The Jon Sanchez Show
07/31-Retirement Investments We Like
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Admit Jay was a rip your face off rally, and then you kind of-- Whoa, whoa, whoa, whoa, whoa, whoa, whoa. I'll take it. I'll call it it. It's what it was. You just took the words out of my-- Yeah. You're going to call it that. I-- yeah, I felt like I'm risk on big time until we were talking later. There's some correlation to some comments about Iran and Hezbollah and missiles, et cetera, and the markets that weren't really small caps rolled over, Dow rolled over, S&P stayed OK. But because of Nvidia and now we get meta to say everything's great, and that's right, off to the races, risk on. There you go. There you go. We like it. We like it. Good stuff. Well, it was a very interesting day today. Had some decent strength in the pre-market session, thanks to not Nvidia, but a smaller company, AMD. They kind of got the ball rolling early this morning. We'll talk about that. We'll talk again about meta's earnings after the close, what that stock is doing. And oh, by the way, we did have that little tiny, important event called the Fed Open Market Committee interest rate decision followed by the press conference. So Mr. Powell, we'll kind of tease you a little bit here folks, and that is there was nothing earth shattering coming out of the chairman's mouth or in the interest rate decision. But the likelihood is we will share with you. And I read the press conference, or press release, I should say, and hit some of the quotes that Mr. Powell had to say to his press conference. You will find that the Fed is ever, ever so close. Don't you agree, Mr. Gone? Ever so close to a September interest rate cut. I mean, the tea leaves are there. Do we have a beer bed or a dollar? What was our bed on our two interest rate cuts versus zero? I think it was taken lobster, to be honest with you. That's fine with me. Yeah. We'll take either of them. Yeah, exactly. We'll do both of that. Yeah, but it's a good thing we are seeing-- unless something else happens, we're seeing all the soft things that we want to see happening other than our debt levels going higher. You've got an economy that is slowing down, not crashing. You've got inflation that's coming down. And not disinflation to the extent that everyone was afraid of. You've come overall. I think, thankfully, for the AI boom, which has helped now create probably hundreds of thousands of new jobs into the future, if not more. And all those things are coalescing in a Fed that's now ready to at least stop being so restrictive as far as policies can serve. You mean all those idiot analysts out there that call for a tech slowdown and AI and all that stuff? You mean they're wrong? Yeah, I mean, the thing is, we're seeing now, which fortunately-- so I don't know. Google's earnings-- remember, Google's a little bit different. Google was who could be a share loser, right? With chat, GPT, and perplexity. And you name whatever chat bot you want to use. That is the new search replacement. And so Google came out, talked about CapEx being $5 billion or the heck they said it was, I think, bigger than that, that they're going to need to spend over the next quarter. And people are like, OK, they're going to have to spend. And that's bad for tech, right? We saw Tesla down. We saw Google down because of bad earnings. And then Microsoft came out and had good enough earnings, in my opinion. I think just one thing that was no easy miss on Azure. But overall, they said the same thing. And everyone's like, oh, that's good, right? Nvidia, it's good for that. And AMD came out this morning and said she saw a $400 billion opportunity over the next 10 years or something like that for the company, et cetera. Or the industry. But this is just showing sort of what we talked about is, can this be and will it be the iPhone effect of all the jobs that are created from all the different things that this new technology or the ability to digest technology provides us? And I think that's more the bull case is, yeah. Yeah, they're going to have to spend. But like you and I said on Monday, the right way to frame it is the companies that can spend will be winners later. The companies that can't will be dead. And so probably doesn't make sense to throw the baby out with the bathwater just because your favorite tech companies can have to spend to grow their business over the next 10 years. Well, I think another way to play this is you and I do in our portfolios. And you and I discuss a lot is you don't necessarily have to play the AI game by saying, because again, no one really knows to our point, like you said, we touch on this on Monday. No one really knows who's going to be the real profitable winner in AI as far as liking it to the next great search engine, like another Google or something. You know, is it going to be chat, GPT, or, you