11/6/24 Markets in Motion: Election Impacts, Energy Trends, and California's Wage Wave

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• 0:00Speaker 00

  From the padded radio room off Stockdale Highway, here is Money Wise. Call or text in at 661-396-1000.

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• 0:40Speaker 00

  Now, let's start the Money Wise Show.

• 0:42Speaker 03

  Welcome to the Money Wise Show. We are live from the padded radio room off Stockdale Highway on ESPN, Bakersfield, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. I'm Sharad Waite, and I'm sitting here with me today is...

• 1:05Speaker 00

  Dustin Weaver.

• 1:05Speaker 03

  Dustin, and of course, producer extraordinaire Stephen Nicholas. Hey, Stephen. Hello. Well, I want to go right to the listener messages, which we've got a couple of them first, and let's get right to it. First one says, "Thank you for doing, for going down past election years and how it's affected the markets. Were there any big changes in the last eight years between Trump and Biden? Not politics, just the economy." So Dustin, I want to start the show out with talking to you and our listeners about this, this listener question. Of course, now, we're now post-election, and, and so, you know, you can, even yesterday

• 1:47Speaker 03

  before the election, you could, you could sort of look at, at the current president versus President Trump, and, and sort of compare what has happened in terms of the economy and the stock market. But, you know, now that we're post-election, I want us to have a discussion not only about maybe looking to see where we were eight years ago, but also what could be some of the impacts that...

• 2:18Speaker 03

  Affect the economy going forward now that we do know who the next president is going to be. So let's first start with just eight years ago. Dustin, you were mentioning before the show, let's talk about maybe earnings as a starting point.

• 2:34Speaker 04

  The reason I brought that up right before we started here was when we talk about the stock market and ownership of companies in general, I mean, one of the biggest factors is when determining the value of a company is what kind of earnings do they have? Are they making money?

• 2:51Speaker 03

  Right? Yeah.

• 2:53Speaker 04

  And if you go back 2016 and looked at the earnings per share of the S and P 500 companies, which as you know, is 500 of the largest companies in the U.S., you know, it's about half of what it is today, meaning their earnings are twice as much now than they were eight years ago.

• 3:13Speaker 03

  Yeah.

• 3:14Speaker 04

  So yes, they're making money and they have have been making more money, not, you know, not up every year, year over year, but the average over the last year, you know, or excuse me, over the last eight years, they're making more.

• 3:28Speaker 03

  Doubled.

• 3:29Speaker 04

  Doubled.

• 3:30Speaker 03

  They've doubled. And that is a little bit above average, I think, for in terms of the stock market. Remember the the rule of, what's the rules?

• 3:41Speaker 04

  Seventy-two.

• 3:42Speaker 03

  Seventy-two. So roughly at seven percent, it doubles every 10 years.

• 3:47Speaker 04

  Right.

• 3:48Speaker 03

  Roughly. So we've had, that means this has been, you know, above that sort of rate of return or growth rate for publicly traded companies in the United States, that's good. There's, if you look at, because it's tricky looking at the just the stock market in general, not meaning the value of the stock market rather than the earnings of the actual, what are the companies actually earning? Because as you mentioned, fundamentally, people are buying into a company because they're either expecting them to have profits.

• 4:24Speaker 04

  Right.

• 4:25Speaker 03

  Revenues with and profits from those revenues, or they're currently, and they have a history of of. Revenues and profits. And usually those companies that have, you know, a strong history of showing profit to their shareholders are usually paying a dividend. They've been around a while. They're sometimes more established companies. And therefore, you have expectation of being able to be rewarded for holding that stock. But sometimes you have companies like, I'm thinking of the biggest, the big example being Amazon that went nearly 20 years before reporting any profit. But why were people buying Amazon stock for the first 20 years of the company?

• 5:07Speaker 03

  Well, they were expecting it to eventually make a profit from the revenues that they were bringing in.

• 5:13Speaker 04

  Right.

• 5:14Speaker 03

  And so that's, that's why I really like that you kind of brought that up. You know, you, you, let's, let's just look at earnings. Forget the stock market, because the stock market and the actual share price is all based off what, what investors are, what they think the value is.

• 5:29Speaker 04

  The expectations are.

• 5:30Speaker 03

  What the expectation is.

• 5:31Speaker 04

  Yeah, because if you go back and look at someone like Nvidia, we'll pick on, pick on them for a minute. You know, with this whole AI boom and Nvidia being one that helps create the platform to let the computers do that. You know, they're helping create the chips that drive that. It's like, well, if we expect AI to keep progressing and growing.

• 5:51Speaker 03

  Yeah.

• 5:52Speaker 04

  Nvidia is going to participate in those earnings.

• 5:54Speaker 03

  Right.

• 5:54Speaker 04

  To make money.

• 5:55Speaker 03

  Right.

• 5:55Speaker 04

  So.

• 5:56Speaker 03

  As long as that is.

• 5:56Speaker 04

  That price up so much so fast.

• 5:59Speaker 03

  Yeah.

• 5:59Speaker 04

  Is the expected earnings to come.

