#15 – The Masters, Inflation, Tax Day, Markets Broadening, Baby Boomers, and Magic Retirement Numbers

Connor Miller [00:01:22]:
Thanks for having me. It really is probably one of the best weekends of the year. Best sun, and then you throw on the perfect weather. It really couldn’t get any better.

Wes Moss [00:01:30]:
We should, I feel like we should be there, but we have a job to do and we’re doing money matters here on this Sunday morning. So let’s see, we’ve got three different things that have to do with inflation because that was the big story of the week. We’ve got Masters inflation, which doesn’t exist because inflation goes, there’s only one place where inflation goes to die, and that’s Augusta. So it’s our annual tradition that we go over the menu at the Masters, which is still looks like the prices are from like 1972. We have post office inflation because we’ve been seeing issues with USP’s. They’re losing $6 billion, so they’re, of course, increasing stamps yet again. And then, more importantly, in what really moved markets this week with a big, a big knee jerk reaction this past Wednesday was what I would, what I call the cotton candy inflation report. So we have post office inflation, mass inflation, Conor Miller and cotton candy inflation all here today on money matters.

Wes Moss [00:02:32]:
Now, what do I mean by that? It means that the latest inflation report was a little warm and inflation is a little sticky. And I was at a birthday party. I hosted a birthday party for a bunch of second graders about a month ago, and that’s why cotton candy’s in my head, because I ordered one of those popcorn machines that you see at the carnival and a cotton candy maker. So for an hour or two I was making blue and pink cotton candy. Most kids wanted to blend the two together to have the rainbow cotton candy. And it was, by the time I was done, it was just sticky, warm.

Connor Miller [00:03:11]:
And sticky minutes everywhere.

Wes Moss [00:03:13]:
And that’s exactly what happened this week with inflation. And that’s why the market didn’t like it, because it’s more inflation than we want to see. And it seems to not be going away like we want it to see as it’s. In fact, there’s even a, there is a, quote, sticky CPI gauge. We didn’t actually should have pulled that, but we did not for this weekend. Yeah.

Connor Miller [00:03:34]:
And really we got two prints to start the year in January and February that were a little bit higher than most would have liked. But, you know, some, some people wrote those off due to seasonal effects with the holidays. This one pretty much has verified that, yeah, inflation overall is proving to be stickier than most of us would like at this point.

Wes Moss [00:03:55]:
Stick it around. But now here’s, and here’s why I came up with this, because the headlines on Wednesday, and this was, this was the most anticipated report of the week. It was the CPI inflation report. I was on Wednesday. Now, by the way, PPI report came in the producer price indicator on Thursday, and that was not hotter than expected. But the headlines in the Wall Street Journal were hot inflation print. And I just think that that is a stretch. It was a touch warm and kind of lingering longer than we’d like.

Wes Moss [00:04:25]:
So CPI came in at 3.5% for the month. The jump from, call it February to March, came in at 0.4 as opposed to 0.3. And this was interesting. Jeremy Siegel from Wharton School pointed this out this week. He noted that the CPI report, they round these numbers, so it’s either up 0.2 or up 0.3 or up 0.4. But interestingly, if the data had come in two to three hundredths of a percent lower instead of the 0.4 that ended up making a three and a half print, it would have been at .3 expectations and the market may not even reacted at all. So it’s very interesting that just a tiny fraction they rounded to the higher number. And I think it maybe made the inflation story this week a bigger story than it really, really needed to be.

Wes Moss [00:05:17]:
So this tiny fraction had a dramatic impact on interest rates, had a big impact in a given day for stocks. Stocks were down about 1% the day the inflation report came out this week, which arguably isn’t all that much. 1% is not that strange for a market to move in a given day. But the ten year treasury interest rate, now that did move a lot. Conor Miller it was lingering around 4.3%, went to all the way above 4.5 now, which that in itself is a six or 7% move in interest rates for the ten year treasury. So that’s a pretty big move. And that was in the matter of minutes. Literally, as soon as that report came out, interest rates shot higher.

Wes Moss [00:05:57]:
But it also shows how hypersensitive and I would say arguably over sensitive financial markets are to what they think or want the Fed, the Federal Reserve, to do. Just a drip, too much inflation. And now the Fed may not lower interest rates as much as the market was hoping for. Also, interestingly, this came straight from the BLS report. Bureau of Labor Statistics showed that shelter, which is the housing component, arguably very important. Food, shelter, energy, but the shelter index, it’s up about 5.7% year over year, accounted for 60% of that 3.5% inflation over this past year, 60%. The other big move in the overall inflation number was from a really big increase in motor vehicle, basically in car insurance, has gone up a little over 20% over the past year. Those two categories, OER, which is owner’s equivalent, rent, that’s shelter and car insurance, they happen to be the most backward looking components of inflation to begin with, the way the BLS does this, and I don’t pretend to be an expert on exactly how they calculate it, but they look at an 18 month moving average on housing costs and rental prices.

Wes Moss [00:07:25]:
So think about how old that data is. They’re printing it today, but they’re looking at what prices have done over the last year and a half. If you go to a real time data, and, Conor, you pulled this up this week, but if you go to either zillow, which is real, I would say more real time data, or apartment list data that reports monthly rental costs, it shows that there’s, there’s essentially been zero increase, zero increase happening in rents for well over a year now. So in fact, it was even a little bit negative if you’re looking at the most recent data on rental costs. Yeah.

Connor Miller [00:08:01]:
And this is something that our team has actually looked at. It was, I guess, about a year ago. We went back and we looked, and the difference between how the BLS calculates shelter costs versus the more real time.

Wes Moss [00:08:12]:
Data, like just in its name. The Bureau of Labor Statistics feels like a very large ship, slow to turn.

Connor Miller [00:08:19]:
And that’s exactly what it is when they calculate it. We found that there was about a 16 month lag in how the BLS calculates it versus what’s going on in real time. So back in 2021, when inflation was had just gotten started, but we saw this boom in housing, it worked the opposite. Now, today, rents really haven’t gone up much over the last year, but it’s still coming in hot in the CPI report.

Wes Moss [00:08:47]:
So if you were to assume that shelter has really had no inflation over the past year and take that out of the 3.5%, again, that’s not how the system works, because they’re using BLS data and they’re not using Zillow or apartment list data, then inflation over the past year would only be about 1.5%. Which I’m not saying that inflation has only been one and a half percent, because housing shelter numbers are very real. And yes, the way they calculate it has always been the same way. So it’s not as though it’s a new phenomenon. But if you’re looking at that way, I think all of that to say that the report on inflation was just a tiny bit high, the market reacted pretty significantly to it. All of a sudden, the chances of future rate cuts went from three down to two. Now, there’s a good argument to be made that there may be no interest rate cuts for all of 2024. We don’t know, but you could certainly make that case at this point.