know, Microsoft, whatever. Yeah, exactly. Yeah, I don't, I think it's going to be a byproduct of-- how can I describe this? That part of it's going to be a byproduct of where they're really making the money, which is selling the services to businesses, right? Like, I'll just pick Microsoft as an example. OK, Microsoft's not going to be able to charge per se, other than maybe 20 bucks a month or something for their version of chat GPT, right? If you and I want to use an AI chat GPT type of model, great, we can find it free on the internet or, again, pay 20 bucks to somebody, one of these companies that are offering it. It's going to be minor. But what are the companies going to do with the technology, right? You and I both know, these are the very, very smart men and women that operate these companies. So how are they going to really make the money on it? Is it-- I think it's going to be selling the services, almost like Microsoft does with Windows, right? Yeah. Yeah, there you go. Exactly. They're going to sell it as a bundle and say, look at, our AI version can do this, this, this, and this for your business, so therefore pay us X amount of dollars, like SAP, SAP, and so many of these other companies, I think that's really where it's going to go. So my point is, and I know you agree, yeah, you own the majors, the Microsofts, and so on and so forth. But then you peel the layers of the onion back and you go down to and say, OK, whoever the winner is, whether it's a Microsoft or an Apple, I mean, we can't rely on Apple and AI. They're a prominent player now. But you go down to the basics, strip those layers off, and say, OK, what do they all need? They'll need, in most cases, NVIDIA chips, or AMD chips, or these type of things. So that's even a better way to play it, if you're kind of unsure where AI is really going. Because I mean, I feel so many similarities to this as to the late '90s when the internet came out. It's like, OK, who's going to win on this? No one knows. Who's a Google? I think that's where the economy is. I think we're in the mid '90s. So I truly were, again, although it's not for shadowing 2000, but right, I think demographics sit there, baby boomers, you've backed them up 30 years. It's now you've got technology of the internet. Then you've got AI and big data and machine learning and all those efficiencies that are coming now. And yeah, I mean, the next round, the picks and shovels, the AMDs, I think the lion's share of the easy money has been made, right? It's now more the, what industrial company, a cat tractor, a deer, these kind of guys who are going to be able to offer sass on tractors, et cetera. It knows the field. It knows, dah, dah, dah, dah. And it's smart enough to go drive. And when this happens, shut the thing down or turn left or drop grain, or you know what I mean? Like, that's all the stuff that, that's where the real power comes into it. And it's not on-prem in the machine. It's in the cloud upstairs. And all you have is a terminal that's talking to it. And you know what I mean? Like, that's where the, I think the real money gets made over time is how can they be more efficient, digest data, et cetera. And that's the exciting part. You're going to need lots of people to program all that stuff and sell it. And I mean, that's where it could be a new go-go. - Well, it's interesting. You are, you know, a few minutes of the show being on tonight, you've already brought up the issue twice. And you know, I honestly haven't thought about that. I think it's a great point you bring up. And that is the number of new jobs created because of AI, right? I mean, we don't see it in the non-form payroll numbers yet or maybe it's mixed in somewhere. But they, maybe eventually they'll break that out like they say, here's how many people, you know, we're hired in healthcare and mining and so on. So maybe they'll be at a category of AI at some point, I don't know. But I think that's a very valid point. Yeah, there's, I mean, you know, you got an outstanding son that one of your two that, you know, going in the computer world and through school and then the Lord knows the world is oyster when he gets out. - Dog fight to get those spots, too. I mean, it's insane. - Yeah, yeah. - How competitive it is. - Yep, absolutely. But yeah, that's, like you said, it's kind of the future there. So yeah, it was a heck of a day. So let me just kind of go back to the AMD and then I'll let you start running here. And so we started the day off with AMD, you know, releasing earnings numbers that were really good. I'm trying to find my notes here of what exactly, specifically, here we go. - You raised revenue guides. - Yeah, it was only beat by a penny, but they beat on the revenues and again, it was the guidance. They got a Q through revenues in line. So, you know, on the surface, they didn't look all that great. But man, it was like, I'll, it seemed like all investors