• 6:01Speaker 03

  And so let's look then eight years ago, we, we've had at least since, um, let's, let's take a look at the overall general stock market during that time. Uh, and looking at the S and P 500, just over the last eight years. So we can go back to, let's say, uh, 2016. And in 2016, since 2016, the S and P 500, uh, and I'm going back to November of 2016. So we can get sort of a true reference. We have about 160% gain in the S and P 500. So eight years ago.

• 6:46Speaker 03

  Just as you would have learned that President Biden-elect was just elected, or close to being elected, right? It took a little while after the last election, but President Biden was elected and you thought, oh, boy, it's maybe not a great time to go into the market, you know, in November of 2016. Well, you would have missed, and I'm talking about if you just invested into an index like the S and P 500, we're talking about 162% gain in the last eight years. It's even more than the earnings gains that you just mentioned.

• 7:25Speaker 04

  Right.

• 7:25Speaker 03

  And that is-

• 7:26Speaker 04

  I didn't have the exact stat. It was, it was over double.

• 7:29Speaker 03

  Yeah, it's more than doubled in eight years.

• 7:33Speaker 04

  Yes.

• 7:34Speaker 03

  And so has the S and P 500.

• 7:36Speaker 04

  Right.

• 7:37Speaker 03

  It's more than doubled in the last eight years. Now, this all being said, I'll repeat exactly what we said yesterday, right before the election, which was, it really doesn't, in terms of economics, it's very difficult to parse out and determine what's best for the stock market and the economy, based on which president is in office and which party is in office of the White House and which party controls Congress. And this is something that is so, I think, worth repeating. I always get some peace of mind when I go back and look at history of this, because it's just a good reminder of how politicians

• 8:20Speaker 03

  really do want us to believe that they have these magic wands, that they can pull levers and all of a sudden, macroeconomic forces kick in.

• 8:29Speaker 04

  Right.

• 8:30Speaker 03

  And, and all of a sudden, you know, interest rates are changed, or gas prices, energy prices. These are global connections. These are global, like, complicated economic forces that there's no one-

• 8:46Speaker 03

  Person and certainly politician that has the ability to overnight change those.

• 8:52Speaker 04

  Exactly.

• 8:53Speaker 03

  And so if you look at the S and P 500, you have to, if you want to say in a perfect world, which party would be in the White House and which party would be in control of Congress? And if you go back since 1945, the clear winner, not by a whole lot, but definitely there's a winner. And that would be a Republican troll, Republican control of Congress with a Democratic president. And that, again, repeating that. So that would be a president that is Democrat. And then you have the House and the Senate, both Republican,

• 9:33Speaker 03

  going back 80 years, the best return, just talking about pure return of the S and P 500 has been that. And it's about 11, almost an 11% rate of return during that period of time. The second best would be a unified government under Democratic control. That means all Democrats, President, Congress, House and Senate, all Democrats. That's the second place, just above an annualized return of just over 10%. The third place would be a unified government under Republican control. That would be a Republican president, Congress,

• 10:14Speaker 03

  House and Senate. And that is actually a pretty substantial drop, going back over 80 years to close to an 8%. So 8% versus the best case scenario, which would be a Republican-controlled Congress with a Democratic president. We're talking about the difference of nearly 3%.

• 10:36Speaker 04

  Yeah, yeah, two and a half, 3%.

• 10:38Speaker 03

  Over 80 years. How much impact does that have Dustin on, how much impact would that have on a portfolio?

• 10:44Speaker 04

  Oh, yeah. Compound interest.

• 10:46Speaker 03

  It's enormous.

• 10:47Speaker 04

  Yeah.

• 10:48Speaker 03

  But if you take, if you take all of those and you just look at our average, and that's what we kind of mentioned yesterday, remind investors, it's all the same.

• 10:58Speaker 04

  And that's what we've been doing, right? A lot of clients have been asking about this. We all have that chart that looks at the last 100 years and it's a visual that shows red and blue. And the trend is clear. Over the long run, the markets have made money, right? And it really didn't matter. In the long run, when you're talking 30, 40, 50 year time horizon on money, whether it's you're saving for retirement or just a long-term investment. I mean, it was good to stay invested, to be in and stay in, right? And not make those emotional moves out just based on who's in the White House.

• 11:34Speaker 03

  Right, because we also gave the example the other day. Go back, let's say, you can go back four years, the election that was four years ago or eight years ago, but the election between Biden and Trump, you know, general, general, general thought would tell you, well, Trump would be pro-carbon fuels, energy, and Biden would be more pro-green energy and green technology. If you had invested into, you know, if, if people had not invested in, in the, the

• 12:16Speaker 03

  non-carbon energy investments, because Biden won four years ago, well, they, they would have missed out on incredible growth. In fact, the growth was, and if they would have missed out on growth, but they would have, they would have missed out more if they would have bet, if people didn't buy into fossil fuels over the last four years, meaning the idea that Biden was going to crush the earnings of energy companies that were still mining fossil fuels, they would have, they would have bet wrong. They did far better than the green technology is. So the conventional wisdom, you know, of which sector you would invest in based on

• 13:01Speaker 03

  who won the election would have proved you wrong. And it's, so it's really difficult also to like bet on individual sectors, you know, you know, it's just, it's just impossible to know how much really a president would, would be able to do and impact, you know, any individual sector.

