The PlanStrong Financial Forum 08-19-17

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Sunday, August 20th
00:54:31

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From those plans stroll in the broadcast studios he would still play and strong financial forum will be your host. Jim farmer her family president Roh plans strong investment management. Cold War games this time Bruce Morton investing. Symbian phone. And I'm Ken carver is the anchor desk and pulled Parsons is not with us this week he's on vacation so joining us is how it's vendors CFA Alex works with Paul Allen's an analyst at planned strangler Mecca program thanks for having me absolutely and it's been a busy week you know Paul takes off and lots of things happen in the news it seems is simply he knows one busy weeks or Cummings or abduct several little golf. And it has good busy week and yeah yeah but it's been a busy summer. It's so we'll we'll talk about that and that's a good point doom Paul and I did mention that last last week and the week before that you know these. That old adage and it's only go away certainly would does would not be a year because a lot of sub has been going on. And sometimes it's soothing your lines like that are approved. Just by the fact that there's so wrong beauties I won't let you can't you can numbers are mango way animals you'll remind data enough you'll find trends that may or may not recessed so the -- and doesn't lose your job as mining data yes and I read another your jobs is changing diapers on what I guess so congratulations. To your new -- for the birth of newborn baby boy thank you both well falsely for the shows up exactly like getting much sleep conflict we would like to welcome deck went to the world and congratulations anyway thank. So that you don't even want a baby is born and may be especially baby is born can we have to talk about what's going on yeah I don't talk to us consumer spending this week average which well it was a good number earlier in the week I know that I've contributed to that especially severe losses and yes that's a fact that. So good let's send beginning this is just look at and of course we always have to bring you bring up in context and with today's news stories so. We'll look at what's been going on in the in the in the stock Mario storm the US start Marty what happened in the. That was another volatile week with global relations if another volatile week with the crowd the demonstration. On the end Fred good markets as well. Tennessee early in the week it really seemed like the fears the North Korean fears from last week for subsiding right on the other big news it was over the weekends at you know senior White House officials really downplayed the idea of an imminent war. And then to top pentagon official also said that type. You know they're they're looking for diplomatic solution and and then later bilateral also early in the week North Korea came on said that. You know they're on the holding off from their attack. For Guam from Iraq which I don't know where it was a sigh of relief to the market or not that a whole lot of people really believe them in the first place because this is just. A string of of events that seemed to always have the same endings hmmm lots of threats. No one really ever coming through and and people backing often and that's to be what's happening it did the it's worth you word down a bit last week at least they weren't and so earlier in the police are and so that news this week who recession rebounds and a yep yep and down. You know what with the with career we can't forget they're there history month two years ago also during August. Com North Korea issued a 48 hour world ultimatum on South Korea to switch off the loudspeakers. Which were were blaring around you know. Propaganda across the the demons demilitarized zone friend and a Korean Peninsula. South Korea decided not to do so. The 48 hour deadline passed and North Korea subsequently. Apologized essentially and then backed off and then the the and he the issue is do you escalated. And then again. Last year. In march of last year during US South Korean military exercises on North Korea threatened to attack come. North north are sir South Korea's Presidential Palace solicit receive an apology from their than president. No apology was received North Korea ended up backing off a threat never materialized same story so it's always something you have to take seriously. To an extent but. I I'd say the market reacting generally just about every time you'll see page. A sell off followed by a a real relief rally once that the threat really materialized so that's what we saw again. So we did see some rebounding but then we also saw and some turmoil. Involving. Rumors of Gary Cohn Mon June. And we're gonna obviously we will know what happened. In in Virginia who we all know the I'm backlash that trump and and his his administration took for their response to. That situation room and there was real concern on Thursday there was actually a rumor. That. Jerry Cohen. Who who was kind of a top White House economic council was going to resign and people saw that as a big risk because Tom a lot of people were hoping he was gonna be. Kind of pushing through tax reform and if she who is disgusted by cops remarks really didn't resign. And that really left a lot of these tax agenda and questioned whether or not it would be on completed this year completed at all completed to the extent that people were hoping. My arm and the same time a lot of these CEOs that are backed off the guy on the council. No one really wants to see. Any any. Separation from. Those forces because you know people liked seeing them come together in and hope for. Lower regulations lower taxes or we're gonna help our companies and and now it appears that they're going to be going in the other direction and then that obviously throws some some cold water on. Something that really dropped the stark stock market up since the election so something worth worth considering. I'm I think there's still a lot going on behind the scenes with tax reform. On the ninth I still think it is definitely calmed something that could happen before year end and common that would be nice boost the market but certainly Tom moments like these events like he's. We do wonder if if some those relations are gonna be dampened the point that something is not. You are today. You're a star market's doing pretty well there are still a great year son you know despite the basic tickled over the last couple weeks. You know we're still within a few percent of all time highs on on major US indices. Markets up nine or 10% or so pounds so far this year. International stocks are actually closer to seventeen or 18% so it's been even better story there on the stole all around relatively good returns even in the bond markets. You know not nearly as vocal. Common