Wes Moss [00:09:44]:
And the question, though, is that is the market kind of overreacting a little bit? And I would say Wednesday was kind of an overreaction for just a touch hot, really, just warm. And inflation, that just continues to be sticky. The question that you will ask, though, Conor Miller, would you rather have fed rate cuts, or would you rather just have a really strong economy and the Fed not have to cut?

Connor Miller [00:10:12]:
Both would be ideal. Right?

Wes Moss [00:10:13]:
I knew you would probably come up with something. Yeah, both would be great. A really strong economy and lower interest rates will juice GDP to 6% a year. That’s probably a little bit.

Connor Miller [00:10:24]:
Just want to have your cake and eat it, too. No, as long as the economy is going strong and it’s doing it in spite of the fact that interest rates are where they are, then I’ll take that all day long.

Wes Moss [00:10:34]:
So if I had to choose between the two, I’d rather a strong economy than also have rate cuts, which might imply that the economy isn’t all that strong because the Fed needs to now lower rates. That remains to be seen. But to your other point, the labor market’s still very strong. There’s also, I think, a little bit of a silver lining in some of the economic data this week in that household paychecks, which have risen over the past year, real hourly earnings, that’s the pay after you take out inflation. So if you get a 5% pay raise when inflation is six, then you’re getting a negative real wage increase, you get a decrease, but that was up over a half a percent from March 2023 to March 2024. So over the past year, households have gotten a real wage increase that’s a little over half a percent, which means that people can tactically afford to buy more goods and services because they have more money, even accounting for inflation in their pocket. Remember, though, that real wages declined for two years in a row after the initial issues with COVID We had two straight years where people were really losing out to inflation.

Connor Miller [00:11:50]:
And that was really one of our core themes heading into the year, was following two years where you lost purchasing power back to back. This was going to be the first year where those wages did actually outpace inflation, which theoretically should be good news for the people.

Wes Moss [00:12:06]:
But people still haven’t caught up. That’s the problem is that, yes, real wages are up this year, but it still doesn’t make up for two years where people were falling behind. And that’s why sentiment is that even though we have this strong labor economy, the unemployment rate is ultra low, near a, call it 50, 60 year low. People still in America don’t feel like this is an amazing economy. And that’s the issue. Another thing that contributes to that, if you go back to the CPI inflation report, prices at the pump are up. So gasoline prices are up almost 2% from February to March. We’re looking at 352 a gallon today versus 335.

Wes Moss [00:12:47]:
So that’s contributing to this as well. And we feel that because we have to go fill up our gas tank over and over and over again and get reminded of the inflation that we’re all combating. Of course, we’ve talked a little bit about something like 25% of generation Z, which are ages. Conor, what? Eleven to 26?

Connor Miller [00:13:09]:
25.

Wes Moss [00:13:09]:
That entire group. 25, a quarter of that whole group. They obviously don’t all file taxes because they’re not old enough. Some of those, they’re not old enough to work. But that group needs tax therapy, they need actual therapists in order to get through their taxes. And 50% of that group has either been brought to tears or expects to be brought to tears. When it comes to filing their taxes. Is that what, is that what April’s come to? Is that what April 15 has come to? We were talking about cotton candy inflation.

Wes Moss [00:13:39]:
They don’t sell cotton candy at the masters. The reason we’re making this cotton candy reference here is that cotton candy is warm, and if you, if you’re dealing with it for more than a minute, it’s kind of sticky. And it’s exactly what the inflation report was this week. It wasn’t hot, wasn’t crazy, wasn’t way out of bounds. It was just a tiny fraction higher than the market expected, or economists expected. And big knee jerk reaction. A, stocks went down a full percent in that one day. We got the report from consumer price index, and b, we saw interest rates pop pretty significantly, up six, 7% in a matter of a couple of minutes.

Wes Moss [00:14:16]:
Now, there’s no cotton candy on the menu at Augusta. And Connor Miller. This is one of my favorite traditions here on money matters is to get a photograph from the masters, because I didn’t get to go this year, but somebody will usually send a picture of the menu, and it looks like this year, I don’t see a whole lot of inflation. Egg salad sandwich, dollar 50, pimento cheese, still $1.50.

Connor Miller [00:14:42]:
So, full disclosure, I’ve never been to the masters, but is there a certain item, if you’ve been, that you get when you go?

Wes Moss [00:14:50]:
I don’t, I’ve only, I think I’ve only been, yeah, I’ve only been one time. So the folks that, if you’re a one timer and you don’t think you’re going to keep going back year to year, I think people kind of get every single thing on the menu because you just want to try everything. So you get the egg salad, the pimento cheese, the pork barbecue, the club, the chicken salad on honey wheat. I remember that one. I love that one. And then the classic chicken. Then there’s the ham and cheese on rye. All of those.

Wes Moss [00:15:18]:
I would say they’re all pretty darn good. They’re not the best lunch you’re going to ever have in your life, but they’re good. They’re memorable, and they’re very inexpensive beverages. Soft drinks, $2. Bottled water, $2. And then they do have a beer menu. Domestic beer is six, imported is six, and white wine, of course, is $6 at the masters. There’s something on that menu.

Wes Moss [00:15:43]:
What is it? Crow’s nest?

Connor Miller [00:15:45]:
Yeah, that’s a, I think it’s a local beer that they make. I’m not sure exactly what kind of beer? But that’s one. If I was there, I would definitely have to try that.

Wes Moss [00:15:54]:
Yeah. I don’t remember that Georgia peach ice cream sandwich. That to me sounds amazing. I’d love. I’d love one of those right now. Even though it’s still kind of breakfast time.

Connor Miller [00:16:05]:
Maybe producer Mallory can run and grab us some of those.

Wes Moss [00:16:08]:
Can you go grab us some Georgia peach ice cream sandwiches? That would be so good. Of course, Jeff Lloyd did what if you want one of everything, one of every sandwich, $18 and you get all of them. One of every breakfast item, $12. Every beverage, 31 of every snack, 1050. So you could get one of everything on the menu for $70.50. I don’t think you can say you could do that at McDonald’s drive.

Connor Miller [00:16:37]:
So I would say that’s about a normal bill if you’d going out to eat today.

Wes Moss [00:16:43]:
Speaking of what is the teen? This is a great survey from this week. Piper Sandler did their 47th semiannual taking stock with Teens survey spring 2024. Looking at brand loyalty and what you reminded me of, fast food. The top restaurants for teens. And I think this is the way their survey worked. It was 80. Let’s see.