needed was just a little bit of good news in the semi-conductor space. And boy, again, this thing took off last night and this morning and, you know, just continued on. And then, like I said, everyone out, well, if AMD is doing good, then boy, better jumping to Nvidia, better jumping to Intel and running down the line. So it was fascinating to watch that. - And that move yesterday in Nvidia, nothing was down 7% yesterday, right? So I don't doubt there wasn't a short trade into some of those two, into numbers, right? Like they can't beat, Andy's gonna say something, you know, the reaction to Google, Microsoft, you know, I just wonder if there was a bit of a, you know, people got too far ahead of themselves because small caps today felt in some times where just knifeing lower. And then you and I were talking earlier, in the matter of 10 minutes, you know, the small, Russell 2000 was up 1.2% in a matter of 10 minutes. And then it was, you know, down half a per, it was just really volatile as far as that space. So it felt very macro oriented versus any one stock or so on and so forth. So, you know, that led us into the Fed decision, which I'm sure we can touch on after the break, but that sort of gave the, you know, final fuel to the market, to at least, you know, give it a bit of a thumbs up for risk on and-- - Exactly. - And we can cover that. - Well, like you keep saying is, you know, when there's no bad news, that means the market's gonna melt higher, you know, until the path of lease resistance. AMD, I'll wrap up with finished the day up, $6.4 and 4 cents, 4.4% to 144.48. The video up $13.29, 12.8% to 117.02. And Microsoft though, still continuing its weakness from yesterday, down $4.57, 1.1% lost to 4.1835. All right, we come back. We will move into what the major averages did for the day, hit the commodity side, interest rate side, and start getting into our discussion of what Mr. Powell and the crew had to say today. But first, let's turn it to Kristen Snow. She's in the right now, traffic center. Hey, Kristen. - Welcome back to the John Sanchez Show on Newstalk 780K, which was Jason Ghan of Sanchez Wealth Management. All right, here's how we finished. Well off the highs of the day, I will throw that at you, as far as the Dow Jones Industrial Average was concerned just to pick on that one. We finished up 99 points on the Dow. Our closing level was 40,842. That was a 0.24% gain. Nasdaq, she was a bit more steady, held from the opening bell and just built momentum as the day progressed. Finished at 4.52, a 2.64% rise to 17,599. S&P up 86 points, 1.58% to a close of 5,522. Strong day for oil. As we all know, the tensions in the Middle East are beginning to escalate once again. Again, Tuesday night, Israel's air strike into Beirut killing the top Hezbollah official, sparked a lot of concern on that one. And so we saw oil prices move up very dramatically, 4.3% gain on oil today. 77, 73, a barrel was our close. Gold had a great day at $21.10 to close at 2,473. And to the bond market, after the Fed interest rate decision, down three basis points on the 10-year at a yield of 4.14%. 23 basis point decline, Mr. Gott, 23 basis point decline for the potential. - Three handle on the 10-year. - Yeah, pretty substantial there. My goodness. I can't wait to talk to Dwight tomorrow. It's going to be just ecstatic seeing the, with the 30 years doing. - Yeah, exactly. - So, yeah, so 4.11 close there. All right, now, let's get meta out of the way first, Jay. And then we'll get to the Fed 'cause we're going to spend a lot of time on that one. So after the close, Mark Zuckerberg and crew, they reported some very, very strong earnings numbers. Boy, did the stock move. Regular session up, $11.64, a 2.51% gain to 4.7483. Right now in the after hours, tack on another $34.04, 7.17%, stock now trading at $508.87. Numbers looked as follows, $5.16 shares of what they made, estimates were $4.73, rev came in at $39.07 billion, estimates were $38.31 billion. Anything you want to add on the earnings side of them? - Yeah, just the one-liner about rather risk building AI capacity before it's needed rather than too late from the conference call, right? I think that sort of highlights some of the themes that we were talking about earlier, is you're going to see that build it and they will come type strategy from a lot of these big guys, for sure. - Right, right, exactly. And, you know, it's cost-cutting initiatives. They sparked what was that back in 2021, 2022, still helping things out. They've got rid of about 21,000 people over multiple rounds of layoffs, operating an income climbing 58% from a year earlier to $14.9 billion, operating margins expanding for 29% to 38% compared to a year ago, headcount down 1% year over year to $70,799 as of June 30th. So they're, you know, I won't say becoming a lean and mean company, but boy, they're a different company, you know, and now