there have been a lot of concerns about rate increases and people are wondering if it's even worth owning bonds but they've returned already 3% including interest this year. Which I gotta say is better than a lot of people expected out of bonds and so again not not bad from the conservative side your portfolio. And if you're aggressive in stocks especially international stocks you've had a very very good year so far. Ruled the US dollar bet. Anything new movement there it again. You know talk a little bit on later in the show about how we the dollar's been but how it was really fifteen year highs so it's really just taken a step back from that this week not a whole lot of change there. On the anything typical you know was stronger earlier in the week. And then as of risks escalated later in the week there were some also some some news from the Fed. The minutes from their July meaning was released and there was some. I'm disagreement over the timing of the next next rate increase and the probability has declined somewhat for another rate hike this year. Generally that leads to lower rates potentially lower rates lower inflation. Arms hands. And so a weaker dollar relative to some of the other major currencies. No we did see some movement in oil and that we had seen oil creep back up a bit get no closer to the fifty dollar mark in Dubai and burns to back the other way this last week you know oil's been another seesaw it's been you know OPEC is going to cut production OPEC's going to cut exports. You know the US is getting pretty close to all time on highs in production. And this last week it appears that OPEC actually increase production again in July and the US is awfully close to their 2015 peak of productions are. You know it's been a seesaw story for oil this week it was sun it was us it was on the downside. Energy stocks are still a laggard this year they're down about 15% so far year to date. Well behind all other areas in the stock market no mood there was some important economic data released by the government what are some of the stories there. So retail sales arm came out earlier in the week and it was a very very good number impound relative to some of the more recent reports which indicated that the consumer was not spending. The number in. July was point 6% a month over month over month growth vs a point 3% growth ask expectation. We also saw an increased in the prior months come revision upward which was also a good sign so. Some of the concerns of consumer wasn't spending. Were bombed. That those fears are work work on the sweet this wasn't just the Bender family they're doing little or no I don't think those those numbers have quite hit the economic cycle yet are monsters do real zero a nice uptick curry did just checking. So and so those numbers Europe what else we have. So with those I should say there was some risk in those numbers nom because one of the other things they they look at is this credit card debt and savings rates. And generally you like to see people spending but you don't like deceit and ramping up credit card bills you like to see them spending because they're making more money at work but they have been ramping up their credit card bills and receiving less and I was a little bit of a risk that came with this report. In fact. The savings rate reached a peak in October 2015 of around 6% from right now work closely with three point 8% com and that's not far off from crew recession lows so something to look out for there not a lot of I'm not a lot of room for consumers continue to spend when they're so when that. Any numbers Serb for retailers who came out yet again if it was a mixed landscape. Com for retailers but overall spending was relatively strong especially in certain areas. A lot of focus has been on consumer discretionary names and especially regional stock has even with a strong US stock market that's up significantly. Retailers have been down about 15%. I don't market cap weighted index of of retail stocks are down 15% over the last year or so. Some better some worse we did have we did hear from Home Depot and target and TJX this week. Reported Tom you're pretty good same store sales growth which is very very important number for retailers. We also heard from. You know Wal-Mart which there were some good some bad and and they're they're seeing a lot of competition from Amazon so their cost four bit higher so stock was little down but. They're seeing strong growth and e-commerce Tom and they're still seeing some scenes were sales growth and and traffic growth so those are good signs for the consumer. And the stock had been up so much that I think expectations were pretty high that even though they posted a solid report wasn't quite as good as people expect. Are there any retailers it didn't have good reports the yeah you know urban outfitter storm came out Macy's Kohl's JC Penney. Dick's Sporting Goods all all. Showing signs of trouble seems source source sales declines comment really missing out. Losing out to some of the that those retailers with on line presence. On steroids I'd say the brick and mortar retail. Market is still a challenged one on and that's essentially the ones that have managed to ramp up there. E-commerce like Wal-Mart and like a target have managed to it to. Do OK but other ones are are really losing out. Mr. you're Alex and vendors CFA who's with plans strong when we come back more stories go what's going on the market in investing ideas it's all coming out of supply as strong financial form. This is tall Parsons president of planned strong investment management. And you're listening to them planned strong financial forum on WRKO. Boston's talk station. If you like what you hear on our show and what media take a look at your investments and retirement plan called my office. 80889727526. That's 888972. Plant. Securities and investment advisory services offered through metro metro group member and as I can sequester investment management is an affiliate of this financial grouping is located in Washington street and Massachusetts. Hi this is loving Nelson. People use different strategies to acquire enough money for retirement. Some try to do it themselves. Others buy insurance or investment products though sometimes will benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to act in your best interest. And be paid the same amount no matter watcher invested in if these things matter to you. Call Paul Parsons at planned strong investment management to learn more call 888. 