Connor Miller [00:17:08]:
It was 6000 teens surveyed across the US.

Wes Moss [00:17:11]:
Oh. Average age of 16.1. So they may or may not have their driver’s license. Average household income, 66,000 teens currently part time employed. 38% of these folks are working these teens. 85% of teens own an iPhone and 86% expect to have an iPhone as their next phone. Interesting. And some of these brands, I don’t even know.

Wes Moss [00:17:39]:
Number one, elf. E l f is the number one cosmetics brand. I don’t know if I’ve ever heard about that. But anyway, so we’re going back to food. Top restaurants. Number five on the list, Texas Roadhouse. Number four, raising canes. Never heard of that one.

Wes Moss [00:17:55]:
Number three, Chipotle.

Connor Miller [00:17:59]:
Or.

Wes Moss [00:17:59]:
How do you pronounce that, Conor? Is it Chipotle or Chipotle? I’m not sure.

Connor Miller [00:18:03]:
I think it’s Chipotle. But there’s a lot of confusion there.

Wes Moss [00:18:06]:
There’s a lot of confusion, especially with. I think it’s gen Xers. There’s videos on TikTok that show gen Xers pronouncing it wrong. Number two on the list, McDonald’s. 10% of teens top restaurant and number one on the list, Chick fil A. The other thing too. I love this. Top snacks.

Wes Moss [00:18:32]:
Five. This is again. And I think about. This is you think about if you know what kids want and teenagers want when it comes to their brand affinities, there is a fair amount of. Even though you might think teens are fickle and they’ll change from one to the other, it says a lot about brand loyalty here. The fact that 85% have iPhones and 86% plan to get their next phone is an iPhone. It does say something for brands. And number six on the list for top snacks, or number five on the list of top snacks is cheetahs, four doritos, three cheez its, two, I guess, just lays potato chips.

Wes Moss [00:19:10]:
Good old fashioned. And number one on the list, you probably this. I think that this is what’s littered on underneath the seats of your Tesla because you’re mister dad.

Connor Miller [00:19:21]:
So basically, this report just tells us that teens are just toddlers that have grown up with the number one snack being, of course, goldfish.

Wes Moss [00:19:29]:
I spent a lot of years not loving goldfish. And my kids, of course, we’ve had goldfish in the house now for 17 years. It is only the past year when I have come around to loving goldfish. I don’t know what it is, but have you always loved them?

Connor Miller [00:19:46]:
These things are the bane of my existence because when they’re out, you just. You’ve got to grab a handful of them, right?

Wes Moss [00:19:53]:
Here’s what I remember. In our car is goldfish that then have soda dumped on them and they expand and they’re just like, stuck to the seat. That’s why I maybe didn’t love it.

Connor Miller [00:20:04]:
Yeah, you don’t want to eat.

Wes Moss [00:20:04]:
We had little, little, little kids. Let’s see. Top celebrities to this group. This is no surprise. Number one on the list is Taylor Swift. Number two is a little surprising. Adam Sandler. Interesting for that group.

Wes Moss [00:20:17]:
I think of Adam Sandler as more my generation. Yeah.

Connor Miller [00:20:21]:
Millennial or Gen X. Back in the nineties.

Wes Moss [00:20:24]:
Top influencers. I don’t think anybody. Number one on the list is mrbeast. Do you know Mrbeast?

Connor Miller [00:20:31]:
I don’t.

Wes Moss [00:20:31]:
Okay. The consumption, video consumption. Three on the list. Hulu, two, YouTube, TV. And number one, of course, no surprise, Netflix.

Connor Miller [00:20:42]:
We were actually talking about this earlier in the context of inflation because there was a category that we couldn’t quite figure out.

Wes Moss [00:20:50]:
Oh, let’s go to that. I wanted to say the top footwear brands, three is converse, two’s Adidas. Number one, by a huge margin, 59% of teenagers say their number one brand for footwear is Nike. 59%. I wonder if that has something to do with the recent, with the air movie. Could be part of it. I don’t know. All right, so let’s go to inflation.

Wes Moss [00:21:12]:
Speaking of inflation, where did it show up in this latest report? What’s been expensive, what has not? What’s pushed these numbers higher? We know, of course, shelter is by far the biggest component to the bigger than expected number. Shelter was up 5.7% year over year. It contributed 60% to the overall inflation number. But there’s some other categories that are pretty interesting that you and I were talking about this week, so let’s move to that.

Connor Miller [00:21:42]:
Yeah, one of the biggest categories we were looking at, we were looking at overall impact to inflation. So they just have straight up overall impact to the headline number, and then they take out food and energy. The biggest impact to this report was a category called video discs and other media. And so we were looking at that earlier.

Wes Moss [00:22:00]:
We’re like video discs and other media.

Connor Miller [00:22:03]:
That doesn’t sound like something that would be super relevant today. I don’t know how many people are still buying video discs.

Wes Moss [00:22:08]:
Hold on. Up over 30% over the last year. Over the past year.

Connor Miller [00:22:15]:
Turns out they’re actually going to be changing the name of this category to streaming services and video rentals, among other things. So, of course, what this is, is the price increases from streaming services over the last year from Netflix and Amazon prime and Disney plus.

Wes Moss [00:22:34]:
And those have been about, in a lot of cases, up 20% to 30%. It’s from seven bucks to ten bucks for some of these streaming services. So it’s amazing how it came through, tracked really well in the BLS data. But when I read that video discs and other media, I was immediately thinking of laser discs, which you may, I don’t know, do you ever, do you remember what a Laserdisc was?

Connor Miller [00:22:59]:
It was a little bit before my time. VHS was the big one.

Wes Moss [00:23:03]:
Yeah, it was. The laserdisc was that it was this giant, looked like a compact disc the size of a regular lp, a record. And then what came next was the, I guess the compact disc, which is the one that we still know to this day. I don’t have a compact disc player anymore in my car, but I guess it was compact from the giant laser disc that for some reason in America, never took off. Only like a one or 2% adoption rate. Here in the United States, we were.

Connor Miller [00:23:33]:
Reading, because it could only hold like 30 minutes of video on one side.

Wes Moss [00:23:37]:
So if you think about this technology war, when it was laser discs and then it was VHS tapes, before it was compact disc, that would come in the mail from Netflix. But what was interesting is that why, why or how did VHS tapes win out, Connor?

Connor Miller [00:23:55]:
Mainly because of what they could store and you could actually record over them. So that was a priority. You’d have the sitcom come on the tv if you couldn’t get to it, put the VHS in, record it and you could rewatch it over and over again.