• 13:21Speaker 04

  It's a good reminder of the diversification that we talk a lot about with our clients and getting professional management that's highly diversified. And. Less emotional, right?

• 13:34Speaker 03

  Right.

• 13:34Speaker 04

  On making short-term bets or short-term, you know, oh, this sector's gonna win this next quarter, year, two years.

• 13:44Speaker 03

  Right.

• 13:45Speaker 04

  You know.

• 13:45Speaker 03

  So hard.

• 13:46Speaker 04

  Some of the fundamentals we talk about a lot with clients.

• 13:48Speaker 03

  Yeah, sticking to those fundamentals. Don't be swayed by fads or trends. And for the most part, that will, that will keep people along the straight and narrow. To finish up this, this topic again, talking about the impact on the stock market, depending on who won the presidential and, and House and Senate races. The worst-case scenario would be Democratic control of Congress with a Republican president. And it's pretty substantially worse. Now, again, I don't know why this is necessarily the case, but it's just over a 4% annualized rate of return for the S and P 500 when we have Democratic control of Congress with a Republican president.

• 14:33Speaker 04

  Yeah.

• 14:33Speaker 03

  This is so weird. Where you have the best-case scenario being Republican control of Congress with a Democratic president. So, I mean, again, you can't make any sense of this because it'd be simple to say, oh, okay. Well, then it's just the Congress that has all of the control of the policies, which, yeah, in theory, they, they kind of do, but the president can veto.

• 14:57Speaker 04

  It's almost like there's more variables than just these things, right?

• 14:59Speaker 03

  Yeah.

• 15:00Speaker 04

  I mean, correlation's not causation. We're just looking at some of the history and, and trying to report some of those facts.

• 15:08Speaker 03

  Yeah, so there you have it. Great question, great comments. Keep them coming our way. We're going to take our first quick break of the day. And we get back, we've got more questions to answer. We're Money Wise.

• 15:18Speaker 00

  If you're a business owner who provides a retirement plan for your employees, contact Money Wise Wealth Management to see if you're maximizing your options and minimizing your liabilities. Money Wise 401K plans are customized to you and your company's needs. 661-847-1000. That's 661-847-1000.

• 15:43Speaker 03

  Thanks for tuning in. We're the Money Wise Show. Keep your questions and comments coming our way, 661-396-1000. That can be sent 24 hours a day. I'm Sharad Wait and I'm sitting here with Dustin Weaver.

• 15:56Speaker 04

  Yes, sir. Good to be here.

• 15:57Speaker 03

  Another great message here, Dustin. It says, can you clarify whether there's any truth to what some reports are saying that economists and financial experts expect a quick financial upswing if Trump were to return to office? So, thanks for this message. This message came in before we got the results and that President Trump did in fact win. So, the question then, Dustin, do we expect a quick financial upswing?

• 16:23Speaker 04

  So, I mean, talking really quick.

• 16:25Speaker 03

  I know. I was gonna say, let's talk about just today. It seems to be a big upswing. Just, we're talking about very immediate. Dow Jones jumped 3.5%. It's about a 1,500 points gain to close at a record high. It's its best day that the Dow has seen since 2022. The S&P 500, about 2.5% gain, and the NASDAQ, almost a 3% gain, also getting up to a new record for the NASDAQ, the tech-heavy index. So, if we're looking at real short-term, Dustin, that's pretty, pretty big.

• 17:05Speaker 04

  Yeah, the immediate short-term, one day.

• 17:07Speaker 03

  That's right.

• 17:08Speaker 04

  Yeah, I saw the NASDAQ was up, I think, almost 5% at one point throughout the day.

• 17:12Speaker 03

  Unbelievable. So, I mean, what that tells you is you see an immediate positive reaction to the outcome. How much of that has to do with the policies that are being proposed? Or how much of that has to do with now that there is certainty? Maybe it's a mix of both. But, you know, certainly the policies can't come into play until there's a new person in office.

• 17:38Speaker 04

  And/or until the policies are here, right?

• 17:41Speaker 03

  Yeah, but people are trading on the markets based off of what we were saying earlier, what they're expecting it to be.

• 17:46Speaker 04

  Right.

• 17:46Speaker 03

  And not so much on what it actually is, what the fundamentals are and what it is. And so, so there you have it. We're seeing some immediate impact for the positive. But what about Dustin, if we step back, if we step back a little bit, and I've gone over these numbers a little bit in past shows, especially leading up to the election. If it, you have to go generally over the, at least over the last 30, almost 40 years. The stock market a year has ended the year up in a, in an election year.

• 18:23Speaker 04

  Out of what percentage of the time? I missed that.

• 18:25Speaker 03

  I'm going back to 1980, so 44 years. I would say, when I say 19-

• 18:33Speaker 04

  Most years in an election year are positive.

