25:27 So you're looking for situations where the marginal cash you're going to get back from each incremental dollar the company spends is going up, not down. This part of the economy, that's really hard to do, which is why the market has been struggling for the last almost two years between essentially, I guess the low was 3,600. The high was 4,800. You know, we've traded basically between 4,200 and 4,600 now for almost two years. So there's going to be resolution over the next couple months. You know, we think it's up initially for the next six months. then who knows what happens in 2024, we'll update you as we get closer. But our crystal wall, although we can try to make 18-month forecast, we try to stick to maybe six months at a time. So this is reducing down.

Starting point is 00:26:17 I'm going to go over here and start adding one of my favorite things in the world to eat cheese, which I try to stay away from because I can't not eat enough of it. So that's just the Mexican blended cheese. And then I have the massive Costco size portion here. Eric, you got any topics you can think of off the top of your head here while you're filming this? I'm gonna put you on this spot because it's,

Starting point is 00:26:55 I don't know how many people are, well, if we released this today, I know no one would be watching it because here in Texas it's, OU is playing UT right now and it's the second half. So all I think anyone in Texas is doing is either partying at the Texas State Fair up in Arlington or throughout the football game. So it's all quiet unless you're up there probably.

Starting point is 00:27:18 So I think Texas A&M may play later today too. So you got any questions here? Some people ask about gold. You know, it's not to me a retiree. investment because it doesn't provide you any cash but if you're concerned about the markets and safety I would say you know gold over the next number of years is as good as safety place as you can put it it's not going to provide you any cash right which you know right now your cash buying treasuries and stuff you

Starting point is 00:27:53 can provide you 5% 5 and a half percent so you know don't sneeze at that but you know people ask do ask me about gold I haven't liked it in 20 something years if you're gonna like it probably the next three to five years is as good a time as any to like it you know should you buy an ETF or should you take delivery of it just remember most of these ETFs don't actually own most of them don't actually own the physical metal they own contracts and financial instruments to replace the physical metal so if you're really concerned about like the financial system and and

Starting point is 00:28:32 I hate to say the end of the world trade, you want to buy gold and you want to take delivery of it, which can be costly because of commissions and insurance purposes and storage purposes, but that's what you would do. And there's some online wholesalers who will sell it to you at a reasonably inexpensive markup. So that's my thoughts on gold. Let me think here. What else do we like besides kind of technology and gross stocks? You know, some of these conservative stocks are finally getting interesting.

Starting point is 00:29:04 I've seen some data on utility stocks, which we don't own a bunch for clients just because there's no growth. But as the economy finally slows and inflation is peaked, right? The data we look at, inflation is running about 1.3% looking out a year. In fact, the data that the Federal Reserve looks at, if you market real time, like three months trailing average, it's down under 2.5%. I think it's now 2.1%. Now, the trailing 12-month data is like 3-9, but that's not what's going on in the markets right now. What's going on, they've got inflation down. Right now, it looks like the Federal Reserve doesn't care or they're just definitely afraid that it comes popping back. So they're keeping real interest rates much higher

Starting point is 00:29:50 than they've been since a great financial crisis. They're back to really normal to high levels, actually the real ones. And, you know, the fear is in the end of the year, they might make a mistake and keep them that high and cause a congestion in financial markets. I don't think they're going to do that this year. I think Powell learned from his mistake in December of 2018. And if you recall, the market dropped like 20% from October into Christmas Eve. And then Powell said, hey, I've kind of made a mistake. And then the market's more off to the races in 2016. So I don't think he makes that mistake. I think the upcoming Federal Reserve meeting in late October, early November is an excuse. And by then, the markets are starting to already exhale. And what normally

Starting point is 00:30:38 would happen is the markets would start to reverse higher into the second half of October after option expiration in October. And then they would use the Federal Reserve's meeting in November as an excuse to vault even higher into Thanksgiving. We do have, you know, we do have economic cycles. You know, our title for this year's piece was the old normal. And that means we will have recessions. Stock market will not be backstop by the Federal Reserve and expect more volatility relative to the last number of years in the markets. So let me let me turn this down and get start stuffing some of these molay enchiladas. So we're going to we're going to stuff these enchiladas here. I don't burn myself.

Starting point is 00:31:32 Eric actually wanted to change your batteries with asking me about the difference between being in the accumulation stage and the retirement stage. And they are different, right? When you're in the accumulation stage, you actually should probably want a period of 10 years where the market goes nowhere. And you're contributing to the markets every year, right? Your dollar cost averaging because you're not going to need the money for another decade, you know, 20, 30 years. And, but if you're in retirement or near retirement, you have different goals and objectives, right? Safety of principle might be higher. How am I going to generate income in retirement? How am I going to cash to pay bills, to pay rent, to pay health care? Those are the things on your mind.