Wes Moss [00:24:08]:
If you remember programming your VCR, then it may be. And for your kids, maybe it’s time that you do some retirement planning. That means you’re probably about 60 years old or 65. Means you’re a baby boomer. What else? Car insurance. Huge piece of the equation. Up 22% over the past year. Maybe that’s still a residual from COVID So you had less cars on the road, then you had more cars.

Wes Moss [00:24:33]:
And then, of course, car prices. We know that there’s a huge lag. So we had car prices go up for a long time. What followed a year to two years later, of course, higher car insurance to protect your vehicles. The repair of household items was a big number. Up plus 18%. Care of the elderly. That’s interesting.

Wes Moss [00:24:53]:
Care of elderly at home, up 14%. These are just all the. These are the BLS categories. Motor vehicle repair, veterinarian services, almost 10%. This one. Tax return preparation, up 7%. What do you think that’s about?

Connor Miller [00:25:15]:
That’s got to be.

Wes Moss [00:25:16]:
Why is that one of the hottest categories in the US economy?

Connor Miller [00:25:19]:
I mean, tax days tomorrow. Right?

Wes Moss [00:25:21]:
Tax days tomorrow. But there’s all these free services now you’ve got free services and the IR’s itself is launching its own free service. You can file your taxes for free, maybe. Here’s my guess on this, is that interest rates are higher. So a lot of these tax prep firms that are doing your taxes for free and giving you your tax refund early, they’re charging you higher interest on that pre refund that they’ll give you. That, I think, is why. That’s why I would suspect tax service prep costs going up. Even though it’s not directly correlated, it’s still the cost you would pay one of these firms.

Connor Miller [00:26:02]:
And the other piece that we’ve been hitting on is wages. Right. If you have to pay the person who’s preparing your taxes, then the service fee is going to go up.

Wes Moss [00:26:12]:
Where did we not see inflation? My eyes are almost too bad to read this, but rent, one of the places we saw the biggest. These are deflationary numbers. These were. Prices have come down. Not just slowed down, but rental cars, toys, airfare, all negative over the past year. No rental again, maybe coming from. We’ve seen used car prices come down. Maybe that’s why we’re starting to see rental costs come down a little bit as well.

Wes Moss [00:26:42]:
But here’s the bottom line. The numbers point towards the fed not lowering interest rates anytime soon, not implementing rate cuts, even though the market kind of wants that. Investors want that. The Fed does not want to repeat the 1970s, where we had this roller coaster inflation. They got inflation under control, left some embers, and then the fire started again. And there was this roller coaster of inflation. They know that. They don’t want to see that again.

Wes Moss [00:27:08]:
They want it tame and in check before they take their foot off the brake pedal. Yes, rate cuts are possible this summer. I doubt it. They’re possible in the fall. I started to doubt that as well. But it’s not the end of the world. Again. Jeremy Siegel, who was talking about how the market was overreacting to just a slightly higher inflation print than we may have thought, I think smartly reminds us that when it comes to investing, and we’re investing in equities to beat out inflation.

Wes Moss [00:27:42]:
And so far this year, the market is already, in the short four months of this year, so far, already done its average outpacing of inflation. Markets up about 9%. Inflation is called around three. So it’s a 6% real return over inflation. Well, guess what? Over the last 30 years and 100 years and even 200 years, that’s about what the market’s given to investors, 6.5% over inflation per year on average. So we can’t be disappointed if we’re not getting 15 or 20% in any given year. 6.5% is still great, and we’re at the long term average already for this year. And it’s a reminder that stock returns crush cash rates of return, bonds, bills, and nearly every other category.

Wes Moss [00:28:34]:
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Wes Moss [00:29:08]:
Mine my voice a little scratchy this week.

Connor Miller [00:29:11]:
Tis the season. With allergies.

Wes Moss [00:29:12]:
Tis the season. I was in here on Wednesday or Tuesday, Tuesday evening on EVH’s show. I love those guys. That’s such a funny show. But Clark Howard was in studio, too, so he popped in and we were talking about the economy. Of course, we’re talking about, EvH made the proclamation that the Fed mandates us to invest. Mandates us to invest. And he’s not wrong about that.

Wes Moss [00:29:41]:
They have this mandate that is maximum employment or full employment, and they call it price stability. That’s how they message it. But price stability means they want a warm level of inflation all the time. And if that’s the case and they achieve their mandate, which is inflation, then it really does leave us almost no choice but to invest. If we were leaving money in bank accounts that are giving us zero interest, even though, yes, money markets are paying four and 5% today, regular checking accounts are not, the big banks are paying still almost zero in a lot of cases. So if our money is sitting, not growing, then it’s automatically wilting. Our dollars are wilting and they’re a little bit less valuable every single year. And the greater inflation is, the more that wilting happens.

Wes Moss [00:30:34]:
But, Connor, you pull data as this is something I know you track, or we track because it’s so important, is dividend growth over time in the s and P 500.

Connor Miller [00:30:43]:
Yeah. So being the income investors that we are, dividend growth companies that are able to not only produce dividends, but grow them over time is where we like to be in stocks. And so we have this data going back about 150 years, and it shows that companies that have the ability to grow their dividend over time really are your best protector of purchasing power, to the tune of dividend growth being about 3.7% on average.

Wes Moss [00:31:14]:
On average every year. So again, this is just the company. If they’re paying a dollar, then on average the next year they’re paying a dollar. $0.04.

Connor Miller [00:31:22]:
That’s right. Whereas inflation over that time has been about 2%. So nearly double the rate of inflation. So you’re getting a raise every year. Well, that sounds good, but how does it actually hold up in an environment like this? And we track this all the way through 2020, 2022, when inflation was 9%. Well, over the last twelve months, inflation has been three and a half percent, and companies in the S and P 500 have grown their dividends by 4.6%.

Wes Moss [00:31:50]:
So it’s not quite double.

Connor Miller [00:31:51]:
Not quite double, but you’re still outpacing inflation. You’re still getting a real increase in those dividends.

Wes Moss [00:31:57]:
But over time, and this is why people don’t pay it. This is why it’s easy to ignore the power of dividend increases. My example there is a pretty real life example. A dollar, two four. That’s a 4% raise. It doesn’t sound like a lot and it really doesn’t sound like a lot. When it’s $0.04, it’s almost like going back to Trader Joe Bananas. They went from nineteen cents to twenty three.

Wes Moss [00:32:22]:
That doesn’t sound like a lot, but on a percentage basis, it’s a big number. Same thing here. A few cents go a really long way when it goes to protecting the amount of income you’re receiving from dividends over time. It is tax day tomorrow, so no wonder you hear the sounds of so many people crying. Conor Miller this was, what was this cash app or. I don’t remember who did this study, but it was 25% of Gen Z’ers say they’ll need a therapist to deal with filing their taxes. I don’t know how much of this will happen tomorrow, but obviously this is a stressful time for Gen Z. Survey also says 54% of all Gen Z’ers said filing taxes either brought them to tears or in, in the past or expect to this year.