• 18:35Speaker 03

  Most years in the election year are positive, not all. But if you look at the examples where we, where we did not end the year up positive, I think there's some other reasons for it. For example, in 2008.

• 18:48Speaker 04

  Oh yeah, global financial meltdown.

• 18:50Speaker 03

  Yeah.

• 18:51Speaker 04

  Financial crisis.

• 18:51Speaker 03

  Major financial crisis was going on right during that time. How about in 2000?

• 18:57Speaker 04

  Dot com bubble.

• 18:58Speaker 03

  Dot com bubble. That was the, the markets ended that year down about 7%. And the, as the year I just mentioned before with the great recession in 2008, the markets ended down 10%. Other than that, in 1984, the markets were down about 1%. But if you look at the average, the average has, is 1.5%. That means the markets have ended in positive territory and even the median gain is 3.7%. So.

• 19:35Speaker 04

  Yeah. And with the elections always being November. I mean, that's not a whole lot more time between now and the end of the year.

• 19:43Speaker 03

  That's right.

• 19:43Speaker 04

  But they're saying, hey, you know, once you know. What the outcome is, by the end of the year, it's usually a positive a little bit.

• 19:51Speaker 03

  That's right.

• 19:52Speaker 04

  Just historically.

• 19:53Speaker 03

  That's right.

• 19:53Speaker 04

  No guarantee that that'll happen this year, but that's what's happened before.

• 19:56Speaker 03

  That's right, and that's right. And that's all we really have is to go off of. It's no, it doesn't really even mean that it will happen again. Any past information is just that. But it does give us some reference that, well, historically speaking, things sort of do sort of smooth out. And then what you have is the opportunity for maybe some of these policies to actually have, take some, have some play. So that's another part of this question that I wanted to sort of address because we were gonna have Dr. Gerhart on. Couldn't make it to the show today, but Dr. Gerhart from Cal State Bakersfield is a true economist.

• 20:38Speaker 04

  Exactly.

• 20:38Speaker 03

  We like to pretend like we're economists. But in doing a little bit of research, again, it's really early to sort of know if, you know, how much of this will happen. But looking at what the impact of Trump's economic proposals would be is a little, it's actually a little tricky for me because it's hard to know when he has said something if he's serious or not. And I'm not just joking, I mean it. Like, he's talking about some of these economic policies that I don't know how serious to take him. For example, the universal tariffs, something he's been pretty consistent about, which is this proposition of implementing a baseline tariff

• 21:22Speaker 03

  on all imports, 10 to 20% on all imports, but specifically higher rates for countries like China, potentially reaching up to 60% tariff. Well, this, usually tariffs are intended to protect domestic industries, but a tariff is

• 21:43Speaker 03

  A tax and the tax and that increase in those costs and goods. It does impact the exporters, but it's paid by the people who are importing it. That's us, Americans. It'd be either American companies or American consumers that would be importing those things and be paying that tax or that tariff. And so I have, I'm not alone in this, but economists and those that are in the know about the impact of tariffs on an economy across the board say that this would increase

• 22:22Speaker 03

  prices, this would elevate inflation and it has an economic impact of inflation between six and nine percent that would hit the country by 2026 compared to where we are now, which is about 1.9 or about 2%. We're back down to our basic historic inflation rates. So this would triple or quadruple, more than quadruple our current inflation numbers. Just the tariff plan, I think that would be very politically hard for anybody to swallow. And so that's why I kind of come back to, I have to take this with a grain of salt, that this could be potentially happen.

• 23:04Speaker 03

  Tariffs did go up and were changed under the first Trump administration and Biden kept many of those increased tariffs on many of those countries and those exporters. But you know, right now where you know, there's still, at least part of the campaign was off of bringing prices down further.

• 23:29Speaker 04

  Right.

• 23:30Speaker 03

  I have, I just haven't been able to wrap my head around how universal tariffs would do that.

• 23:35Speaker 04

  Yeah, it's certainly going to be interesting to see how it all plays out, especially with. Inflation being top of mind for a lot of families out there. I mean, we've seen a lot of it over the last few years.

• 23:45Speaker 03

  Yeah.

• 23:46Speaker 04

  Right? Yeah. It's a real thing.

• 23:48Speaker 03

  It's a real thing and it's, it's again, I think it just comes down to a lot of political rhetoric. The other, some of other, other Trump's proposals, economic proposals would be energy production, expansion. This would be increasing domestic oil and gas production through deregulation. And Trump is hoping that that would lower energy costs. However, regulation is just one of the factors baked into the cost of energy, especially if you look at oil.

• 24:23Speaker 03

  And oil is, is a global market, happens to be traded in the dollar. So we, you know, we have some certain impact on that. But global markets and global production has the, the biggest say in the price of oil. The only real impact that, that could potentially happen on a political side is if, you know, you could lower some of the costs. But again, I have a hard time thinking how, at the end of the day, how this impact, how, how it could, how any president could have an actual impact on the price of oil and gas is beyond me. We've had Chad Hathaway on the show many times.

• 25:05Speaker 04

  I was just thinking, phone a friend, Chad.