Starting point is 00:32:17 And those are dollars as opposed to when you're accumulating. You're worried more about percent returns in retirement. you can't spend percent returns. You can't, you can only spend dollars. So, you know, one of the things I've talked about to our clients and prospect is, from an investment manager standpoint, one of the key things you cannot do, or I, I abhorre you to try to prevent yourself from doing it, is going back and forth, looking at your portfolio, and when the market's down, calling your advisor or thinking to yourself, I lost $200,000.

Starting point is 00:32:53 And then when the market's up, looking at your portfolio, and when the market's up, looking at your portfolio, portfolio and comparing it to the S&P 500 or the NASDAQ and saying, I'm only up 10%, and the NASDAX up 35. And going back and forth, I'm down 200, but I'm only up 10%. You will never reach your goals and objectives by doing that. You pick one or the other. You manage it for cash or you forget about the cash for a while and you manage it for percent returns, which are measured over long periods of times, knowing that you can't spend those percentages, you can only spend cash in retirement. It's a timely question because I actually got off the phone with a fraternity brother of mine. We were catching up, and he's kind of semi-retired, owns a chain of car washes

Starting point is 00:33:37 and stuff. And we were talking, he asked me my thoughts on the market. And he's my age, and I said he's semi-retired. He has cash coming in from his businesses. And he's normally, historically, really aggressive in the stock market. And for the first time in quite a while, I'm like, hey, Mike, what do you doing? And he said, you know, for the first time, I'm like, I can get 5 and a half percent on a three to five year bond. Corporates are 6 percent. I don't need more than 6 percent over the next, you know, three to five years. That cash will, you know, will be great for me.

Starting point is 00:34:09 So I was glad to see him thinking that way. But, you know, once again, he's near or in retirement versus someone who's 20 or 30 or 40 years old. my kids, you know, 25 years old, the money they're making now putting into the market should be insignificant relative to their whole life. They should actually be rooting for a lost decade of returns where the market actually does go from 4,800 or 5,000 down to 2,500 and stays between 3,000 and, you know, 4,500 for a decade, you know, which is essentially what happened after the dot-com bubble in 2000 through the great financial crisis in the 2011. 11, you know, it just bounced around. But that bouncing around, like it or not, if you were a baby boomer and you were working and still had your job, you were dollar cost averaging that entire time. And lo and behold, you know, the markets broke out to a new all the time high in 2000, I think 13 or 14 and have compounded at, you know, 10 or I think 12% ever since, which, you know, you had a decade of just kind of putting money into the market and not making much.

Starting point is 00:35:18 and then your returns have all come the last 10 years. So now you're in retirement and you're like, I've got this big bundle of retirement savings. I own my house or my mortgage is 3%. Now you should be worried more about cash returns and return of principal as opposed to percent returns of, you know, my accounts are only up 5 percent because value stocks and dividend stocks are up two or three percent this year. But the NASDAQ is up 30 percent. Hey, Chris, investment team, why am I up, why am I not up 30%? I'm kind of like, well, because last year, you know, those stocks were down 35% and those dividend stocks were flat.

Starting point is 00:36:00 So in trying to go back and forth between the two styles, you're never going to catch the swings correctly. So you need to pick a asset allocation, you know, stocks and bonds, and then types of stocks, whether they're dividend, gross stocks or gross stocks that don't pay much dividend and stick with that and make those allocations changes occasionally. But don't try to move huge chunks of stocks to bonds all the time. Don't try to move huge chunks of money from gross stocks to value stocks, trying to time that one. It doesn't work. There's no investment manager who can do it consistently, right?

Starting point is 00:36:42 And I've been doing this 30 years, and I honestly, the data would show I'm pretty good at actually seeing these moves in the overall market, but even so executing on them in a way to make significant, meaningful differences in your portfolio, it was difficult, particularly if you're talking about having hundreds of clients with differing tax objectives, you know, someone's 55. That's a different outlook than someone who's 85, right? And you're going to move everyone's portfolio around just because of your outlook for the next year or two, and it really shouldn't change probably for the 55-year-old. Maybe it changes for the 85-year-old because they need the money or whatever.