9727526. Hiring the right advisor could be your best investment. That's 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group linked member tumor SIPC plans to investment management is not an affiliate of next financial grouping and is located at 980 Washington. OK. Okay. Okay. Okay okay. Okay. No one's own broadcast studios and the epicenter of any issues this has no plans strong financial forum where all portions president of planned stronger and just remember. And I can go armory here at her desk hello with Alex Bender who's in polls seem today Alex's C is a CFA and an analyst at planned strong. We just remind you that this of course is a good time to call plans strong. And senate but no obligation portfolio review. Pollen I spoke who have there's just last week oh here we are wearing the dog days here and things you're a little bit quiet. And that's actually good time because there really nice quiet in the markets are they are doing things. Mark you don't take vacation days and so but didn't perhaps in your other lines of work you are taking somebody cases are some time off and gives you an opportunity. To put some paperwork together get in talk to Paul and Alex and say what do I have what should I have. How my doing that sort of thing is I don't know obligation portfolio review. That Paul and Alex are happy to do with you they sit with you. And that they brought an hour are now for show and really give you a good review there's a lot of other. Work that you do as well as Social Security numbers don't. So does is this is our brother. Whole process is not just our my Starks and the right place you're at it really starts with the financial plan you know which is something that we also offered no cost listeners. Where will take a look at their assets will take a look at their expected future earnings. Any future sources of income whether it's Social Security your pension or investment income were inheritance. Or the downsizing ever of a home truth these are all things that we take into consideration and we put a plan together and just to tell as a roadmap for are you going in the right place you have to make any major changes do you have to take as much risk is your take energy you'd be taking more stock market. Are you contributing enough. On what should my withdrawal plan B that's the most taxes fished to be in retirement things along those lines and it really helps us figure out. Oh what's what's a prudent investment strategy and from there are we match attest to how you're currently invest. And then from there we then say okay well wool are you consistent are part of the investing themes that you were. I'm going after and your portfolio are they consistent where it's where we see the market. Is is your portfolio eakins comprised of things that were. Well suited for last year but may be some of those things have have gotten a little bit expensive menus timed it to rebalance and diversify and some other areas. That's really the second part of our meeting. Is is going over really investment themes and investment allocation. And you know I I gotta say it it. I've seen a lot of people get complacent. The bull market has added risk took to people's portfolios and a lot of people have gotten in late. This has really been one of the most heated bull markets have ever seen for a occur where people are are just. So negative on prospects for this country for the global economy that they're just unwilling to invest in the markets. Or are scarred from what happened in the you know the the 070 wait 09 ignorance. You know they just stay out of the market and and I'm starting to see some of them get break back in and taking risks that frankly. Not not the time to take the risks they're taking my. And ends it's not just me who's seeing this and in fact fidelity. Came out with with that of reports. Com that shows that that there investors hold about 70% of their assets in stocks. Vs about 50% in 2009. Really frankly I would I'd like to see those numbers reversed. Has generally when markets markets low and there's fear is when you wanna have a little bit more emphasis on risk. And when the markets how high end. And and people are generally pretty optimistic is when you wanna start taking some of the risk off the table so. You know I'd I'd say if if you've been in a risky portfolio riskier than they're comfortable with it's been a good time to do. But now might be a good time to reevaluate that and and and I'll speak to a professional quite like coming in Paul about. About so what what might make the most sense for the next next six to twelve months. The toll free number for cholesterol. 8889727526. That's 888972. Plan. Or go online to plans strong dot com and just send an email to Alex sort of fallen say. Early December employment were in command for no obligation portfolio review. And as you can tell from what else she said there's a lot that goes into that and you really is a worthwhile. Hour hour and a half of your time. We really merely good idea as to whether or not as you said you pointed in the right direction from where we are as a as a nation where the economy is right now. 888972. Plan or plans strong dot com. Alex in the pro break we're talking about two or some of the government data that's been released and though. One thing they came out were the minutes from the last fed meaning what what we learn from that it's boring and nobody is always there's always something interesting in the. You know which it's it's always important to look at what's behind. The economic situation what's driving the markets and some of the things that we look at her are these these these weekly. Earnings releases him calm and frankly these these weekly economic polices and we've just gotten done with. Two were or were just about at the end of second quarter earnings season. Com and it's been a very very good one off following a very very good first quarter earnings season so corporations are burning. It's. Good profits close all time higher profits and the growth rate for the first quarter was about 14%. It's looking like the second quarter is gonna be approaching that as well maybe closer to 12% but considering at the end of the first quarter people were expecting the second quarter growth rate to be six. Coming in at twelve is a nice positive surprise and that's why you've seen the market rally like hats. When the market gets long in an economic recovery. You can't really count on the market to just get expensive because it was oversold where we're past that. At this point you need fundamental improvement to drive stock prices higher and we've continued distressed us. And after two years of earnings doing really nothing the market did OK in that period. Make got more expensive. Earnings are really are driving stock market performance. And kicking the can down the road insane lower earnings are gonna come back next year. That time is done and we're finally start to see companies post good fundamental results. All get more of that in a minute. Talk a little bit more about the other economic numbers that came out this week I said retail sales was a very good number after some some weeks months that it's showing some signs of a coming back through. And it also