• 25:07Speaker 03

  Well, we've talked about it with him and he, he's agreed with this. He's like, this is, they don't, this is, people don't have that, that sort of sway on that market, on that commodity. It's very difficult for that to happen. There's, there's global examples right now that's happening with, in Europe, and especially in Eastern Europe, with the war between Russia and Ukraine, where we saw this incredible shift of energy, global energy and how it was being bought and sold around the world. Even at that, it's had somewhat minimal impact on the, on the global prices of, it had some short-term impact

• 25:46Speaker 03

  on global prices of oil and, and gas, but even then, a war, you know, you know, between two major. Energy producers.

• 25:58Speaker 04

  Yeah, if I look back at this listener question where they're saying, you know, is there any truth in some of what these experts are saying, just to push back a little bit, I think you're going to find experts on both sides of the equation that say, you know, there's going to be some good and some potential harm depending on how everything plays out.

• 26:20Speaker 03

  Yeah, for sure. So there you have it. Great questions, great comments from our listeners. Keep them coming our way. We're going to take a break. We're Money Wise and we'll be right back.

• 26:28Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned local wealth management firm with 60 plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 26:47Speaker 03

  Welcome to the Money Wise Show. I'm Sharad Waite. I'm here with Dustin Weaver. Welcome back. Okay, Dustin, we've had the election now over, thank goodness. And I want to just one more thing that has come up. And this revolves around cryptocurrency. We have a, let's call it a Money Wise policy. Money Wise policy is right along the lines of Charlie Munger's opinion of cryptocurrency, which is, he calls it, in terms of an investment, he thinks it's rat poison squared. Wouldn't touch it. And it's, you know, you're being

• 27:29Speaker 03

  sold something that is imaginary and therefore doesn't have a place inside of a portfolio. This is coming from, you know, Warren Buffett's right hand man. This comes from a lot of people who have a lot of experience in the markets, but they're simply looking at this as a new, a new unproven.

• 27:55Speaker 03

  Thing. It's a new technology and there are risks involved anytime you have something new that's coming into the financial markets. And we're not talking about just the financial markets, we're talking about the global financial system.

• 28:07Speaker 04

  Right.

• 28:08Speaker 03

  This is, this is, this is, I believe, what a lot of the, the, the drive behind the cryptocurrency movement is this idea of decentralizing monetary policy. That, and that is a, a, a, a, a why, a, a noble venture, but it is rife with regulatory risks and many complications. And therefore, we, we don't recommend people buy into cryptocurrency as, as a legitimate, long-term investment. Now, perhaps it can be viewed as an alternative.

• 28:52Speaker 03

  Perhaps it can be viewed as something to be intrigued about and to maybe have some sort of investment in as a speculation, because ultimately, I can, there, everybody has accepted that the technology behind cryptocurrency is great.

• 29:09Speaker 04

  Yeah.

• 29:10Speaker 03

  Right?

• 29:10Speaker 04

  Yep.

• 29:11Speaker 03

  Decentralized ledger.

• 29:13Speaker 04

  Right.

• 29:13Speaker 03

  That's fantastic. You can have a much more efficient way of, of keeping track of things. It sounds great. But what, how much is Bitcoin worth?

• 29:25Speaker 04

  Well, um, I don't have that right in front of me, but I know that if you added up all of the cryptocurrency, it's starting to show up on the map. What do I mean by that? So, it, you know, looking at global equity markets across the world, if you added up all the value of total market capitalization.

• 29:43Speaker 03

  Yeah.

• 29:43Speaker 04

  What does that add up to? It's about 110 trillion dollars with a T, right?

• 29:48Speaker 03

  Of all investments, you're saying?

• 29:50Speaker 04

  All investments, it's around 110. And cryptocurrencies make up about 2 trillion of that.

• 29:56Speaker 03

  So it's come back because I think, I think at one point, crypto global value, I mean, it's all crypto, not just Bitcoin, but Doge, everything, was about 3 trillion, I think, when it peaked. And it dropped down to about a trillion, and now it's gained back some of that. So it's about 2 trillion versus 110 trillion.

• 30:18Speaker 04

  So it's a thing, but it's a small percentage of all the things.

• 30:21Speaker 03

  Why does it have so much voice then? Why does it seem like it's not just 1% of the global invest investable market? But it's like, it doesn't it seem like it's? You'd think that I'd guess if you polled the average investor, it feels like it's, I don't know, 20%?

• 30:39Speaker 04

  As much as it's talked about, you'd think so.

• 30:41Speaker 03

  Yeah, maybe it's it's that it's that intrigue to where where you have the you have the potential of being on the ground floor of something big and something great. And so the reason I kind of bring this up is because President Trump, who has been very friendly towards the cryptocurrency world, has essentially talked about, this was back in July in Nashville, Trump headlined one of the biggest Bitcoin conferences of the year and gave a keynote address where he essentially, his exact quote was, quote, "For too long, our government has violated the cardinal rule

• 31:25Speaker 03

  that every Bitcoiner knows by heart: Never sell your Bitcoin." So this is interesting because what President Trump is proposing, he says, quote, "If I'm elected, I will be I will be in the policy of my administration, United States of America, to keep 100% of all the Bitcoin the US government currently holds or acquires into the future." He's saying, President Trump is saying, well, we'll keep the Bitcoin that we collect from criminals or that we have. And why are we selling it?