Wes Moss [00:33:12]:
Come on. This is. Do you expect to cry this year over your taxes?

Connor Miller [00:33:16]:
Well, we didn’t know why when we were talking about this earlier, but now after going through the inflation tax preparation fees up 7% over the last year.

Wes Moss [00:33:24]:
No wonder they’re crying. Great points.

Connor Miller [00:33:27]:
Why they’re crying brought that full circle. Gotta pay all these taxes and then I gotta pay someone to file them for me.

Wes Moss [00:33:33]:
Well, I get that the tax code is what, 2 million? Is it 2 million words? I read something this week about it’s like seven times longer than all the Harry Potters put together. And I know that shocks you, Mallory.

Connor Miller [00:33:50]:
Every time I hear that, it just takes me back to, I think it was 2016 when maybe Ted Cruz was running for president. He’s like, we’re gonna put the tax code on one piece of paper.

Wes Moss [00:33:58]:
I remember that. I was like, that’d be a great idea. Yeah, I would’ve loved to see that. And then maybe less people would be crying about their taxes because they are complicated. They do take a long time. What else in this is that? Something like 50% of Gen Zers don’t know where to find their w two or their 1099. And they’re just lost. Guess what? You’ll get used to it.

Wes Moss [00:34:20]:
We all do. There’s no way getting around it. So it’s tax day coming up. We had the inflation report this week, Conor Miller that we saw really maybe an overreaction interest rates. The market went down 1% on Wednesday. As soon as the inflation report came out, Dow futures were down. And then we ended the day down, call it 1% or so, 400 points or so on the dow. So it was a pretty big reaction.

Wes Moss [00:34:47]:
I wouldn’t overstate that, because it was only 1%. Where the big movement came was in interest rates. You don’t see interest rates move this dramatically very often. And within a minute, we saw rates go from four three to 4.5, which again, doesn’t sound like a lot, but that’s a 6% jump. So we saw rates go up because this week we’re calling it the cotton candy inflation report because it wasn’t hot. It was kind of just a little warm. It’s a little bit warmer than expected, and it’s sticky, as in it’s just kind of hanging around. And we’re not getting the inflation that was coming down month after month for the better part of a year.

Wes Moss [00:35:26]:
It’s kind of stalled out. So we have this last mile problem that we’re seeing, and really just a.

Connor Miller [00:35:30]:
Testament to how tied to the Fed both stocks and bonds are right now, because everything is being centered around when’s the Fed going to cut? How much are they going to cut? Earlier this year, the market was pricing in six Fed rate cuts. So that’s about a one and a half percent cut to interest rates.

Wes Moss [00:35:49]:
So we’d go from five, call it five and a half, all the way down to four, which would be material.

Connor Miller [00:35:54]:
Right.

Wes Moss [00:35:55]:
Imagine how many people would refinance their mortgages.

Connor Miller [00:35:57]:
And that’s the rate that sets all the other interest rates. So when we’re talking about the ten year US treasury, that’s a function of where the Fed funds rate is as well. Now that’s down to one, maybe two cuts this year. And so that’s why you saw that jump in long term interest rates, if that.

Wes Moss [00:36:15]:
Right. I could foresee a year where we have no rate cuts. And that’s not necessarily a bad thing. Remember, if we don’t get rate cuts, it means, yes, it’s inflation is a little higher than the Fed wants it to be, but it also means the economy is probably pretty strong unless we get into stagflation, which again, I don’t see that happening right now. I was talking to a family this week, and they were asking about artificial intelligence. Well, what’s AI going to do? Well, it’s been around now for what, a year and a half? You’re starting to see more and more use cases. It’s very clear. And we’ve been talking about this on money matters for over a year now.

Wes Moss [00:36:48]:
It’s very clear that you’re going to see use cases across the board in multiple industries. So it’s not just artificial and generative intelligence that you can translate Spanish into. It is language translation. That’s an industry. And what does that do for communication? It’s in the utility sector, in the transportation sector, in healthcare, in video, in advertising. So it’s going to be. I look at where we are today, it’s 2024, a lot like where we were in 1999. It’s hard to even get out of the two thousands there.

Wes Moss [00:37:25]:
In 1999. When the Internet was here, we’d been using it for a few years, but we didn’t know how dramatic it would really be on everything. And what happened is that the Internet wasn’t just the few Internet companies that made money. It was the information exchange, the lowering of the cost of doing everything that the web and then ultimately the cloud allowed for. And it made every industry, not every, but made most industries more efficient, more productive. And that’s why we went through this long, that’s part of the reason we saw a long cycle that was pretty low inflation. Now you can make the case, and Conor Miller, you’ve made a great case over the last couple of years of why inflation will stay relatively sticky and warm and not go away. One, and there’s some great reasons for that.

Wes Moss [00:38:18]:
De globalization. We want more things built here in the United States. We just saw money from the federal government go to Taiwan semiconductor to build a giant plant here, billions of dollars to have more built here for our own security. And that’s all you would argue, probably inflationary.

Connor Miller [00:38:36]:
Yeah, I like to separate the two into more near term, immediately inflation and then longer term. What does the picture look like? And I think longer term when you factor in artificial intelligence I don’t see inflation being a huge issue. But that doesn’t change. There’s not as much of an immediate impact. When you have things like higher commodity prices, you have governments continuing to run deficits. There’s still some demographic shifts happening in the workforce that’s causing wages to move higher, faster. And so those are the things that we’re going to have to work out here in the immediate term.

Wes Moss [00:39:11]:
So we’ve got reshoring, onshoring, de globalization. We could have tariffs with China in really in maybe either administration after the election, we don’t really know. But all of those things lead to higher prices or arguably push prices in the direction of higher versus lower. Then you layer in a new technology that’s supposed to, that is clearly making different industries more efficient, more effective. McDonald’s is an example. Kiosks. We know that when people use kiosks at McDonald’s, they are ordering 10% more. We know that if kiosks get it right, and this doesn’t seem like a big stretch at all, that it’ll know that you’ve ordered here before and it’ll immediately say, oh, you need three Big Macs and two chicken nuggets.