revise some of the prior months up so wasn't as bad as originally thought. Also we we heard from the Fed. Their minutes from their July 25 26 meeting Tom were made available they were released on Wednesday. And they showed that the on some of the the numbers were having some doubts over inflation have been wondering if now is really the best time to raise rates until inflation kind of got nearer to their part of 2%. So like I'd say that before the meeting the odds for a another rate hike in 2017 were about 5050 maybe slightly higher. Now they're slightly below 5050 problem that the odds of a rate hike or slightly lower than they were before the meat. And rates were down a little bit because of that because beat the expectation of future hikes is slightly. They didn't seem to agree though that next month might give good time to start reducing there balance sheet of of of treasury bonds and mortgage backed security and so I mean that what that means is they've been buying up. You know trillions of of thumb bonds to keep interest rates slow not just short term rates but long term rates mortgage rates. And they're finally starting to move in the other direction where they need to get sell some of these beckoned the marketplace. And it's gonna be a multi year process but it's a real turning point once they start that there. What are the jobless numbers they came the jobless number cure and on Thursday yup again and again. Jobless claims weekly weekly unemployment claims were. About as low as they've been for six monsoon must still an incredibly low number which points to continued strength in labor markets. That's one of the reasons that the Fed is a little bit surprised at one inflation is running solo because with a strong labor market. You'd expect to see earnings growth. You expect to see wage growth and and that piece is starting to show but it's really been slow. Arm and and the hope is that continued strong we will market will eventually bring back that wage inflation that the markets relieved and lack. Alex you mentioned a good earnings season so far I can use some specifics when we learned. Yes so about 9092%. Of S&P 500 components have reported second quarter earnings and and that close to 70% are being on earnings in close to 70% are also beating on revenue. And so on those stats alone more companies are being on both earnings and revenue and typical mom also works were expecting about 12% growth rate a mention the expectation at the beginning of the quarter was about 6%. Very positive there. Of the sectors that are really leading this earnings recovery. Energy is really coming off of easy comps a year ago when oil prices were so low. So energy is showing the biggest multi our year over year change in earnings and positive 300 plus percent. That was expected. What really wasn't as expected was some of the other earnings numbers we've been getting on specifically technology financial some health care. All continue to lead the charge with 10% plus earnings growth. I'm technology had at about fifteen or 16% has beaten by about 11% in terms of the expectations so technology is a really blown out of the park. On this earning season and that's one of the reasons tech stocks have done so well was because the the outlook is really improved these companies. All right so let's look at some of the tech headlines and terrible start with a apple. As Paul I know has mentioned in recent shows revolution continues in the inner entertainment space in the media space TV space. This week that continued apple announced the budget of a billion dollars for TV programming not a big portion of their business but then getting into the space is certainly something to keep an eye on sure they're joining other tech behemoths Amazon which got in in 2013. FaceBook and Google which are read our our more recently getting into the arena. And it it is something to keep an eye out for. HBO spends about twice that on contents. But it is in line with what Amazon's budget was when they enter the space a few years ago also what the what this means is that apple always is going to acquire and produce probably as many as ten. TV shows. They're calling and offered through there streaming music service or even offering new movie. Video focused service. But it's clearly a change from their existing model where they've really focused on iTunes for. TV show rentals and found. Movie movie rentals and even movie purchases from what they've seen this is iTunes has been a bit challenged by Netflix and some of the other video subscription services your and they're fighting back I'm just for exhibit example. ITunes generator about four billion revenue. Over the last year. But its share of the movie rental and sales market has dropped to below 35%. This was above 50% in 2012 so there's they're clearly seen the competitive. Impact in and doing what they can understand front but don't they have a deal with the Netflix and HBO that's why they have to be careful. They they do get about a 15% cut of subscription revenues. From its App Store for. Netflix HBO go here so they don't wanna remind those waters cassettes episode that's a good cut of a pretty good business. If I'm Netflix and I do little upset that my business partner just put a billion dollars into a competing and entertainment consoles are and then you use you saw with what Disney just did with Netflix right there aren't as Paul talked about in recent so there is there. People people want to. Be able to participate on Netflix but at this point they're they're looking to have a competing services wells they can get more upon the momentum back our children to address or another interesting. Apple announcement that's when we return split a strong financial form this is. All Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Boston's talk stations. If you like what you hear on our show and what they need to take a look at your investments and retirement plan called my office of 808897275260. That's 888972. Plan. Securities and investment advisory services offered through an intranet to prevent remembered him as I can sequester investment management is an affiliate of this financial grouping is located in Washington street domestically and six. Hi this is on he Nelson. Now it's time to get organized and to make sure you have a financial plan. Who protect your retirement. Rich your financial life together. Call Paul Parsons had planned strong investment management to schedule financial checkup call 888. 