Starting point is 00:37:21 So if you're 25, like I said, you shouldn't be worried about it at all. You should be worried about saving as much of your disposable income as you can, putting in the market, deferring things that you just want to do for a whim that gave you immediate satisfaction and gratification. but down the road you're like, you know, well, I wish I had that money because it could have compounded and I could have bought a house or something like that. No, don't give up on all vacations when you're young because of their memories you'll have your entire life. Okay, final stage. So we're going to stuff these enchiladas and I've got a little known secret

Starting point is 00:37:58 from HV here. These are called mixilla tortillas. So they're part corn, part flour. So they've got the flavor of corn, but they roll like a flour. The problem I find with corn tortillas, you usually have to double them up because they crack because the texture's wrong. This best of both worlds. 24 count. I think it's like two and a half bucks over at H.E.B. I've never seen them anywhere else. And they're kind of hard to find there because they have so many different types of tortillas here in Texas. I'll look for them though. So I'm going to stuff these for everyone for work. You know, just enough that I can I can roll this shut. It's got enough liquid. It should stay closed. I'm not going to make these really big.

Starting point is 00:38:40 because I'm going to double layer everything. I actually thought I probably had made more than this, but maybe it's because I left some of the pork just for tacos. So I told everyone it's going to be first come, first serve. And hopefully they're not going to fight over this. They're usually pretty good at sharing. So trying to think of market stuff left, you know, as much as we haven't heard the term unprecedented much this year, not in the stock market.

Starting point is 00:39:07 It has been pretty much in the bond market. It has been near unprecedented. The losses are as close to the losses, I think, of the great financial crisis in stocks. Because the Federal Reserve kept rates at 0% for a long time. And it really is kind of perverse and unfair in that they incented people. You know, the government checks out to everyone, told people to spend money, they shut the economy down. Then they told everyone to save money, spend money, and now people talk about this excess savings, you know, rate, which is one of the most absurd terms I've ever heard. Only an economist can dream that one up because if one looks at the United States, everyone knows we're anything but a country of savers and certainly not excess savings.

Starting point is 00:40:02 All they're talking about is a polite way to rename and market. the government did way too much, handed out way too much money during the COVID crisis. And some of that money and some of those handouts haven't been spent. So it now's been spent. I think the savings rate is down to 3.5% which I think is near where it normally is. But the next time you hear that excess savings term on CNBC or anyplace else, turn it off, boo hiss, throw something at your TV. don't break your TV, and know that there's no such thing as excess savings in America.

Starting point is 00:40:43 And in most countries, there's not. There's a lot of discussion about we're massively in debt. Yes, we are. It's largely on the backs of the last 40 years of politicians on both sides in Washington, deciding to borrow money we didn't have and spend money we don't have. So, you know, the national debt is $33 trillion in climbing. That does not include the unfunded liabilities, whether it's Social Security and health care benefits that we promised everyone when you add that on.

Starting point is 00:41:19 I can't remember if the number is $100 trillion yet or not, but it's a lot. So, you know, the country will pay a price for all this borrowing, and it won't be the generation that, borrowed the money. It will not be the people who are currently leading the country who led us into this debt burden because they will largely be dead and gone by the time it becomes an issue. So it will be left apparently to the, you know, Gen X, which I'm part of, the millennials and Gen Z to figure out how to unwind or pay off or start to pay down the debt. So, you know, people ask me, well, how are they going to do it. I don't like any of the answers, but the easiest answer to me is, you know, a

Starting point is 00:42:12 wealth tax on transition. So you get rid of the stepped-up basis of a lot of the wealth transfer and tax it, given that most of the wealth is sitting at the baby boom when they die and it gets passed on. You know, if it's getting passed on tax-free, You know, it's largely compounded at super high rates the last 20 or 30 years largely by borrowing and spending. You know, if it gets taxed, if we pay down the debt on the way to the next generation, that's probably going to be the easiest way to do it. That and to rationally extend the beginning of when people take Social Security, when they take these health care benefits. because people live longer, right? We're coming up with new ways to extend people's lives.

Starting point is 00:43:09 Therefore, the costs go up exponentially the longer we use these medications, the longer people live. So, you know, I don't think, you know, the declaration was not written back when people's life, you know, expand was 80 years plus. You know, no one ever expected our government leaders in Washington to live past the age of 35 or 40, let alone into their 80s. and there's going to be some big changes over the next 10 years. But we've gotten through this every generation,

Starting point is 00:43:42 and we'll get through this, we'll figure it out, because that's what we do as a country. So I'm trying to think other topics here. I'm going to work on the second layer. What else you got? Here's Stoli. Here's Stoli, the polar, we call him the Stolar bear sometimes, because he looks like a polar bear.

Starting point is 00:44:05 So he's quite flexible. He's nine years old, and he's probably one of the prettiest dogs I've ever seen in my life. And yes, I'm biased. But we tried to get another one, but our breeders, his parents stopped breeding and stuff. So Bailey was a home breed, sort of from a home breeder. and she is a super smart dog and all she wants to do is hunt. So I'm trying to think here as I finish this up.