• 31:59Speaker 04

  Why sell it?

• 31:59Speaker 03

  It's only gonna hold it. We're only gonna go up. That's the cardinal rule of Bitcoiners.

• 32:04Speaker 04

  I feel like he said some other things about it, too. Did you find anything on that?

• 32:07Speaker 03

  Yeah, I mean, he's also talked about firing and unseating US Securities and Exchange Commissioner Chairman Gary Gensler.

• 32:18Speaker 04

  Because he's an anti crypto guy.

• 32:21Speaker 03

  Anti crypto is is part of that as well. The SEC has a stake in this, so does the central bank, the Fed, and so does the Treasury Department. All of those have, you know, have a role in making decisions for these types of things. But it does make me nervous because of the, I think, the, I guess, the abuse, not the abuse, but the misuse of this type of investment. And how, I think it's just, it's still unknown what will happen to cryptocurrency.

• 32:59Speaker 04

  Yeah.

• 32:59Speaker 03

  This is incredibly unknown, and I still have a hard time seeing a pathway forward for a president, even if they control the House and the Senate, to be able to, maybe it's not that it would get to the point where now everybody's using Bitcoin to pay their taxes, but perhaps it's it's a win for those people who are very passionate about cryptocurrencies, albeit a very small percentage of the population, because it's a step in the right direction for them.

• 33:29Speaker 03

  I like the fact, you know, there's a, I'm very, there's still a big part of me that is very libertarian in terms of our fiscal and monetary policy. I wish that we had much more hands off approach to the the free markets. And so I'm very, I can see the appeal to cryptocurrencies and the decentralized manner that

• 33:52Speaker 04

  Right.

• 33:53Speaker 03

  you can, you can strip out the power of the middleman, that in our world, there is a middleman in in the industry, in our industry, in lots of places where I I'm not happy about that. And because everybody gets their little cut from it.

• 34:10Speaker 04

  And I feel like I interrupted you earlier, you were talking about the technology itself. You know, we could benefit not just from the, you know, the money side of it, but the blockchain technology.

• 34:19Speaker 03

  Yeah.

• 34:20Speaker 04

  And what that can do in other areas.

• 34:21Speaker 03

  Yeah. Like, that gets me really excited. I would like for us to be able to get to the point where we're much more cashless. And I like the fact that it can be anonymous. That's, that's great, too, but that also comes with some major problems. Because now you have.

• 34:38Speaker 04

  The nefarious.

• 34:38Speaker 03

  The nefarious, too. Yeah, it's like, well, you know, it's. I don't know. It's just, it's gonna be an interesting future here.

• 34:46Speaker 05

  You know when we get the chip in our wrist?

• 34:49Speaker 03

  Yep.

• 34:50Speaker 05

  What was that, the Justin Timberlake movie where they were paying out of their wrist?

• 34:54Speaker 03

  Oh, yeah.

• 34:56Speaker 05

  I didn't see that one. It's coming.

• 34:57Speaker 03

  Yeah, I mean, there's all kinds of crazy ideas because with the blockchain technology, you also have this idea of not the universal basic income, but there's this idea of universal basic credit that you take the global, the global economic value divided by the number of humans that are on the planet. Everybody is born with a certain number of credits that they can use to spend as they see fit throughout their lifetime. And, you know, that's a fascinating thought experiment because you still have people who can have the opportunity. It's not like socialism or communism, but you have people who have, still have, can exercise

• 35:42Speaker 03

  their free will. But you, you know, they're still brought into the world with a certain level of safety, financially speaking for them, so that they're not going to end up being an enormous cost like we're experiencing now homeless, for example. It's so expensive, you know, to have, just send a homeless person to the ER versus, you know, buying them a house, for example, and reducing their medical costs. It's counterintuitive. You got to come up with this extra money. But there's some, you know, some really interesting thought process, you know, thought experiments and economists doing some, you know, limited experiments to what would happen if we do this. Because if you look at the overall wealth

• 36:26Speaker 03

  in the world and the amount of resources that are in the world, there's enough money, essentially, if you just piled it all up, and I'm not talking about like taking money from private companies and all that. I'm just talking about resources and what's available. You divide it up by the humans. It turns out there's like an enormous amount, and way more than enough that we'll ever use based off of the projected growth. Of population, global population growth and where we'll peak, which is, I can't remember where we're going to peak in population. But I think it's somewhere around 10 or 12 billion people.

• 37:03Speaker 04

  Is that what they're estimating?

• 37:04Speaker 03

  That's what they're estimating and then it sort of starts to come down. So, you know, we're going to peak at a certain level of population, but we're going to have, always have a certain amount of resources, natural resources and publicly owned resources that you could sort of do something like that.