9727526. That's 888972. Plan commit to getting your financial house in order call 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group member and SIPC plans drawing dismantled our affiliate. It's. He says financial talking to your signing and informative. Ground at least is informative it's Glenn strong financial forum where you hold portions of the president's bold plans stronger investment management and concur birdie. The anchor desk along with Alex vendors filling in this week for Paul Parsons follows playing golf Alex should be playing golf because he's just had a baby truly should help but know Alex is working. When you don't tell I have to sergeant Paul. This time he's on vacation and you just have the baby. Sort of game graduation student too embarrassed I maybe came early three weeks early and Paul have this vacation schedule when he was there's Larry nice to get there's only daughter there's nothing fair about this just so taken care of the baby although obligation. But the reason remind you of the former you know when you do not need to call and talk about child care with Alex but you may wanna call. And and as scheduled no obligation portfolio review. And the toll free number is 8889727526. He needed 972 planned. Or you online to plans strong dot com it's very easy leaders send an email to Allard shortfall or both and just say a set of employment the right back to on Monday. And the sort of employment firm for this week the following week. This is a great time to do it. Who got a couple always before everything big subway once September hits it's like you did we never find a free moment so the good times and do on schedule and hours so to sit with Paul and Alex. And make sure that your portfolio is properly aligned. For a what's coming up and boarded we there's also observed we have been as you can tell from this show the number one goal that shows let you know how much research fall allergies do. There's a law the resurgent goes into what they do for the food their clients and obviously that. This year some of that with you here on the program to see you know whatever work they do. That research points in the right direction to make sure your pointed and there are great direction once again ADV 9727526. Or plan strong dot com. We're talking about some of the attack news Alex before the break and there is. Coming up soon so we don't know the date yet the true will be the new iPhone from apple. And that's always the focus on a stock because it's still such a big contribution to earnings it's it's 70% of sales so while BI phone's always gonna be the behemoth for apple or because everything else is relatively small in comparison. We talked about some of the initiatives Apple's been taking too. Reduce their dependency on the iPhone in what could be a relatively saturated market but there are still some some optimistic. Views on what the new iPhone could bring a new upgrade cycle that that might. Bring the stock to new highs you know some of the other things that excite me in this release XP from any personal standpoint it is. The announcement that they recently made on the new I watch which is some sleet to come out sometime this year hopefully. It's and I watched that doesn't have iPhone dependency anymore it comes with its own. Says cellular capability so if I decide I wanna go for Iran I don't need to have my phone in my pocket or your pot and I can do everything I need to do for my phone. Still have voice commands still be able to do everything. But not having to have your phone is a big. Swing for me you know where before it was really just an add on now which it can be considered a separate device and one that I will strongly consider. And that does make sense you say they're certainly for people who. Wanna have their iPhone with the more exercising any running any candidate exercising hiking. It's carrying. The phone is that giant pain in the neck I mean I see my daughter Rondo and she sometimes strapped into her arm. But she gets her way to a mother's arms are so big digitally manage their phones and it's it's even harder to do that she actually most of the time holds it in her hand and yes that's just doesn't seem like you're getting the most out of your work out when you're holding your iPhone you don't wanna throw water droplets. So we have the idea of strapping a watch on. And it that would really make a big difference to a lot of people who want to remain active while having your I device with them. And being a new dad carry around a paperback from time they are gonna do have more speaks to pull my life that's it nonetheless I still find it pretty appealing to be able to have just watched her be able to handle the duties. Between. You know keeping the phone on me all time. Right so it and that's good that's there it's a good point eight so will be keeping an eye on that we don't go away and that's coming out but it looks like that's a couple of new things we Capitol Hill and so what else we learn about tech tech has gotten a lot of attention and 'cause it's it's. Frankly been such an outperformer in the market on the after driving a lot of the returns in the market last year this year it's it's having another great year. And despite recent pressure and volatility and and some of the comparisons to the dotcom bubble. It's still up 20% this year that tech index Tom Cruise is 10% for the S&P 500. An index of 500 dollars corporations in the US. Com and investors generally take notice and a lot of them feel like they've missed out. A lot of them feel that the best days are behind them and and there was there was an article on Fox Business. In the last couple weeks and I wanted to share some of the findings from that because it really was comparison between now. And the seventeen year ago dot com bubble and why. It's really not even a close comparison between now and did you do hear people talk about them in the same breath often so Olympia Lebanon through all of that part of what I'm talking about here in the most hated. Powerful Margaret Herrera is his people have been missing out and there's there I'm skeptical about the reasons that the market's been up. Mom and they feel like a correction is coming and they've been saying that for years and it's just been it's it's been bad time to have that view. Iran and an ice I still feel that as long as there is that sentiment out there it's it's a good signal for the market means that they're still. A lot of people that are under invest in a lot of money that could come to work once we do start seeing the good results like we've seen. Army and there is real upside if we do get this tax cut which I know Paul has mentioned before god. You know well a lot of people have been doubting that especially recently and and if we get that. That could be a very pretty big boost earnings that could be a very very big boost consumers in spending on deck could go straight to the stock market. So why do you think you and why is Fox Business think that does the current tech boom is nothing like the the the bulk of them juniors the area the first his first as though. Tuitions and on this destroy the most cited. Difference on is it if it being there actually looked at the largest five US tech stocks what they called a power my