they're shareholder, that's to say, you're definitely benefiting from it. So, yeah, so great numbers, and that should, again, help things out pretty nicely as we move into tomorrow, everybody was kind of waiting to bait a breath on this one, weren't they after Microsoft's list? - Microsoft's, yeah. - They're only a 2.2% weight in the S&P now. - Yeah, yeah. - Microsoft was the biggest, but yeah. - That's right, yeah. - Nice to see the market up with it down. All right, all that, all that covetching about if, you know, the biggest name goes down, the market goes. Nope, it doesn't happen, it doesn't happen again, I get it again, so. - Yeah, that's it. But can you imagine if Meadow would have missed and after Google, then after Microsoft, if Meadow would have missed, yeah, we'd have had our hands full tomorrow, that's for sure. Hey, NASDAQ future is looking good, it's still early, but up 193 points right now, almost 1%. - Take it, book it. - You'll take it, absolutely, we will. All right, so now you're up to date on what happened in the stock market today, other than, of course, what happened in the Federal Reserve, interest rate decision, and then the press conference. So, we always like to start things off when we talk about the Fed and an interest rate decision, but what the Fed issued in what's called the FOMC statement, a Federal Open Market Committee statement. So, let's get this out of the way, and then when we come back from our break, we'll delve into some of the quotes of Mr. Powell, and some of the other market reactions to it. So, here's the press release from today's interest rate decision. Recent indicators suggest that economic activity has continued to expand at a solid pace. Job games have moderated, and the unemployment rate has moved up, but remains low. Inflation has eased over the past year, but remains somewhat elevated. In recent months, there have been some further progress toward the Committee's 2% inflation objective. The Committee seeks to achieve maximum employment and inflation at a rate of 2% over the long run, blah, blah, blah. Committee judges that the risk to achieving its employment and inflation goals continues to move into a better balance. There's a new word, a couple new words, better balance. Economic outlook is uncertain, and the Committee is attentive to the risk on both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the Fed funds rate between five and a quarter to five and a half percent. In considering any adjustments to the target range for the Fed funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risk. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to returning inflation to its 2% objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risk emerged that can impede the attainment of the Committee's goals. The Committee's assessment will take into account a wide range of information, including readings on labor market conditions, inflation pressures, and inflation expectations, and inflation and international developments. So it looked like they got, yeah, everybody voted in favor of the no move, so no surprise there. But of course, we all knew this, right? Nothing this is really quite different. But of course, you never know what the Fed is really thinking until we get into the press conference, which happens 30 minutes after that press release, and we get into the press interview with Mr. Powell. So when we come back, we'll start talking about some of the quotes that Mr. Powell had to say, and I'm really liking this too. What does this mean for your portfolio at this point? Now the street is pretty doggone confident, and Mr. Powell saying, you know what? Looks like we may have a September cut in our way as our interpretation. So we'll discuss that when we come back on the John Sanchez Show. First, let us turn it over to Jack Saban. He has news traffic on weather. Hey, Jack. Welcome back to the John Sanchez Show on his stock 780K OH with Jason Gaunt. All right, once again, we finished up 99 on the Dow, a 452 point gain on the NASDAQ, and an S&P rise of 86 points. All right, before we get over to Mr. Powell and the crew, how to say today, let me give you a quick reminder, stay on the crew. Boy, they've got a great inventory of coyote tractors, the small ones, the big ones, everything in between, as I like to say, and don't forget 0% financing on select models. You can't beat it. Yeah, I know you'd love to be in a nice air-conditioned tractor to get those chores around the house done. Well, they got those also. Go see you, Stan, and everybody at S&W Tractor. They're an incredible family and incredible group of employees located at 4880 East 9 Lane in Carson City, online at s&wtractor.com. And of course, they're phone number 882-1225. That's 882-1225. All right, so we just read you the press release of what happened at the Fed interest rate decision meeting at 11 o'clock. But of course, what the