Wes Moss [00:39:57]:
Actually, I think with McDonald’s, for our family, it’s pretty much only nuggets, chicken nuggets and a chick fil a. It’s regular nuggets. It’s only about nuggets. But if a kiosk knows it can quickly get your order, get it right, and then say, hey, would you like a fruit cup on top of that? So it’s a really efficient way for the business itself. I would have to look at that as a tailwind for lower inflation. Over time, productivity increases are disinflationary for the most part. And that, I think over time is something we’re going to say.

Connor Miller [00:40:32]:
I think that’s the balance that we’re going to be dealing with over the next several years. We just saw California raise the minimum wage to $20 an hour.

Wes Moss [00:40:41]:
$20 an hour.

Connor Miller [00:40:42]:
So how quickly will these companies adopt the technology that they have been adopting over the last decade? But how much more quickly will they do so to try and combat those higher price increases?

Wes Moss [00:40:55]:
Here’s the technology. Krispy Kreme donuts at McDonald’s for breakfast. I don’t know if you’d call that artificial intelligence innovation. That’s innovation is what it is. I want to always go back to. There’s another statistic that we briefly touched on recently, I think here on money matters, maybe on the retire sooner podcast. One of the many shows that Connor Miller helps with. The baby boomers plan to keep their homes as they grow older.

Wes Moss [00:41:23]:
Report says essentially 80% of boomers want to age in place. They don’t want to go somewhere else. And it always reminds me of housing. Here’s what artificial intelligence is not going to help with. I don’t think it’s going to help reducing housing costs anytime soon. Now, it might improve the speed of doing home appraisals. That could be helpful to banks, financial services industry. But when you’re looking at home prices, I just think the numbers are staggering.

Wes Moss [00:41:55]:
If you go back to July of 2013, so argue a little over ten years a little over a decade ago, the case sheller home price 20 city index, which is the one I like to look at. There’s the overall, there’s the ten. I like the 20 city index, the level was 159. That’s not a dollar number. That’s just a case Shiller index. In February of 2020, right before COVID hit Conor Miller, that index was at 222. Again today, over 322. So we’ve seen a 44.8, call it almost 50% increase in home prices in just the last couple of years.

Wes Moss [00:42:32]:
I think that’s another thing that, yes, we talked about how shelter is maybe overstating the rate of inflation. The BLS in their CPI report, the Bureau of Labor Statistics in their inflation report, uses an 18 month weighted average for rental prices or the cost of rent, whether it’s going up or down. But in real time, we’ve seen those rental rates essentially be at zero or even a slightly negative over the past year or so.

Connor Miller [00:43:02]:
Yeah. Let’s not forget on the home price front, back in February of 2022, mortgage rates were less than 3%. Today. Now they’re over 7%.

Wes Moss [00:43:11]:
So you have a 50% bump in housing prices that much more expensive, and rates in the seven to 7.5% range on the 30 year fix. Think about when we were just talking about the Fed lowering rates. Imagine if rates do go back to four on the federal funds rate. I don’t know exactly what that’ll do to the ten year treasury, but even if interest rates go down by, if 30 year mortgages go down by a half a percent or even just 1%, it stands to reason that almost everybody that’s bought a house in the last year and a half is going to try to refinance to a lower rate. And I think that’s something that we’ll see refinance activity go up dramatically. When we get back from break, we’ll talk a little bit more about where inflation is and where inflation isn’t. So what are the categories that contributed to this inflation, this warmer than expected inflation report? In some of the areas, we’re actually seeing deflation or prices coming down according to the most recent inflation report. Stay tuned.

Wes Moss [00:44:13]:
More money matters, straight ahead. No inflation at the masters prices the same as ever. Pimento cheese egg salad still coming in at what, $1.50. Connor Miller hasn’t changed. Hasn’t changed. The. Yeah, we’ve got egg salad at $1.50, pimento cheese dollar 50, pork barbecue at $3 and then, of course, beverages. Bottled water.

Connor Miller [00:44:38]:
That’s not, that cheap.

Wes Moss [00:44:39]:
$2 for bottled water. Beers are $6.

Connor Miller [00:44:42]:
Well, but you gotta compare it to other sporting events. If you go to Braves game, you’re gonna spend $10 a fortune.

Wes Moss [00:44:49]:
Here’s. I don’t know where else you could find this Georgia peach ice cream sandwich. Something about that sounds so good to me right now. Where inflation was and wasn’t, we know that video discs got more expensive over the past year. It’s an antiquated category for the BLS. We know they’re changing that to streaming services. And we’ve seen a bunch of streamers up their prices. No wonder that category is up 30% on the year.

Wes Moss [00:45:18]:
But there’s some areas that we saw deflation. Connor Miller.

Connor Miller [00:45:23]:
Yeah. When you look at the overall vehicle market. So new vehicles, used vehicles, both were actually down over the last year, which.

Wes Moss [00:45:31]:
Means probably good news for auto insurance over the course of the next year.

Connor Miller [00:45:34]:
Because we got that big uptick a couple years ago in vehicle prices.

Wes Moss [00:45:38]:
Very laggy. This is very backward looking data.

Connor Miller [00:45:41]:
Furniture, appliances. So if you’re renovating a home, good news for you. Airfare, rental cars. So good news on the travel front.

Wes Moss [00:45:50]:
It doesn’t feel like airfare’s down at all, does it?

Connor Miller [00:45:52]:
Really doesn’t.

Wes Moss [00:45:54]:
I’m wondering about appliances. I guess maybe because there was a surge during COVID and then you’re still. Even today’s terrible appliance world we live in, that they don’t last like they used to. In the, my kids would say the good old days, you don’t have a refrigerator that lasts 30 years anymore. The surge during COVID is still only a few years ago. So I would hope that those appliances are still working. By the way, we have totally worn out our washer dryer, and that’s only been a couple of years, maybe four kids.

Connor Miller [00:46:26]:
And one thing that a lot of people have been talking about is the difference between goods inflation and services inflation. And so initially in 2021 and 2022, and we had all the supply chain issues, that’s where the price of goods skyrocketed. Furniture and appliances and all those things that were really hard to get.

Wes Moss [00:46:45]:
And then that got corrected really quickly.

Connor Miller [00:46:46]:
That was the transitory piece of inflation. Now it’s last.

Wes Moss [00:46:50]:
The Fed was two thirds right. That was very transitory.

Connor Miller [00:46:53]:
That’s being a little. A little more lenient to them.

Wes Moss [00:46:56]:
But on the services side, that’s where we just, we still have some issues.

Connor Miller [00:47:01]:
That’s where the wage inflation is. People are getting paid more, and that’s translating into higher service costs.

Wes Moss [00:47:06]:
California minimum wage, $20 an hour for that’s, I believe, fast food only. But that’s a huge increase from, it was from dollar 16 an hour to dollar 20. It’s a really big increase. I don’t know if that would show up in services inflation because you’re still buying a good, you’re still buying goods or food probably come through as food inflation.

