#16 – Spinach In The Candy Bowl, Jerome Powell On A Wheaties Box, And The Fed’s Interest Rate Delay

Wes Moss [00:00:54]:
Or do you go by Jeffree or Jeffrey Lloyd?

Jeff Lloyd [00:00:56]:
Jeffrey is my real name, but I go by Jeff. And thank you for having me back.

Wes Moss [00:01:00]:
I was inspired this week. I got a listener email that was pretty nice, saying that it’s one of the few places he feels like he actually learned something. So I’m going to double down on hoping we learn something today here on money matters.

Jeff Lloyd [00:01:19]:
Reassuring to hear hero money matters. We like to have fun, but at the end of the day, we want to educate our listeners on financial markets and preparing for retirement. That’s what we do on money matters.

Wes Moss [00:01:31]:
And what’s happening in the world, right? We have tensions in the Middle east. We have the market and the really, the market and the media totally obsessed with the Federal Reserve. I mean, they’re salivating over every single word that the Federal Reserve is saying or might say or about to say or parsing. And I think that’s a really, really important theme for the last couple of months. And it continues to boil even hotter. It’s almost at a fevered pitch. And this market’s obsession with. I almost think of it as like, mommy and daddy fed.

Wes Moss [00:02:05]:
It’s the parenting style of the Federal Reserve. And it just, the parents are home and they’re cracking down. There’s no more candy bowl. It’s all spinach. It’s all, you’re grounded. And the world just wants mom and dad to go away, go away on another trip so we can stop eating spinach and we can go back to the candy bowl whenever we want. That’s just not happening. But I think that’s part of this obsession.

Wes Moss [00:02:28]:
By the way, one of my young guys, my second grader, wanted to make, he was so excited to make a shake, so none of my other kids seem to. I’ve had four of them. The three older boys, they don’t care about cooking. I mean, they don’t fit into the grill master theme that we love here on money matters. You and I love to grill.

Jeff Lloyd [00:02:48]:
Is he making like a protein shake? Is he starting to work out in second grade? Is that, is that where youth athletics is going these days? It’s like workout routine starting in second grade.

Wes Moss [00:02:58]:
Speaking of, one of our podcast guests, doctor John Deloney, he’s on Ramsey. He’s one of Ramsey’s guys. I saw a clip this week that, and we interviewed him for the podcast, the retired podcast. I don’t even know if that’s aired yet, but it will soon. He said that youth sports, travel, sports are ruining the american family. And I stopped to rewatch it. To rewatch it. He makes such an amazing point.

Wes Moss [00:03:24]:
You’re a victim of it. I’m a victim of it. Maybe it’s good in the long run. Probably not good in the long run, but we’re totally off topic. I want to get back to the Fed. Totally off topic. I want to get back to the fed. By the way, Johnson and Johnson, 60, they just raised this past week, raised their dividend for how many years?

Jeff Lloyd [00:03:43]:
Jeff Lloyd, their 62nd consecutive year of increasing their dividend 62 years in a row.

Wes Moss [00:03:50]:
In a row, by the way. And we’re going to be talking about some exchange traded funds. ETF’s here on the show today, and I always want to couch this. It’s when you’re doing financial radio and you’re doing it to a large audience. We don’t know who’s listening. I don’t know your particular situation. I don’t know your risk tolerance. I don’t know the stage you’re in, whether you’re 30 and an aggressive investor, or you’re 65 and you’re just fine, or you just want to own fixed income and bonds.

Wes Moss [00:04:20]:
So when we talk about individual ETF’s and we’ll talk about some of these companies inside these ETF’s that are also dividend raisers over time, they’re really for educational purposes. What you might want and look for may be different from someone else. So maybe this fits your profile, maybe it doesn’t. But I think it’s just important to at least bring these up so people can go look, do your own research, and maybe it works for you, maybe it doesn’t. So we’re gonna talk about these things in an educational context, not, these are not recommendations for people necessarily to do the. Where do we start? Jeff Lloyd, how about this? This one got me. And again, I learned this from a podcast guest. This past week on a recording over the last decade or more than a decade, we keep track of, I call them scary retirement statistics.

Wes Moss [00:05:13]:
And really what they are is just the state of play when it comes to retirement in America. And I found for the first time a website that does an amazing job at this, where you can go in and it’s Federal Reserve data and it’s actually, the website is usafts.org. And these are, it’s all different ways to look at how much people have saved in the United States retirement savings, how much, how much people have in their checking account, different age categories. And if you go and look at this, here’s one that I found. This is households with more than $100,000 saved for retirement by age. It’s interactive chart, easy to use. So I went in there and I looked at how many people have more than 100k saved for retirement. Well, it’s not necessary for retirement, but you can go look at it per age.