that's out that's apple alphabet school. On Microsoft Amazon and FaceBook. You look at their valuations. Today relative to the top five tech firms back in 2000. Are you looking at how price earnings ratio of thirty now. Vs a price earnings ratio of nearly TD then O'Grady vs eighty. Greg might not sound like a lot that's a big difference and valuation means that the companies actually have the earnings from underneath. To support the stock price brand if you look at the growth projections ahead for earnings they're all pretty substantial. So not only is that trailing PE reasonable compared to what it was back then little on the high side but nothing generally ever stops at the average. If you're looking at its foreign earnings which take into account growth expectations there are even lower mom and also very competitive relative to where we were back in the in 2000. Thorough a second time. Difference cited was liquid assets. And mainly then vote on the power five companies again the average. Cash balance and marketable security you know. Securities and can easily be converted into cash from. Is about 18% of their value more than 18% of the compared to back then it was only about 2% the value was cash and these are you security so there's much more behind it if you take the cash out of the picture. That's essentially. Value right there that can be assigned to the company if you take it out stocks look even more attractively priced. I'm and also if they fall on hard times they have much more. Protection too to get through that's for the situation from here on the nonetheless is really relative performance. Because it seems like these stocks have had a very very good run it's nothing compared to the run they had. In the dotcom era turn on the average trailing one your return to Philly for the out power five. And this was as if you know mid June when an article came out was 45% up. That was a underneath 5% in in the temple macho 45 vs a 185%. Recur in one year and if you look over this year. Aperture turn that's even more staggering. A 108% for the the power five companies on average. Verses over 600% for the top five of the tech bubble. Our top five largest companies in the tech buttons that really just shows the degree of this relative performance is nothing like it was in valuations are much more reasonable. And frankly are our outlook for these companies is probably pretty strong earnings growth. A lot of them frankly haven't tapped into some of the day the markets like artificial intelligence and cloud computing that we anticipate will continue to reshape the tech business. No actually talked a little bit about the dollar earlier in the program and the fact that dollar. Which was pretty strong enough gotten a little weak. Talk a little bit about that and what might that mean yes it's funny because in the last few years 12014 to 2016 when the dollar balloon to a fifteen year high people were talking about the negatives of that. And now the dollar is weak again and people are talking about the negatives that perfect so I kind of wanted to set this the record straight down that frankly a lot of company cited the dollar strength is he really big negative dragged their performance because the S&P 500. Generates almost 50% of the revenues from overseas. And if your revenue is generated in euros and yen and other currencies and those currencies depreciate mother time you bring it back home. You have less honest right so the opposite impacts happening now when it's actually going to be improving business earnings and a lot of companies have cited. In their latest quarterly earnings releases that. In the dollar is actually becoming a tail wind what once was ahead wins now what tail went and I wanted to talk a little bit about why that's the case sure. I'm first of all hit the dollar index is down about 8% this year. It's even more pronounced against the Euro which it's down about 15% against the Euro. But it's still about a dollar eighteen and it not long ago was a dollar thirtieth and a dollar fifty sir still relatively strong despite the the weakness so far this year. A weak currency does have its down side that does make it more expensive to travel overseas and it does increase the price of imports. And it can be a destabilizing factor to financial markets because you don't wanna invest in an economy if you think the currencies into devaluing to significantly. It can sometimes lead to capital leaving. Which isn't good for. Performance but it also has its upsides and the near term upside could outweigh those risks. In June exports in the US were up 7% vs a year earlier. A sharp reversal from the 9% drop that exports had from 242060. A weak currency as I said increases the value of profits that these S&P five charter companies on overseas so it translates to higher. I'm bottom line based on the currency translation that's been in big big factor here. And and frankly it also serves the needs of fat as as I said earlier in the show the Fed is concerned about weak inflation. But if you're if you're currencies weak and her importing more expensive products from a recedes. That will help increase inflation they I think they they estimate that that's gonna add about. Point 2% to inflation not a not a ton but it's gonna definitely helped them get torched their goals where they feel more comfortable about the recovery and start to raise rates. So again. Ms. long as the fall is order order orderly comment for the right reasons I do think that this week dollar can be relatively good and a nice tail wind to otherwise sluggish US economic growth. Al Aqsa international stocks I have our crude gonna drag on portfolios for many years but it appears that this year may be a little different when we come back. We'll talk about that it's a plan strong financial for a. This is tall Parsons president of planned strong investment management. And you're listening to the plan's strong financial forum on WRKO. Dawson's talk station. If you like what you hear on our show and what media take a look at your investments and retirement plan called my office. 808897275260. That's 888972. Plan. Securities and investment advisory services offered through metro metro group member to me as I can sequester investment management is an affiliate of this financial grouping concluded that any Russian diplomats improved to six. Hi this is Bobby Nelson. People use different strategies to acquire enough money for retirement some try to do it themselves. Others buy insurance for investment products though sometimes will benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to act in your best interest. And be paid the same amount no matter what your invested in if these things matter to you. Call Paul Parsons at planned strong investment management to learn more call 888. 