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Payne Points of Wealth Podcast

Best earnings quarter in history? Ep#137

By October 20, 2023October 28th, 2023No Comments

A big earnings season

Earnings season just started and the banks came in with great earnings, better than expected on the top and bottom lines. Pepsi had great earnings last week. Growth in this quarter, based on early estimates, could be 4-5%. With moderating inflation, economic activity better than expected, low unemployment, and wages going up, we might have that soft landing the Fed’s been talking about.

Based on earnings estimates right now, we might have the best quarter in earnings in the history of the country.

Bob Payne

We're anticipating earnings are going to beat expectations because we know analysts tend to be a negative bunch.

Ryan Payne

Short term is short term.

Markets have been volatile so it may be tempting to put money into a money market or a 3-month treasury at 5%, however:

  • Short-term rates are short-term, so next year that rate could be 3%

  • What you really should consider is inflation and the income you’ll need for the next 10, 20, 30 years

  • You could be locking into longer-term bonds because rates are at a 16-year high  

  • Excluding the Magnificent Seven big-caps, if you look at the valuation of the market, it’s historically getting to the point where it’s actually cheap and priced for a big upside move

It's just a great time to be a long-term investor and I don't want people to miss the opportunity.

Ryan Payne

Now's the time to lock in those yields, so you always have them... short term is short term is short term...

Bob Payne

The Tipping Point

A scandal-free

financial independence plan.

Here at Payne Capital Management, we do many financial reviews and we find it’s almost scandalous how badly some financial matters are addressed in a lot of the portfolios we see. So we want to talk about how to create a scandal-free financial independence plan.

Scandal #1 Mutual Funds

It’s scandalous because you have higher fees for more tax-inefficient products. A better choice is an exchange-traded fund, which has a much better structure, is liquid and typically costs less.

How is the mutual fund industry still in existence?

Bob Payne

Scandal #2 The Insurance Industry

Insurance products are always expensive. But the annuities they’re selling outside of insurance, the non-traded real estate investment trusts, have the highest fees possible and your income stream turns out to be your own principal. It’s a scandal.

There's nothing out there that you can invest in that's liquid and low-cost based on what Wall Street or the insurance industry is trying to jam down your throat. I mean, it's scandalous.

Ryan Payne

If it's illiquid, it's inappropriate.

Chris Payne

Scandal #3 Lack of Communication Between Planners

Having a financial planner and not having that financial planner talk to your accountant and your estate planner is a scandal. You really want all three working together.

Scandal #4 Not Factoring In Inflation and Health Care Costs

We’re living longer. Medical costs in retirement are going to be higher and inflation is going to double over the next 20 years on average. We find most of us aren’t really factoring in these higher costs.

..assisted care can cost $500,000 to a million dollars.

Chris Payne

Scandal #5 Way More Risk Than You Need

When someone is getting to that wealth distribution stage and getting close to drawing from their portfolio, it’s a scandal to have extreme volatility in that portfolio.

90% of every new client we've ever met was taking more risk than necessary.

Bob Payne

..you're investing like you're 30 and now you're 50.. huge mistake.

Ryan Payne

Hidden Facts of Finance

For nearly 2,500 dividend-paying companies between 2009 and 2022, dividend hikes for small and micro-cap stocks outpaced large-cap and giant-cap hikes by approximately a factor of two. And this plays out the yield for the small caps of the Russell 2000 is 2.9% right now, whereas, for the Russell 2000, which is a large-cap index, it’s only 0.9 percent.

In the wake of the oil shock of 1974, the US economy contracted 3%, adjusted for inflation, sending unemployment up to 9%, while inflation topped 12%. What didn’t inflate were stock prices, the Dow Jones shed 45% in the brutal bear market of 1973-74.

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