Wes Moss [00:06:04]:
So we look at the 65 to 69 year old that’s arguably retirement age. And the answer is this. Only 31% of Americans that are in that age range, 65 through 69, have $100,000 or more save retirement. Now look at it another way. That means that nearly 70% of Americans that are 65 through 69 have less than $100,000 saved. More than. Nearly 70% of Americans have less than 100 grand. So we have a.

Wes Moss [00:06:38]:
There is this thought that we have somewhat of a retirement crisis in the United States, and that’s it. I don’t know what other statistic tells it, but if you’re going into retirement and you have less than 100k saved, there’s not a lot of, there’s no, there’s really very little income generation off of that. So you’re pretty much relying on Social Security. Maybe some of these folks, though, have pensions. And I’ve seen this where if you’ve got a really good pension program and you know it over the course of 30 years, it’s, it’s not that uncommon for that group to save a little less because they know they’re going to have a whole lot of pensions. So it doesn’t tell the full story, but very telling in its own right.

Jeff Lloyd [00:07:13]:
Also on money matters, a lot of the topics that we discuss is how to enjoy a happy retirement. And one of the things that we talk about is the median net worth that someone needs to have in order to have a happy retirement. $100,000 sounds like a lot of money, but for retirement, that level is not setting someone up for necessarily a happy retirement.

Wes Moss [00:07:37]:
Here’s another one. Number of people without any savings, 39% 39.2% of Americans. Adults have no, zero, none, nada retirement savings whatsoever. Here’s another statistic that’s, that’s concerning about the state of play here. This is about low confidence in retire, retirement security. Only 31% of non retirees believe their retirement savings is on track. That’s a drop from 40% a couple years ago. And 71% of non retired adults report a moderate worry that the retirement savings just isn’t enough.

Wes Moss [00:08:18]:
Do you think 42% very worried.

Jeff Lloyd [00:08:21]:
Do you think a rise in inflation has anything to do with the drop in confidence?

Wes Moss [00:08:26]:
That’s a very good point. It is. It’s got to be a big part of it. I think that this is, and here’s where there’s more worry. Inflation comes into play. We know higher prices are sticking around. We call it cotton candy like inflation, meaning that the inflation numbers over the last couple of weeks have come in the headlines. Are they, the inflation is hotter than expected? It’s not much.

Wes Moss [00:08:48]:
Inflation was expected to be 3.4% in the last CPI report. Consumer price index inflation report came in at 3.5. So it’s not as though inflation is jumping through the roof again like we saw two summers ago. However, it’s a little warmer than expected. And it’s hanging around. It’s sticking around, hence kind of like cotton candy, which looks good on the surface until ten, five minutes in it’s warm and it sticks to, it just won’t go. Just won’t go away. That’s exactly the state of play.

Wes Moss [00:09:20]:
And that in itself is what the marketplace seems to be so obsessed about. So if you think about the news around the world and what investors have become, I think almost completely obsessed with is the Fed’s next move. What is, what is Jerome Powell going to do?

Jeff Lloyd [00:09:37]:
I actually thought about this on the.

Wes Moss [00:09:38]:
They should put him on the COVID of a cereal box like he’s like the most popular guy in America, even though the Olympics is coming up in less than 100 days. It’s like Jerome Powell on the, on the box of wheaties.

Jeff Lloyd [00:09:50]:
Put him on the wheaties box.

Wes Moss [00:09:51]:
Put him on wheaties.

Jeff Lloyd [00:09:52]:
But I was thinking about this on the drive in this morning. Obviously, we heard some comments from Powell this week and I was thinking, does the market react more to anything that Jerome Powell says? More than, let’s say, the State of the Union? We heard the State of the union about a month ago. Do investors and people want to hear from Powell more?

Wes Moss [00:10:12]:
100% more? Ten times more.

Jeff Lloyd [00:10:14]:
I think so, too.

Wes Moss [00:10:15]:
Ten times more. What we’re seeing, though, is that the care around the market, the market’s hanging on every word. If it looks like rates are going to go up, the stock market goes down. If interest rates do tick up a little bit, because Jerome Powell said, I’m going to calm down on interest rates and we may not cut like we expect, like you all expected, then interest rates shoot higher. Markets don’t do all that well. So it’s understandable that there is this craving for information out of the Fed. We went so long with what I would consider easy parenting. We had zero.