street has really become accustomed to is finding out what Mr. Powell has to say, right at the press conference that happens again at 1130. So what Jason and I want to do right now is kind of go through some of the contents of his speech and his Q&A sessions, et cetera, and see if we can kind of get a good feel for what the chairman is thinking. So, Jason, the first quote that I dug up is the following. If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September. If that test is met, now, I don't really know what he's referring to as far as the test. Oh, he's, yeah, he actually touched on it, he said, you know, again, they were more focused on inflation for a long time, right? That was the part of the dual mandate that was 90% of their focus. And now they're in the recent, in the release today, they started talking about the dual mandate again, that now we're at a point where they're equally important again. And so, you know-- - It could be your mind. - There was definitely some new wording today. - Oh, yeah. - Felt different. The words, you know, as far as, you know, signaling that, you know, in as many words, if the data continues in the direction that we've had it over the last couple, you're gonna get cuts, you know, and he talked about, you know, you can't as much as say it, but they signal as much as humanly possible that it is very, very, very much on the table. I would argue it's to be taken off the table versus, you know, something needs to happen, dramatic for it to not happen, versus the latter of, we need all the things to line up, and then maybe it's more of, if something really, really bad happens, it won't, but it's going to. - And more of the same, it will happen, yeah, exactly. So I think the key of this first quote is again, a reduction in our policy rate could be on the table as soon as the next meeting. He has not been that forward in his comments on that, according to my recollection. So I think that one's new, so pretty, pretty damning outlook there in forecast. Now, of course, we all know that the recent economic data has shown us that inflation is falling. Jason and I have shared with you the PCE, the CPI, the PPI, et cetera. So all that's happening. But of course we did have the inflation, or excuse me, the unemployment rate has moved up a bit, you know, slightly above the 4%, but some say, of course, that that is just kind of an anomaly that we saw at the last reports. So we will see if that holds, but Fed has indicated, as I read before, that they're aware that it's moving up, but I don't think it's anything to, again, stop them from cutting the rates. Now, the Fed did say, of course, in their policy statement, they are tentative to risk on both sides of the dual mandate, as Jason just said, which is the maximum employment and stable prices. That's what we call the dual mandate. Now, the central banker went on to say that they would be data dependent, but this is new, Jason, but not data point dependent. I thought that was interesting. Yeah, and I'm trying to think of the line. I was driving to grab lunch when I heard it. But it touched on the fact that, you know, we're prior before, you know, they were talking about moving too early, right? That was always the commentary, moving too early, moving too early, moving too early. And this was the time that they essentially touched on that the risks of going too early are now balanced with the risks of going too late. And that was the thing that I thought was like, boom, that's the, that's the tell that now they're there, just as worried about being late as they are about being worried for, wherever, they just didn't want to screw it up on this side of, we've got rates and then inflation goes back up. Now they're admitting, okay, now we're sort of at that pendulum point of, you know, damned if you do, damned if you don't. Yes. You might as well move in the direction of helping versus not going fast enough and hurting the economy like that. Mm-hmm. Well, you and I both know, a lot of the Fed policy is also about, I hate to use this, but it's about ego, right? Their egos are bruised because many feel on the street that they again waited too long to start raising rates and they don't want to be on the other side being criticized that they've waited too long to begin cutting rates. So I think, you know, if we were a fly on the wall, I think that is also factoring into your point. Now let's go to the labor market side. Quote, I don't think of the labor market in its current state as a likely source of significant inflationary pressures. So I would not like to see material further cooling in the labor market. Right. Yeah. That was interesting. I mean, we've now moved from what was what? 3.4% I think was the low, 3.3, up to now 4.1. Remember, we've talked about before, a 1% increase in unemployment has been followed by a recession 100% of the time. So like that is, you know, and