Starting point is 00:44:36 What else? We're going to be having some more live streams coming up. We'll probably talk about the markets a little more. We've already talked about the fourth quarter a bunch in our live streams. And, you know, I tend not to try to, I don't change my story much unless some of the data starts to change a lot. And it hasn't. So, you know, people ask me. you know, have you changed your mind? And I'm not sure why they asked. Maybe it's because the market

Starting point is 00:45:02 went from 4,600 to 4, you know, 250. Haven't changed my mind. That doesn't mean it doesn't make me nervous. In fact, I haven't been sleeping as much just because what, when you see something that's going to happen and it happens, the next step is, is the next thing going to happen as well, right? Okay, we were right. And we actually have had more cash in the portfolios than we normally do. We were carrying in our model portfolios 10% and some of the model portfolios, which we haven't done in years. Does that help? It helps in that, it gives us some opportunity here over the next few weeks when companies report earnings to buy some stocks that are down and that we think will perform pretty well into the fourth quarter and first quarter. You know, does it move the needle? It can

Starting point is 00:45:49 move the needle. You know, if they're going to be tech stocks, we know they can move the needle because how much they can return. But, you know, remember, too, cash is yielding, you know, 5%. So it's not a bad place to part money in uncertainty. Whereas, you know, there was Tina. There is no alternative for, you know, 10 years. There are alternatives now,

Starting point is 00:46:14 and we're back to that environment. So active management, I think, will become probably the thing of the coming decade, right? It'll be, I mean, passive management now, I think, is almost 50% of the market, which is why there are these huge moves up and down in these large-cap stocks, because so much of the money is sitting in these passive funds when the money that's actively managed wants to move, it has an oversized effect on the stock overall. So I think Pepsi was down $9 one day, last week. I mean, I, on four million shares, which is nothing. So I think that equates to a $20 billion loss in the company on only four million shares trading, you know, which is a couple hundred

Starting point is 00:47:08 million dollars in stock. And it just, you know, all this stock sitting at Vanguard or sitting at BlackRock in ETFs and in indexes is kind of parked there. in these funds, and it doesn't move, right, unless the index moves. So the incremental buyer or seller who's concerned about the company's fundamentals and might want to sell or buy, they have a big effect, which is a good thing if you're an active manager and you can kind of stay patient, you can wait for those opportunities. And when those negative catalysts happen, but you see them in advance, you're waiting, you have some cash and you can put some money to work. So patience will be rewarded, I think, a lot more over the next five, seven years than it has been over the last decade where, you know, the Fed just pretty much came in and backstopped everything.

Starting point is 00:48:04 I don't think they want the market to collapse. I think there are way too many savers and baby boomers with a lot of money and influence in Washington, D.C. That the last thing in the world they want is the stock markets to collapse. But that doesn't mean that there won't be. recessions and there won't be a recession. This historically, minus 35% on the stock market. And that's what we had last year in the first half. The stock market went down, peak to trough in real terms. So when you look at the S&P, I think it dropped 25%. But inflation at the time was running eight or nine, you add the two together. That's minus 35% of your money in real terms,

Starting point is 00:48:45 you know, kind of evaporated. Now it's bounce back. But relative to inflation, you're still, you're still treading water to losing money. So I don't think the folks in D.C. really want our economy to grind to a halt and stuff. And, you know, it's likely to slow down considerably next year anyway in front of the election with all the uncertainties about who's running, who America wants running, and what their policies are going to be. So I'm done rolling these. I've got, I don't know, how many is this? six, 11, there's a good 20 underneath. So I've got, I got about 35 enchiladas.

Starting point is 00:49:30 I've got enough for probably 10 to 15 tacos. This entire meal, when you add everything up, I mean the meat was less than 10 bucks. I think the cheese, cheese might have been three or four bucks. You know, the total meal might cost for 30 enchiladas, 30, 35 bucks. And I'm going to feed most of the office. So from the bottom of my heart, to your mouth, to your stomach, I hope you have a great weekend. Hope you come back next week. We'll pick up the investment topics. We'll pick up the news and we'll get back to talking

Starting point is 00:50:08 about the stock markets and your financial situation. From the whole team here at Ocarus, the financial planners, the financial advisors, Troy, Jessica, the whole investment team, which is now five, up from two, almost a year ago. Have a blessed weekend. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed.

Starting point is 00:50:38 The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future

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Stock Talk - Stock Market Insights & Mole Enchiladas Masterclass: Cooking Up Wealth in Turbulent Times

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