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Payne Points of Wealth Podcast

Investing Is Not A Competitive Sport! Ep #102

By November 2, 2022November 9th, 2022No Comments

What’s up! It’s episode 102 of Payne Points of Wealth and tech is dead! Our prophecy has come true. We’ve warned you about tech for a long time. Meanwhile, markets are rallying hard here and the economy is actually growing despite what all those economists have been telling you. Is this just a big fake-out? Is this a bear market rally? Are we going into a big recession next year? We’re going to give you our 2¢ on that today. We’re going to tell you exactly how to play all the market moves and how to look at the economy right now correctly. We’re also going to talk about financial planning, physical training, and what they have in common. We’ve got a great show. Check it out!

You will want to hear this episode if you are interested in…

  • Economists are so sus! [1:06]
  • Is the S&P overweighted in tech? [4:01]
  • You make the most $$ in a bear market [7:12]
  • The Tipping Point [12:08]
  • There is no wisdom on the internet [13:11]
  • Help to do the right thing when it feels wrong [16:03]
  • Hidden Facts of Finance [21:52]

Are you missing a rally because you’re overweight in mega-cap tech stocks?

If you look at the S&P 500, it accounts for something like 25% but the entire weighting is only in six or seven stocks. That’s the problem, the S&P is so grossly overweight in tech that you’re not benefiting from this rally. What blew our minds looking at the numbers this past week is that old-school boring value stocks like JP Morgan, Coca-Cola, and Pepsi are only down 5%, but tech growth stocks are down 30%. That’s a 25% spread!

This tells you that right now it’s not about being in or out of the market, it’s about having the right portfolio. If you’re diversified you’re not down that much this year and that’s the whole point. You have to spread your risk out. The overall market is telling us that some parts of the economy aren’t doing great like tech, but some parts of the economy are doing really, really well. It’s like we are experiencing rolling recessions, not an all-or-none proposition.

This week on the tipping point: Financial Fitness Trainers

There are a lot of principles that we can apply from the fitness world to your retirement or financial independence plan. What we’ve learned in our boutique firm, Payne Capital Management, is that our role as financial advisors is a lot like being a personal financial trainer.

The similarities are remarkable. You definitely work out better when you have a personal trainer. You get in shape faster and you have less injury because they get you to focus on every part of your body. They don’t limit you to what you would limit yourself to. That’s what happens when you’re investing. “Well, I’m not gonna invest in that area because I lost money there once.” or “I’m a brave investor, I’m going to roll the dice and go a hundred percent in crypto or the arc fund.” You make a lot of mistakes because you don’t know what you don’t know.

This week’s hidden facts of finance

  • John Deere and Company has 50 autonomous tractors in its global testing fleet but intends to ramp up commercial production next year.
  • Money funds are now paying a lot more than bank savings accounts, which yield an average of 1.09% according to Fidelity’s tax-exempt money market fund may be the best bet if you’re in a high tax bracket, it pays 1.75%, which is the equivalent of getting 3.43% if you’re in a high tax bracket. That’s not bad for money just sitting in cash.
  • Renewable energy could account for 60% of power generation in Western Europe and 35% in the US by the year 2030. Up from 35% and 23% today, respectively. Ironically, high fossil fuel prices are the biggest reason that energy producers have the ability to fund the energy transition to cleaner alternatives.
  • Schwab generated 132 million off money market funds in the third quarter up from 29 million a year ago when the company had to issue waivers to compensate for ultra-low money market yields. It’s incredible how much yields have gone up in the last couple of months.

Resources & People Mentioned

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