It’s Episode 121 and the economy continues to remain strong. The jobs market continues to surprise everyone with a hot jobs number. This past week and inflation continues to come down. Every naysayer out there still skeptical of what kind of condition the economy is in. You know how we feel. We’re optimistic, but we’re going to talk about it today.
On The Tipping Point, we’re going to talk about picking your financial independence date. When can you stop working, and live off your portfolio? What do you need to be thinking about?
The Pessimists Are Struggling Right Now
Our sympathies are with the permabears and pessimists–they’ve been so wrong
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The “experts” refuse to believe we’re in a bull market
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The jobs report last week was super hot
- The experts say it’s only the tech sector that’s up. But homebuilders, casinos, healthcare supplies, and construction equipment are up double digits.
- The international markets are up big – Greece is the best-performing stock market in the world right now, up 30% for the year
If the market was going to sell off it would have happened already
- We’ve had a banking crisis
- We’ve had a war in Eastern Europe
- We had record high inflation
Instead, what we’ve seen is resilience. Businesses have had record earnings as companies are generating more revenue than ever.
”They believe it's just a bear market rally.
Bob Payne
”The experts and economists are saying maybe the recession will be in another month from now.. 2 months from now..3 months from now.. Why can't they just change their opinion?
Ryan Payne
Nvidia Up $1 Trillion Overnight – Do Valuations Still Matter?
Wall Street speculation and gambling on new ideas is nothing new. But is AI even a new idea? Remember the IBM Watson TV commercials? Tech in general has had a great run, but look at Amazon trading at 70 times forward earnings.
We’ve seen this before with Microsoft
After the tech bubble burst in 2000, Microsoft increased its revenue by like 120% over the next ten years. But the stock went down 50% because the valuation was so high. It took a whole decade for the valuation to get normalized again. That’s your big risk in tech right now. You’re getting a big rebound now but it could languish for a very long time. If history is our guide, that’s probably highly likely.
”You've got a stock like Nvidia that was down 2/3 of its value last year, is now up 1 trillion in value overnight and valuations suddenly don't matter again.
Bob Payne
The Tipping Point
Picking Your Financial Independence Date
Payne Points
One of the biggest problems that we solve for the thousands of families that we work for here at Payne Capital Management is determining what’s the safe date that you can be financially independent where you could walk away from your job. We do this by building portfolios with strategies designed for achieving individual goals and expectations because everyone’s are different.
The first thing you need to know is how much you’re spending
- Not what your neighbor or someone you know spends but what’s important to you
- Most of the people we meet with have no idea what they’re spending
- Knowing what you spend directly correlates to how much money you’ll need at retirement
- Healthcare spending is a complicated part to determine because people are living longer
”Let's face it, because you live longer, you're going to have more health issues. That means there's going to be more pressure on your portfolio.
Ryan Payne
Think about the lifestyle you’ll want in retirement
We find that people put pressure on themselves to “keep up with the Joneses” or are distracted by their friend or neighbor buying a boat or a house in the Hamptons. The key is to determine what’s important to you and what you want in retirement – and build your plan around that.
”Some of our most wealthy clients are the people that don't drive the fancy cars or have the biggest houses.. they're more keen to save money.
Chris Payne
Run the numbers
The nice thing about running those financial numbers is they don’t lie. They tell you where you’re at right now. That’s why a lot of people don’t like to do financial planning because it’s a little too real. But it’s better to know where you are, whether you have a shortfall or don’t have a shortfall.
”"Scared money never wins" if you're never comfortable that you have enough.. you're never going to let your money work.. you're not going to have the patience.
Bob Payne
Hidden Facts of Finance
You have to go back to the early 1950s and Harry Truman’s second term to find a presidential approval rating of just 37%, while joblessness was as low as it is today.
The average price of a roundtrip trip to Europe now is $1,167. That’s 36% higher than the same time before the pandemic in 2019.
For the first time in 40 years, U.S. debt servicing costs are rising. Interest absorbed 12.7% of tax revenue in April, up sharply from 11.7% a year earlier, leaving less room for other spending. Historically, when net interest costs reach 14% of revenue, financial markets have imposed austerity on the government.