Connor Miller [00:47:28]:
If it was passed through, yeah. To the consumer, it’d come through as food inflation.

Wes Moss [00:47:32]:
But it’s just another reminder that wages permeate through the end product. Energy, as an example, permeates everywhere in the economy, transportation, logistics, the cost of food, getting food to grocery stores. So again, we’re not seeing quite the progress that we want to see on inflation. It’s stickier and hanging around longer than we want. Probably means the Fed’s going to be on hold for a while with these higher rates. So probably, no, probably not a lot of mortgage refinancing lower anytime too soon. But we’ll see how things play out this fall. US Postal Service filed notice with regulators to increase prices on first class, quote forever stamps.

Wes Moss [00:48:14]:
They were sixty eight cents. And I guess if this is approved, they’re going to be $0.73. That’ll be the second rate hike, not Federal Reserve rate hike of the year. January. This year they raised them from $66 to $0.68. So they’ve got to do something. USP’s expects to lose $6.3 billion in 2024. I don’t know how much this has to do with the Palmetto hub in Georgia.

Wes Moss [00:48:44]:
It was supposed to be more efficient. It hasn’t worked out all that well. We’ll see if that gets worked out. It does seem like a hard business to make work. Connor right. I mean, getting pieces of paper from 300 million people around the world, having to go to one area and then having it go all back to the 300 million people, it doesn’t sound overly.

Connor Miller [00:49:05]:
Easy, but that’s just now you’re competing with Amazon, doing it, two day delivery, just expectations for faster delivery.

Wes Moss [00:49:16]:
Yeah, that’s true. I take it back. Amazon does it and it’s no big deal. Something like they deliver 4 billion same day products a year. I believe Andy Jassy was on tv this week talking about his annual letter and the future of what they’re doing as a company. But the statistics really are, I had a mouse break my favorite mouse and I dropped it going from, I don’t know, somewhere in the office this past week I ordered a mouse that same day. It was there in the office the.

Connor Miller [00:49:50]:
Next morning, I was listening to that same interview. He said, from the time you order to the time that the product is packaged and ready to go, eleven minutes. They can do it in eleven minutes.

Wes Moss [00:50:01]:
Talk about efficiency. All right, with that, how about this? We’re going to switch to some financial planning, happy retiree planning, all the above. I wanted to remind our audience of just some of the essentials that we think about when it comes to being a happy retiree. We’ve written about dozens of these in what the happiest retirees know. But if we were to boil it down and say, what are the essentials? What do happy retirees usually share in common? Number one, I would just call this smart money habits. And it’s a combination, but it’s essentially a minimum median savings goal of $700,000. That might sound low in the world we live in, but it does work mathematically for a lot of people. The average is 1.25 million.

Wes Moss [00:50:50]:
Multiple streams of income and maintaining a clear path to mortgage payoff. We’ve got diversified income streams, a clear path to mortgage payoff, and about one point seven zero zero to one point two five million dollars. That would then create, again, more income. That leads to economic freedom. So we can do all the core pursuits that we want to do in life, which leads us to number two, curiosity and an adventurous spirit, which leads to core pursuits. Core pursuits are hobbies on steroids, and it doesn’t matter what they are, whether it’s travel, play, explore, engagement. As long as you’re doing these wholeheartedly on a regular basis and you’re living to get better at these or continue golf, tennis, pickleball, hike, bike, you name it, those are things that you really care about and you want to do more of, and you have a real. It gives you some sort of purpose in life.

Wes Moss [00:51:49]:
And this is a very broad category. It’s not just athletic pursuits, it’s not just working out. It could be a hobby business, it could be craftsmanship, it could be music. So that’s number two. Number three, family relationships are ultra important to happy retirees. Solid relationships with their children. And they tend to ensure that their kids are financially independent and live lives on their own rather than depending financially on their parents. Happy retirees tend to spend less per month on their adult kids than the unhappy retiree.

Wes Moss [00:52:24]:
Group love and marriage. Happy retirees usually have stable relationships. We’ve seen this going all the way back to the millionaire next door. The data from Thomas Stanley and Bill Danko. And part of that is also the significance of companionship. That also leads to higher levels of happiness. Number five, faith and giving back. Faith is important to happy retirees.

Wes Moss [00:52:49]:
And part of that may be the community. So it’s a causation or correlation here. Part of that may be their faith based community that tips them towards being in the happy retiree camp versus unhappy. Which leads us to number six, social connectedness. Again, I think these are all essential, but social connections. Happy retirees stay connected with their family and their friends. They value social interactions. They put work into the social interactions.

Wes Moss [00:53:20]:
They cultivate those social interactions. They’re involved with the community. And it helps. As life gets tough, as it always gets for all humans. Having that social group is extraordinarily important. And then, of course, number seven, that you could say above all, none of this matters without a focus on health and well being. Happy retirees prioritize their health. They engage in activities that keep them moving.

Wes Moss [00:53:49]:
They follow healthy diets. They have relationships with a physician so that they have someone to turn to to keep their health and keep them moving and keep them going. And you put all those together. That’s a quick way. Just do that, Connor, and you’re a.

Connor Miller [00:54:06]:
Happy retiree to simple as that.

Wes Moss [00:54:08]:
Just do those seven. That simple. Speaking of, as we have questions that now, I’m not saying that we’re doing a happy retiree, retire sooner money Matters conference, but if we were, I touched on this a little bit in the podcast this week, which, by the way, this show here that is on WSB mornings from 09:00 to 11:00 is also can be found as a podcast. And you can find money matters, the podcast version, just by going to Apple podcasts and searching for money matters with Wes Moss. There’s also the retire sooner podcast, where we’ll do interviews with leading experts in finance, health and wellness, socialization. And that’s a separate podcast that we put out usually once a week. We’ve been doing this, doing the retire Sooner podcast now for. We’re in our third year.

Wes Moss [00:55:05]:
We’re in our, I think our 16th year, Conor Miller right here in these seats for money matters. Here’s a question that was answering this week. If we were to have a conference, and we’ve got five retirement experts as a panel, you’re probably one of them on stage, Connor. And we asked this question. We’re at a giant retire sooner symposium, and the audience wants to know, how do I ensure my retirement savings will last throughout retirement?

Connor Miller [00:55:34]:
Immediately, my head goes straight to the 4% rule of thumb that we follow pretty much every day. We’re at the office, which just says that retirees can use a sustainable withdrawal rate of 4%, adjusted higher for inflation each year, and have a really, really high probability of success that they’re not gonna run out of money in retirement.