I'll throw this out there, you know, not trying to say it's tomorrow, but you typically want to fade the market once the Fed starts cutting. Historically, that tends to be a tell. We're also in a slightly different environment. We're normally the Fed's cutting rates because the market's like falling off a cliff, right? Whereas this is more of a different dynamic. So I want to table that saying that, you know, it's not always the same, but historically people tend to, you know, the market tends to underperform as the Fed starts to cut you. Wait for the reason behind that, of course, if you're new to the market is the market being affordable looking indicators, we always mention. Market is already priced in the September interest rate cut. And as we have cautioned many, many times that as soon as this is done, then we will, of course, hear their market participants, economists, et cetera, say, okay, we think the next cut is going to happen here, right? The next date, whether it's the end of the year is many are anticipating, but the market will always be looking way down the road, months down the road. And if they, you know, get any indication that the Fed is done cutting rates, such as, you know, if we get the September cut, then the market will become disappointed. And like you were saying, Jason, yeah, it's a great time to fade it at that point. So you got to be careful when these rate cuts start. It's, or excuse me, yes, when they start because you're absolutely right. It can work reverse on everybody thinks, oh, the market's going to skyrocket when the Fed gives us the first rate cut, but you and I both know playing this game a long time. It's terrible. The opposite can happen, yeah. Absolutely. Now, the labor market, of course, that is something the Fed has really no control over. We will see, I think, I think many are, again, back to the unemployment rate. I think many are saying, you know what, that last report where we bumped up over 4%. I think that was kind of an anomaly. So we'll see, of course, what August's report, which of course will reflect back on July, what it actually shows. But, you know, we're at 4.1 is the exact number of the unemployment rate. And, of course, this Friday we're going to find out exactly when we get July's data. And right now I'm looking at a forecast showing 4.2%. So just nudge up just a little bit there. Now, let's move on to the next area. In regards to how big of cut, right? We all have it to anticipate in our models that we would see a quarter percent cut by the Fed in September. But it was brought up by the press corps of potentially a 50 basis point or a half a percent cut. And Mr. Powell said, a 50 basis point cut quote is not something we're thinking about right now indicated that any additional cuts at future meetings would also be dependent upon the economic data. I thought that was kind of a gutsy comment there. We're not thinking of a 50 basis point cut. And I went, "Phew, thank goodness they're not." - Yeah, right. I mean, I think he did it. I feel like he got asked the same question seven times. - Oh, yeah, of course. - Yeah, the market's, oh, you know, these goofballs are always going to try to get something exciting out of him. - Oh, yeah, like he's going to tip his hand and be like, "Yeah, right." He'd be 50, right? It's just terrible. Things look awful. You know, like, you imagine. - Right, yeah. - Oh, good. - Seriously. I guys, I'm scared. You're like, "Oh, yeah." - You know, to your point, I was thinking of something today it was brought up on CNBC earlier this morning that, you know, many are saying it's kind of the rumor on the street, who knows, you know, take it with a grain of salt that if Trump wins, that he would try to get Jamie Dimon, the, of course, the CEO of JPMorgan Chase and one of the most respected CEOs in the world, that, you know, he would get him to take over Powell's job, right? 'Cause we know Trump doesn't really like Powell. But can you imagine, and I thought about that, which you just said, it's like, you know, Diamond is really, really, he speaks his mind, right? I don't know if he can be, you'd have to be a little bit more. Yeah, exactly. I know. Well, that may be a good thing, though, you know? But can you imagine Diamond? 