9727526. Hiring the right advisor could be your best investment that's 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group and member former SIPC plans to investment management is not an affiliate of an accident real big and is located tiny new Washington street Dedham mass. Ground zero for your financial news and economic commentary. This is the plan's strong financial forum where Paul Parsons president of home plans stronger investment management. An engine car very connect the best skin crawl is on vacation so Alexander CFA is joining us today Alex is an analyst at plans strong. Lower my new their toll free number 8889727526. That's ADB 972 plan. Where you can go online to play and strong dot com. Anderson the no load times Paul endure Alex will get back in touch with you and said it would normally Asian portfolio review and as we've been discussing. Don't during the program this is a great time to do well things drew little quieter in the world as we are in the a little bit of the dog days of August even though the market is not taking your vacation time volatilities pick up now has so things are definitely happening in continue to happen. But this would definitely be a good time to sit down say MI are positioned correctly for the rest of the year for the next quarter. For the next couple of years perhaps and of course if if you're nearing retirement drift that's an issue in my position correctly for my retirement elite 89727526. Or plan strong gun cocked. Our to a for the break out as we're talking about international stocks and let's face it for folks who have had international stars in their portfolio over the last several years. This new bit of a drag. But does it looks like things are changing. Yep the last time balls on the show several weeks ago. I intended to talk about this but of course I came with way too much smarter about it never got around to it so I'm pleased still have this talk about OJ wanted to. I have an entire segment for itself. Listen only conference call with JPMorgan not chief economist doctor David Kelly. He's one of many that we keep a close silent because they generally your are right about their forecast months going on and then there. Their tips and their positioning has really been helpful. As we managed client portfolio so someone we always not although not necessarily always agree with but some we always pay attention to for insights and oftentimes learn a lot about the specifically what's going on not just in the US but outside the US and the that the title of the com call was harnessed a world of opportunity. And he started the discussion really explain the five plus two problem okay June nerves are playing good to be very very simple five plus two. Given the length of the US bull market. We're in the ninth year for stocks and we've been very very good. Market for bonds you know 35 years of flat or essentially declining interest rates than men and nice tail wind for bond market prices. Return expectations given that our. Have to be pared down given given the strength that we've seen in in recent years especially in stocks an aspect of the five plus two problem. Given given the valuations given recent performance trends they're projections force US stock market returns over the next five years or about 5% a year. And for bonds given the level of interest rates right now with the tenure about 2.2 percent. Their projections for bonds or are about 2% a year for the next five hour. Fires when Stosur I got close to the man in a 6040 portfolio if you're getting six pursue our sorry 5% on the sixty and 2% on the the forty you're looking at about three point 8% per year. That isn't necessarily going to cut it for most people who aren't frankly if count on much more from their retirement portfolios to a live off much more to accrue. Retirements so they can. Develop enough of domestic deliver often retirement. So in order to improve that figure they encouraged investors to really look outside the US international stocks which hasn't been a popular thing to discuss because international stocks have had problems of their own. Despite what you think as a pretty volatile. Period for US stocks but a good period it's been a pretty multiple and it down period for international stocks and that's starting to show some signs a reversal this year. As as I mentioned earlier in the show US stocks are up about 10% so for large cap US stocks are about 10% this year to an international Sox struck closer to 18%. And if you go even. Higher growth more arrests are emerging market stocks are up close to give up point 15%. I'm so despite good US returns you actually started to see international recurrence outpaced that. Some of that's been helped by the content strong international currencies returns have been amplified by that currency movement. But you're also sorry to see some of these economies are really take a turn for the better. Let me start by talking about relative underperformance of international and relative valuations so. Took to better explain the potential for future recurrence. Since. That look let's just go since the prior peak of the US stock market in 2007 international stocks peaked around the same time in 2007. We know I have a great and we know what happened after. So for now let's just talk about today vs the prior peak. So since the prior peak of the market October 2007. Tender but ten years ago the S&P 500 is up. About 50% 90% U included it's my international stocks over the same period are down about 20% excluding dividends 120% up including dependence let's just compare that. This was a period where people were already sensing that there was a bit of a bubble going on in real state a bit of a vocal going on on the market and even since that time after the crash. The markets still the US markets still fifty to a 100% higher. That it was at that time and a hum a lot of that has been earnings improvement a lot of that has been calm investors more comfortable investing in the stock market and and pushing stocks up to new values a lot of that's been low interest rates. But that's really been solely focused here you look at international they were tracking each other pretty well until 2011. And then you start to run into some of the issues with the eurozone crisis from some concerns with commodity prices that current and emerging markets even more and so they've essentially had double dip recessions where the US in 2011. Really implemented quantitative easing and that helped us really get from slow. Non moderate need to slow growth talk to relieve moderate crow not that some sustainable growth that's that's kept the market afloat they didn't really have that oversees. And that's what's really caused the dove divergence and returns. But looking forward US markets are valued. A little bit above their long term averages. About 1819 times quarter earnings if you're looking in Europe here or international you're looking at about