Wes Moss [00:55:58]:
I think it’s one of the biggest variables to remember about that. My friend Brian Preston, who’s the host of the Money Guys podcast Up in Nashville, gave me a statistic this week. I don’t know if I’m gonna get this exactly right, but it’s something like this. 64% of 65 year olds in America. So 64% of 65 year olds in America have less than $100,000 save per retirement. That’s kind of a wow statistic, isn’t it? Two thirds of retired age folks really don’t have a whole lot of savings. And savings is maybe the wrong word. It’s in investments because there’s a huge difference between investing and saving.

Wes Moss [00:56:44]:
I updated our Jack and Jill study that we’ve done over the years where Jack is the saver. He’s good. He’s a saver. He’s $1,000 a month, and he does it for. He starts at age 30, and he does it all the way through age 60. So he does 30 years of saving, which is yeoman’s work. It takes a lot of discipline. $1,000 every single month.

Wes Moss [00:57:07]:
That’s 360 months. So he saved. He’s put away 360, but he’s only done it in a savings account, which over the years has only averaged. Conor, we’ll call it 1%. He’s put the money away, but the money isn’t really doing a whole lot because it’s at a giant bank and it’s just sitting there. On the other hand, Jill is the investor out of these two. She has to do the savings as well. But she’s also putting that, at least in the market.

Wes Moss [00:57:35]:
We’ll just call it a broad based index, and we’ll assume that she ends up at 10% per year. Now, that’s easier said than done. You can go back over almost any period of time you look at. That’s 20, 30, 40 years of the s and P 500. You’re going to find that double digit rate of return. You’re going to find around, call it a 10% rate of return. So I think it’s safe, just for illustration purposes, that Jack was getting one. But Jill, because she’s not just saving, she’s also investing, is getting ten.

Wes Moss [00:58:07]:
Well, the difference over time, you don’t see much of a difference in the first call it half a decade. Year five, their balances are still fairly similar. But then it starts to diverge, and Jack’s line stays pretty flat. It’s 360 plus 1% compounded each year, gets him to about $419,000. On the other hand, Jill, who’s been investing that money and letting it compound at this 10% rate of return, she ends up with over $2.2 million. The difference between the two is almost $2 million. It’s a $2 million difference. One is an investor, one’s a saver.

Wes Moss [00:58:50]:
Arguably, they both had to do the hard work to save. It’s just that Jack’s money wasn’t working for him. I think it’s so hard in America. The reason I brought the statistics, 64% of 65 year olds of less than $100,000. It’s because it’s hard to save. Two thirds of America just is not able to do it, or they never get around to doing it. And maybe even if they are doing it, they’re frustrated and they’re not getting a whole lot out of it, and they end up essentially in retirement and have to rely on Social Security alone. Retirement’s hard enough, I think that without the education to make sure, we’re also investing in a diversified portfolio.

Wes Moss [00:59:33]:
And that’s the other key here, is just basic investing 101, is to make sure we’re highly diversified and we’re able to harness what the market gives us over time in arguably the best economic system on the globe right here in the United States. Free market capitalism, innovation, entrepreneurship, hard work, the army of american productivity. Put it all together. And there’s a big difference between the two. And the gap widens over time. But it doesn’t necessarily have to, as long as we choose investing over just saving. It’s masters Sunday. That’s exciting.

Wes Moss [01:00:13]:
Masters golf, always exciting. Azaleas. Just the best time of year here in the south, arguably. And tomorrow’s tax day, so we’ve got the best day ever. And a day where 25% of Gen Z’ers feel as though they need therapy for 54% are brought to tiers. What it goes to do with their taxes. Speaking of taxes, Connor Miller, if you were to pick one number when you’re doing retirement planning, big picture, one variable. What’s the most important variable? Just completely putting you on the spot.

Wes Moss [01:00:51]:
We were talking about reading children’s books between the break and now. I just threw this at you. Of course, you as a dad, Superdad, you never skip a page.

Connor Miller [01:00:59]:
It’s gotta be starting to save early. How much you save early and often would be the variable.

Wes Moss [01:01:06]:
I’d have to pick time. It’s time.

Connor Miller [01:01:08]:
Cause we know that historically the stock market’s gonna do what it does over time and it’s going to compound and it’s going to grow that into your retirement portfolio.

Wes Moss [01:01:18]:
I thought you were going to give me an all the above. Wes, the Conor Miller answer I was expecting is, well, they’re all important. You can’t just. They’re all important. Time’s important. Your expected rate of return is important. Your inflation number is important. Your savings rate is important.

Wes Moss [01:01:34]:
Are you increasing your savings rate and then your spending? Isn’t that important? Isn’t that the most important? I think that you’re right. If you had to pick one, it’s hard to argue with your answer. Time. Time is extraordinarily important. Time is now. If we don’t have a whole lot of time, and let’s say you’re doing a retirement plan and you’re retiring tomorrow, and I get this from families a lot. Well, I’m already 70. I don’t have a whole lot of time.

Wes Moss [01:02:02]:
Well, you may very well have a lot of time. Another 20 years, maybe it’s 30 years. So just because we’re getting to retirement, there’s often this sentiment that you don’t have a lot of time for recovery. And I think sometimes that’s a little bit misplaced because we may have a lot of time. And as long as we’re diversify, and usually that’s in response to, well, what’s our allocation going to be? I don’t want to be in stocks all that much because I’m already in retirement. I don’t want to deal with volatility. I don’t have time to make it up. That’s where balance comes in.

Wes Moss [01:02:35]:
That’s where not having everything in fixed income, not having everything in alternative investments, not having everything in stocks, but putting them all together creates an effect that very often can dampen our overall volatility. And we really want that when things are not going so well.

Connor Miller [01:02:55]:
Yeah, it’s putting together a portfolio that’s going to provide you enough income, but then also enough growth to offset inflation like we’ve had over the last couple of years.

Wes Moss [01:03:04]:
As much as we love to forecast what income will be, it’s very easy to know what your income is going to be over the next year. Stock dividends don’t change a whole lot. They tend to rise slowly over time. Bond interest doesn’t change dramatically. If we’re locking in one, three, five year bonds, but over the course of a long term retirement plan, you don’t know what your income is going to be in 20 years. With that all good answers and it’s so fun having you here in the studio. Thank you for thanks for coming in today.

Connor Miller [01:03:36]:
Always a good time. And thank you for having me.

Wes Moss [01:03:38]:
After today, it makes me want to eat goldfish, chick fil a, and the peach ice cream sandwiches that you get at Augusta with that. Have a wonderful rest of your day.

Mallory Boggs [01:03:56]:
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Mallory Boggs [01:04:43]:
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