'Cause he just says it like it is. So he could be the one, if he got the job or took the job, he could be the one that comes in and says, "I'd be a seller prior to you." Right? Yeah, exactly. From what I heard from these guys, I'd probably trim some exposure. Yeah, yeah, yeah. Oh, God. I could see him do that. He doesn't care. He just does not care. So anyways. All right, now we got that out of the way. Now, when's the next interest rate decision? September 17th and 18th. So of course, 18th at 11 a.m. in the mornings when we will find out if we get that quarter percent cut. But also, remember, Powell's expected to speak publicly again before that meeting at the Jackson Hole Economic Policy Symposium, which is in late August. I didn't get a chance to look up the date there. But that's one of your favorite things. You've mentioned in the years past that you did not surprise them over the last year. You thought something was gonna be said there. We've had years where some things have that have been earth-shattering and other times, just kind of goes by the wayside. So never know. Yeah, he likes, I think he likes to drink. Oh, do you think so? No. (laughs) But it's fun to say, but now, yeah, sometimes they'll get a little more comfortable with their statements at Jackson. It's normally what he uses historically for trying to cur... Almost like, you know, a Trump will say, I'm gonna, you select Jamie Diamond and see how the markets react, right? I think Jackson Hole oftentimes is where they test narrative and see how the markets react, just because people are paying attention to it. Yes, they are, yeah, very, very much so. You know, it was interesting. I don't know if you have picked up on this. How the Olympics is speaking of CEOs, how the Olympics have really become almost like a Davos, you know, Switzerland, the, you know, where all the CEOs, it seems like if anybody who has somebody shows up to that winter event and of course, all the interviews and the various breakout sessions and so on and so forth, have you noticed like on CNBC that that's what it's like it's turned out? I've never seen this before in the Olympic side of things in regards to all of the CEOs are there. And again, it feels like a Davos. I just thought that was interesting. They're using an athletic event to conduct a lot of business, which, you know, athletics are a business, but I've been noticing that on CNBC. I didn't know if you did or not. Yeah, I mean, I know they're broadcasting from there and maybe some of the, you know, companies that are providing clothes or technology or all kinds of stuff around it, you know, make sense to be there and spend the money, go out and do the advertising for sure. That's exactly right, that's exactly right. All right, so our final segment, so we're going to get a, oh well, that clock just turned on me when we come back. We'll do our tonight's topic Friday. Yeah, exactly. Well, we'll finish it up, which again is where we start talking about how you determine your retirement income needs. We'll share with you what we do and some of the ideas that we began with you on Monday. But first let's wrap it up with Kristin Snow in the right now, traffic center. Hey, Kristin. Welcome back to the John Sanchez Show on his talk, 780K OH with Jason Gump. All right, you know, Monday we began, if you missed it, please pick up our podcast or your favorite podcasting distributor. We began our topic on determining your income needs, your retirement income needs and creating this cash flow plan, using passive income ideas, right? So let me just recap real quickly what we covered. I'm not going to go into details. I just want to hit the high points here. You know, we mentioned how we do it in our firm. And again, we have our risk program of retirement income savings calculator. You can find it on our website and it breaks down your expenses and your income in four quadrants, fixed variable income and fixed variable expenses. So that's where this whole thing starts. So once you get all that, you're going to know exactly what your cash flow is, what your net income is. And then once again, we reverse engineer it. We say, okay, client, you know, has whatever $5,000 with the bills. So, you know, what are our other income sources? Oh, we got a deficit of $2,000. Okay, Jason, what do we need to do? You know, we put our heads together and we got to figure out how we going to produce that 2,000 or more in income, right? So that's how we reverse engineer it. But then the question comes down to what investments do we use? Now, again, there's a plethora of investments. On Monday we covered, you can use dividend stocks. You can use dividend growth investing as a strategy. Different types of real estate investment trusts, exchange traded funds, you know, thousands and thousands of those. Some of them are more focused on higher dividend yielding. But Jason, I want to hit two things. I think we also touched on preferred stocks, another great way. But I want to hit one thing for sure before we run out of time, the covered call writing strategy and then we'll kind of wrap things up with our key considerations. So take on the, as a, you know, former option trader and expert at the covered call strategy because, you know, again, you got to know what you're doing. You need experts to help you, but it can be a very, very effective strategy for producing additional income. And there are ETFs that do this for you on a larger scale, but by right, you're buying a stock and then you're selling a call, the option to generate income, right? As