fourteen times. Earnings and and emerging markets closer to twelfth so you're looking at a US market that's. I'm pretty expensive and slightly above long term averages you're looking at an international market that's much less expensive in the US on an earnings base earnings were relative earnings basis. I'm actually cheaper than it has been historically and emerging markets even more value. So not to say these markets don't carry risk but if you're looking for ways to boost your potential return. These are some areas to look and because they've underperformed for the last several years for a variety of reasons a lot of people have avoided. My mom they've said oh you know like I can I can buy these US stocks have done quite well. Why would I buy this fund my 401K it's actually down the last three years a lot of people have been making decisions based on the Anand and they've been avoiding international stocks end. At this point. Even if they didn't do that if if one side of the portfolio is growing at 5050%. And and other side of the portfolios. Lost 1% if you don't rebalancing you're gonna happen overweight US stocks. And let's not forget international stocks represent about 50%. If not slightly more than that of the worldwide investing opportunity. And most US investors have 1015%. Allocated international. Hasn't been that place to be until this year down might not be at that time to reconsider. What about some of the risks Alex political risks and another is you've got of course dollar view us dollars well yeah so if you're a US investor investing in international. You were focused not just on what the stock market return is internationally but also what the currency recurrence so if let's say you invest in the European stock market. And the Euro local stock market makes 10%. And the currency appreciates by 5% when your return as a US investors the ten. Plus the five or 50% so but if the currency goes the other way like a different 2014 to 2016 and can actually be in a a headwind for recurrence international so. You start to see the dollar gave back some of its recent strength that's helped amplify international recurrence. Mom and that's a risk is this it's it's two sources of risk stock market risk can't currency and what about some of the political risk you we've got some big elections coming up in Europe as well and d.'s he's really have dominated the headlines obviously brags that he was a big risk to markets met at the time nothing much has happened since then. And those markets have really fully recovered. Their losses. It and then you have what's going on in Europe and this move towards kind of populist parties and fortunately France France one in the right direction. With their election. And the other election that's going to be coming up within the next. 66 months or so is the Italian election and that's gonna be a little bit. Trickier. Just because of their lack of support for the Euro mom there and there and much less in favor of the Euro then then France was so. It's a little bit of a of a bigger risk without election. If they decide they like to leave the Euro zone. Now you have an economy that actually uses the bureau that's gonna leave that that's gonna create a lot of uncertainty. For the markets and that's really the biggest risk in my opinion there there's also China. Which China has been people have been predicting China's imminent clash for years saying that. In other governments propped up the economy. Sound familiar there pressure on that they're debt levels are unsustainable but if you look good beneath the surface in China things are actually pretty stable. And they've had some pretty good growth and they've actually taken steps to do you risk their financial system. At that they've been able to do because the economy's been relatively strong so. Again China some of the other emerging markets might be pretty interest in places to look as well. It didn't get this covers much on this is I'd like what I should say is if you're an Internet if you're if you're an investor. How do you know if you have international exposure your portfolio. One way to do it is just by looking at the title of the funded it says the global fund that pro means it has both US and international. If it says international in the title it probably means it's international excluding the US so it's truly an international farm bureau gonna wanna look at what's what percentage did it hasn't developed first is emerging economies. Because if you want experts the emerging markets you might not get it in some of your a funds that are more focused on developed economies like Europe and Japan. If you're really focused on where the growth is you might have to go to something that's a little bit more weighted towards emerging markets and again. These these numbers defy plus to 10% expected return from international over the next five years these are just projections by JPMorgan of course not guarantees. And they come with risks mom but it is certainly an interest and I opportunity for some some of you value seekers out there. And if you're interested in international star short you're wondering if your funds have international SARS in them or more percentage. You can Carl Blair and strong tool free 8889727526. And Alex from pole B how did you start to boast that it needed nine soon to plan or plans strong dot com. Alex thank you for filling in today thanks Paul we met back next week and hopefully I'll be back before law are ready we'll see you then this blaster and prudential for. This is tall Parsons president of planned strong investment management. And you're listening to them planned strong financial forum on WR KR Boston's talk stations. If you like what you hear on our show and what media take a look at your investments and retirement plan called my office. 808897275260. That's 888972. Plant. Securities and investment advisory services offered through an extra to prevent the opportunity -- -- -- -- investment management and filling them a special -- -- look at this -- Russian diplomats who threw six and strong investment management is located 980 Washington street Dedham mass 0226. And can be reached at eighty to 89727526. Political views may not reflect the views or opinions of next financial group the securities and investment advisory services offered through next financial group ranked number fender SIPC -- investment management has not affiliate Dutch financial group think this radio show is for informational purposes only and is not a solicitation recommendation that any particular investor should purchase or sell any particular security information contained herein is obtained from sources believed to be reliable but its accuracy and completeness or not guaranteed neater next financial grouping -- represented two of provides talked about.
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