Wes Moss [00:10:53]:
And I had to pull up a chart of the federal funds rate and take a look at where we’ve come from. We had 0% interest rates from December of 2008 until October of 2015. Think about how long that is. That’s seven years. Seven years of what I would consider. Mom and dad are on vacation. They left you. They’re on vacation.

Wes Moss [00:11:15]:
You got no rules. Easy parenting. Candy bowl free and open. You didn’t have to eat any veggies. No spinach whatsoever. Oh, by the way, I didn’t. We totally skipped over the story about the protein shake.

Jeff Lloyd [00:11:30]:
Okay.

Wes Moss [00:11:32]:
We totally.

Jeff Lloyd [00:11:33]:
All right. So the second grader’s making a shake.

Wes Moss [00:11:35]:
I’m going to get back to easy parenting. So by second grader, he’s all in on wanting to do one of these shakes. So I said, look, the best way to make one of these healthy shakes in the morning, you’ve got to get ripe bananas. You got to put them in Ziploc. You got to freeze them. That’s your base. That’s your base for a good shake. So we did that.

Wes Moss [00:11:54]:
He was excited to do it. And then the next morning, we made the shake. We put in the bananas, we put in the green spinach or whatever, and some peanut butter, some vanilla healthy shake. And he was like, great. Well, enjoy, dad. Enjoy. I thought you wanted to make the shake. He goes, no, it looks disgusting.

Wes Moss [00:12:14]:
He’s like, I don’t even like bananas, let alone spinach with bananas. He really just wanted to make it for fun. I thought he was excited about drinking this shake for the morning, and he literally just wanted to do it. So I was stuck with a giant thing of.

Jeff Lloyd [00:12:29]:
I didn’t see the story going that way. I really didn’t. Call me for a loop.

Wes Moss [00:12:34]:
Well, me, too. I was. What are we. I thought that we were drinking the green monster. No, I don’t even like bananas anyway. Sorry. Well, I think we. I’ve got to.

Wes Moss [00:12:44]:
I want to wrap this quickly and help people understand what I mean by the parenting analogy. Going back to the fed, we went, when rates are low, it’s easy. Think about low rates. Mortgage rates are at 2%. That’s easy. You can go buy a house, your payments are low, the economy is stimulated. When rates are high, it is much more taxing on the economy. You’ve got a wet blanket on top.

Wes Moss [00:13:07]:
So we went through this period of time, zero, eight through 2015. Seven years of zero rates. Easy parenting. Candy bowl out, free and open. No one in the house had to eat their spinach or their veggies. Then mom and dad came back home, at least for a little bit, and enforced some rules. This is the Fed coming back and made us eat a little bit of spinach. So December of 15 through right until COVID hit 2020, rates went back up.

Wes Moss [00:13:34]:
Still not all that high, but at least there were some interest rates as opposed to zero. Then after COVID hit, the Fed immediately went back to zero rates. Money was virtually free. We had negative interest rates in a lot of places around the world. And so back to all candy, candy bowls out. Mom and dad, back to zero parenting. And that lasted for about two years. All of 2020 and 2021, we went back to zero parenting, zero rates, all candy again.

Wes Moss [00:14:06]:
No parenting, zero rates. Easy money then. And this is where we are today. This is the result. Then January 2022, mom and dad came back and. And due to all the largesse and the inflation, they came home. House was a mess, and they got more strict than ever. And they got strict overnight, and they started raising rates.

Wes Moss [00:14:27]:
Spinach, spinach, eat your spinach. No candy, no fun rates. Up and up and up and up. And then in September 2023, they at least stopped upping the punishment for the economy, and they stopped upping rates. And that’s, we’ve been in this holding pattern now for what, 200 and 5260 some days. All everyone wants to know is, when are mom and dad just going to take. Take it easy again? When are they going to go away, mom and dad? When are you going to go back on vacation? Can’t they just lower rates? And Jerome Powell was on 60 Minutes in, call it, I think, early. It was early Feb.

Wes Moss [00:15:06]:
And it’s amazing what he said versus what the market heard. He vowed that he will. So this is a direct quote here. This was like a Sunday night, you know, 60 minutes. Tick, tick, tick, tick, tick. It’s that anxiety provoking. As soon as you hear it, you’re watching football. And then, well, not this time of year.