long as you hold onto that stock, you don't have any risk if the stock goes up a ton. You just don't get any further gains above where you sell that option. So if you buy a stock for $10 and you sell a call at $12, for example, for let's say you sell it for 50 cents, right? You're break even on your long stock. So you bought it at 10 bucks and hey, if it goes up to $12 and then that option gets exercised and you no longer have your long position, you still made 50 cents because you made your 12 bucks up on the stock, but you also collected income on selling that 50 cents as far as the call is concerned. So technically your break even is $12 and 50 cents. So people who own stock can go out and sell options, right? Whether you wanna be 10% higher or 20% or heck. I mean, there's bids to options that are 30% out of the money. Like really, basically lottery tickets and you can sell those and collect little money here and there. I said the negative to this strategy really is just you give up upside above where you sell that call. And the other negative is all of that is short term income, right? So if you're doing it in a taxable portfolio, which is where the bulk of folks are doing it, that's all short term income that is short term capital gains, that is taxed as ordinary income. So that's some of the negatives, but I've seen folks do it very successfully, especially in stocks that you wanna own a long time. Maybe you have company stock, so on and so forth. You can just sell options against it way out of the money if you physically own the stock. Don't do it if you have like restricted stock units that God forbid the stock goes higher and you get called away and you can't deliver stock, then you lose lots of money. But it's a complicated strategy for many, but if you take the time, it's not all that tough to do. - Right, exactly. So you can make money on the upside of the stock if it goes up, then it hits your strike and then of course the option premium. So yeah, definitely a way to do it, but once again, yeah, get somebody that knows what they're doing. - I'm staying very, very high level here. - Yes you are, yes you are, exactly, good job. Compliance will not be calling me tomorrow. All right, now let's kind of wrap things up with key considerations. So really, depending upon what your personal risk tolerance and goals and so on and so forth are, there's a number of different strategies you can use to produce passive income for your retirement. We didn't get a chance to talk about annuities and things like that, but again, this is what we do and we don't have the time to go through all the details. But a couple of things we want you to keep in mind is we wrap things up. Look at your risk tolerance, right? Forget about the income, et cetera. Look at your risk tolerance. Make sure that whatever investments you choose, stocks, ETFs, bonds, whatever it is, that it matches your risk tolerance. The dividend yield, of course, look for stocks, looks for ETFs, mutual funds that have attractive, but most importantly, most importantly, sustainable yields, right? We've talked about this, Jason, you know, you'll see a juicy yield of 15% and you look at it and go, "Yeah, the 12% of the company is losing $3 a share." And you're like, "Okay, it's not gonna last that long." Diversification that speaks of itself. And then as Jason just alluded to the tax efficiency and make sure you understand the tax implications, the dividend income. Sometimes they're tax favorably on certain investments and things, but understand the tax implications, investment gains such as the capital gains, et cetera. So like I said at the beginning, it's really tough to do on your own, hire somebody like ourselves and we're more than happy to produce a great retirement income plan for you. Anything else, Mr. Gump? - No, I think it's a nice Wednesday. I'm glad we got a good Fed number and hopefully we continue to see some strength. - Yeah, well, let's add too. Let's hope the features continue to rise. (laughing) Well, have a good day tomorrow. Have a good day tomorrow. Great job, buddy, it's been a lot of fun. We'll do it again tomorrow night at the John Sanchez Show. God bless and have a great evening. - Sanchez Wealth Management. The material in this program was intended as general information only and should not be taken as specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting john@sancheswealthmanagement.com or 775-800-1801. John Sanchez offers securities and advisory services through Independent Financial Group LLC, a registered broker, dealer, and investment advisor. Remember FINRA SIPC. Securities offered only in states, John Sanchez is registered in. Sanchez Wealth Management LLC and Independent Financial Group LLC are unaffiliated entities. (bell dings) (bell dings) (bell dings) - How to have fun, anytime, anywhere. 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