• 37:19Speaker 04

  Well, certainly the story of there's enough, sounds a lot better than not enough.

• 37:24Speaker 03

  Yeah.

• 37:24Speaker 04

  I like what you're saying.

• 37:25Speaker 03

  I mean, we have this, especially out in the West, we, there is this, a bit of a starvation mentality. And a lot of this comes from our grandparents. Our grandparents, my grandparents went through the Great Depression, left an enormous impact on the way that they lived their, in the whole rest of their life and they were children, they were younger at the time, teenagers during the Great Depression. But the impact that that had on my grandparents, which was passed on to my parents and on to me, is still in me, which is sort of, you're, you're, you're, you're, it's a bit of a starvation mentality, thinking I'm not going, I'm not going to, there's going to be a big crisis that's going to require me to go and dip into a pool, you know? So I've got my food storage, you know, I've got my safety.

• 38:10Speaker 03

  Yeah, scarcity mentality kind of thing. But that scarcity mentality has been running for a long time for a lot of people because literally they're looking for money to pay their next bill or their overdue electric, electric bill. And so there's just, there's just a lot of, a lot of issues, but we covered a lot this, Dustin. We've got one final break of the day. Don't go anywhere, we're money wise.

• 38:35Speaker 00

  Need to get your financial fix on the go? If so, subscribe to the Money Wise Podcast and catch up on all past shows whenever and wherever you want.

• 38:49Speaker 03

  Thanks for tuning in. We're Money Wise. Appreciate the comments and questions. Keep them coming our way. 661-396-1000. There have been a few comments here regarding cryptocurrency.

• 39:05Speaker 03

  I'll read some of it here. It says, "Speaking of crypto, and does it or could it affect social security benefits in the future? I've heard crazy stuff on a podcast called Unchained and it started to scare me a little." I haven't heard, I haven't heard, I've not heard this podcast.

• 39:19Speaker 04

  No, me neither.

• 39:20Speaker 03

  But there's, there's a lot of hype around cryptocurrencies. There are many podcasts, YouTube channels, influencers, it's conferences, you name it, you can go deep. Get a shirt, get a hat, get a button if you want. And you don't have to be a bro.

• 39:41Speaker 03

  There's crypto people.

• 39:42Speaker 04

  But you can be.

• 39:42Speaker 03

  You can be, yeah.

• 39:45Speaker 03

  And so, you know, you know, could it affect social security benefits? Yeah. I can see how, you know, cryptocurrency just recently has started to come under much more scrutiny and regulatory authority. In June of this year, the US Department of Treasury and the IRS both issued final regulations mandating that all custodial brokers report sales and exchanges of digital assets, including cryptocurrencies, which is really fascinating because it just, you know, not too long ago, it was very much the wild, wild west where you didn't even have custodians reporting anything that was happening, you know, and, you know, how much gains do you have and not have?

• 40:30Speaker 04

  Right.

• 40:30Speaker 03

  Okay, well, you know, that's great. I get, I get the benefit of really having this, you know, this, this currency that's, you know, off the grid, but.

• 40:39Speaker 04

  Yeah, that's a good point because if you have, you know, taxable income outside of social security, that has an impact on how much of it is taxable.

• 40:47Speaker 03

  Yeah.

• 40:47Speaker 04

  Right? So if that's not being reported and then it goes to being reported.

• 40:51Speaker 03

  Yeah. And all of a sudden, it could bring you to a point where your social security is taxable. Again, coming back to another one of the campaign.

• 41:01Speaker 03

  Promises, I guess, from President Trump is that it would eliminate taxes on social security and tips and other forms of income, like eliminate income, yeah, eliminate being taxable at all, or eliminating it over time. Right now, social security is not taxable until you reach a certain level. I don't have the numbers right in front of me anyways, but depending on whether you're married, filing jointly, or a single, once you get, once you have a certain level of taxable income on top of your social security retirement income, then a portion of your social security income becomes taxable.

• 41:36Speaker 04

  That's right.

• 41:36Speaker 03

  Right? And it's staged in where then the more income you make, the more taxable your social security becomes.

• 41:42Speaker 04

  With a cap of 85% of the benefit being taxed, but yeah, you're exactly right. More income, potential more tax.

• 41:49Speaker 03

  Right. And so, you know, there you have it. And as I mentioned, the cryptocurrencies, the, the, some of the laws are changing, starting in 2025, where brokers who take possession of digital assets on behalf of customers have to report the sales. And, and that happens on these exchanges, which would be, which would be reporting a 1099, you know, and we all know what that does. You get a 1099, a copy goes to you and a copy goes to the IRS. And what they're looking for is the difference between what you bought it for and what you sold it for. And that's called capital gains. And right now, there's a difference in the capital gains that you pay, depending on whether you hold it for

• 42:32Speaker 03

  less than a year, after a year. But, you know, who knows? Maybe we can see, maybe we will see some changes as well in the tax code. That usually happens under a presidency. And there is a sunsetting of the tax laws that will be happening next year. So we'll, we'll see what happens with that. So, great questions and comments. And final news here, I know this is something that's dear to Stephen's heart, maybe yours to Dustin, but did you ever play, or do you play Nintendo? Do you play games?

• 43:06Speaker 04

  Oh, I grew up on Nintendo. In fact, Stephen was my neighbor.

• 43:08Speaker 03

  I was gonna say, we played all the... You played Nintendo together? Do you remember what console, what, what was the first?

• 43:14Speaker 04

  All the consoles.

• 43:14Speaker 03

  Starting up.

• 43:15Speaker 05

  I grew up with NES and Super Nintendo, but I think that's probably the last Nintendo. Nintendo I had.

• 43:21Speaker 03

  Was the.

• 43:22Speaker 05

  Before jumping over to Sony.

• 43:24Speaker 04

  I had the 64, I had the GameCube. So yeah, I've played a little Nintendo in my life.

• 43:28Speaker 03

  You started out with the 64?

• 43:30Speaker 05

  I started with the NES.

• 43:31Speaker 04

  Oh, no, the NES.

• 43:32Speaker 03

  Oh, the NES.

• 43:32Speaker 05

  Mike Tyson Punch-Out, Contra, come on.

• 43:35Speaker 03

  Okay, good. We're on the same page. We're on the same page then. Well, you know how long it's been since Nintendo has upgraded their their flagship console, which is now the Switch?

• 43:44Speaker 05

  No.

• 43:45Speaker 04

  How long it's been?

• 43:46Speaker 03

  How long it's been? Seven years.

• 43:48Speaker 04

  Is that when the?

• 43:49Speaker 03

  That's when they first came out with the Switch. It's been seven years. So this, the reason it's came up because earlier this week Nintendo gave their forecast for Switch sales. And it, you know, they continued to go down. The Japanese giant, gaming giant now expects to sell about 12 and a half million units. Um, they had to bring it down from 13 and a half million units. But um, this is a, a huge decrease um, over uh, you know, the uh, volume that they used to sell. And it's because you have these competitors or, you know, better system. Seven years is a long time for the system to not get an upgrade.

• 44:29Speaker 04

  Yeah, I haven't really been following it. How much content are they releasing?

• 44:33Speaker 05

  Well, now they have the VRs and the AI games and it's, I mean, there's a, my son's got the new VR for the PlayStation. And there's abilities to actually sit and watch movies on this system.

• 44:46Speaker 03

  Yeah.

• 44:46Speaker 05

  It's just like.

• 44:47Speaker 03

  It's awesome.

• 44:48Speaker 05

  It's all in one now.

• 44:49Speaker 03

  It's really cool. The now, other thing is that investors are waiting for news that's supposed to come out next year. When Nintendo announces what the successor is, what's the successor to the Switch?

• 45:03Speaker 04

  What's next?

• 45:03Speaker 03

  What's next? And Nintendo, maybe the hope is, I guess, by investors and fans of Nintendo that they've got, they're going to pull something out of their sleeve. Because Nintendo has been revolutionary in some of the things that, obviously from the get-go, that they have an enormous amount of revenue that comes in from the franchises that they own, like Pokemon.

• 45:24Speaker 04

  Oh, yeah.

• 45:24Speaker 03

  And Mario, these flagship, uh, Zelda, um, you know, these are, these are major, um, um, flagship.

• 45:34Speaker 05

  Brands.

• 45:35Speaker 03

  Brands, yeah, that just, you know, don't go, um, have a big value for them. But um, I thought that was interesting, you know, that, that I can't believe it's been seven years since that has happened. Also in headlines, we lost a visionary, a pioneer in the retail world, Bernie Marcus. He was a billionaire, passed away yesterday. He was a co-founder of Home Depot.

• 46:05Speaker 04

  Oh, yeah.

• 46:06Speaker 03

  And, you know, I love these stories of co-founders and business owners, especially somebody like this, who was, who essentially with a partner of his, was fired from a job where they were heartbroken and, you know, thought it was over for them and decided to join a, and start up, a plan to start a business where they were running a hardware store essentially out of a warehouse. And they thought they could bring down costs and create a simple, clean shopping version for consumers. And they were able to essentially

• 46:51Speaker 03

  build up a massive empire.

• 46:53Speaker 04

  Oh, yeah. I have hundreds of thousands of employees.

• 46:56Speaker 03

  A huge, huge. Marcus was a big donor to several charities, including Jewish and medical organizations and, and the biggest donor to the Georgia Aquarium in 2005, gave $250 million grant to help open the aquarium in Georgia.

• 47:16Speaker 04

  They did a lot with disaster relief, too, over the years.

• 47:18Speaker 03

  Yeah. So he did, did a lot of good, Bernie did. Want to thank all of our listeners for tuning in. I want to remind you, if you missed any of these past programs, you can go to wherever you listen to your podcasts and find them there. Want to remind you, too, of these three things: be smart, be safe, and always be money wise.

• 47:36Speaker 02

  Securities offered through SCF Securities, Inc., member FINRA/SIPC. Investment advisory services offered through SCF Investment Advisors, Inc. SCF Securities, Inc. and Money Wise Wealth Management are independently owned and operated.