Wes Moss [00:15:24]:
But all of a sudden then you get the tick, tick, tick, tick, tick, and it brings up this. What’s 60 minutes gonna say? Central bank will proceed. This is his quote. The central bank. He vowed in an interview that the central bank will proceed carefully with interest rate cuts this year. He said, proceed carefully. But here’s what the market heard. Jerome Powell vowed that he will proceed with interest rate cuts this year.

Wes Moss [00:15:50]:
What they didn’t hear, or what the market didn’t want to hear is that Jerome Powell would proceed carefully with interest rate cuts. He didn’t say he was going to do them anytime too soon. The market said, oh, wait, mom and dad are going back on vacation. Maybe they’re going to ease things up a little bit. A little more candy, a little less spinach, and it still hasn’t happened. That’s why the market is obsessed and hanging on every single word. CoUple builds $15 million home in Sag harbor, then sells when dogs doesn’t like it. That’s a real story in the Wall Street Journal.

Jeff Lloyd [00:16:27]:
It was fascinating who was running that household? Who was in charge?

Wes Moss [00:16:33]:
They bought the land.

Jeff Lloyd [00:16:34]:
Who was the top dog? It’s what I want to know. Who’s the top dog?

Wes Moss [00:16:38]:
Sag harbor. I had to look this up. Sag harbor is the Hamptons. And I went to Google Maps and Sag harbor, at least from what I can tell or remember, is the, looks like the northern end of the island, and then you’ve got the southern end and maybe they call it the west and the east. So it’s east. Hampton is more on the Atlantic and Sag harbor is more on the harbor. This couple bought the land for a steal. It was something like $3 million.

Wes Moss [00:17:09]:
Then they built this renovated, built this incredible home. It’s one of these houses that you look at. And of course, the kitchen is the best kitchen you’ve ever seen. And for some reason, every kitchen photo that’s in any sort of real estate thing, this was in the real estate section of the Wall Street Journal. What is it filled with, Jeff Floyd, besides fancy french stoves, what’s always in the kitchen to make it look amazing?

Jeff Lloyd [00:17:34]:
Windows. Big windows.

Wes Moss [00:17:35]:
Good windows. That’s part of it. Copper pots hanging from somewhere, right? They’re either hanging over the island. The copper pots that you and I don’t have, no one has them except for the people in the pictures, or they’re hanging over the stove and there’s lots of copper pots and pans, and they just make everything look amazing. I even showed this week. I showed Lynn. I said, look at this kitchen. And she said.

Wes Moss [00:18:00]:
She goes, I hate all those copper pots. But I think they make the photo. And there’s always lemons in a bowl. Maybe kitchens don’t ever really look like that. Here’s the reality. They built this house they spent a couple years building and probably, I don’t know, $10 million. They’re selling it now for almost 15,000,014.95. Because their dog, Rufus, once they moved in, seemed a little down, pouty.

Jeff Lloyd [00:18:30]:
They used the phrase, the dog was pouty, which is real. That’s an emotion you can sense from.

Wes Moss [00:18:36]:
Your dogs what’s behind all of that. And again, look, I get it. They love their dog. They love Rufus. He didn’t like the beaches at Sag harbor because they were in California. Beaches were sandy. They figured it out because Rufus didn’t like the sag harbor beaches, which, again, I had to google this. I had to use chat gp to figure out.

Wes Moss [00:18:57]:
Wasn’t totally clear. They’re on more of a rocky beach, Pebbly. So he couldn’t dig or run as fast as when they went back to East Hampton, where the beaches are more like the normal Atlantic and it’s normal sand. And he could run and he was happy again. He goes back to Sag harbor, back to Palton. We’re out of here. We’re selling.

Jeff Lloyd [00:19:18]:
I could see where the rocky beach would be a little. Little tough on the paws on the dog. Pauls, right?

Wes Moss [00:19:23]:
He’s a red golden doodle. And it’s time to go.

Jeff Lloyd [00:19:27]:
What’s our theme here with. With Fed Powell and a lot of talk of Paul’s, both with the dog and what the Fed’s doing right now.

Wes Moss [00:19:33]:
So it sounds like interest rates need to go even higher if that’s the case, if we’re still just popping around houses.

Jeff Lloyd [00:19:40]:
Because if the dog. If the dogs don’t like golden noodle.

Wes Moss [00:19:44]:
Doesn’T love it, let’s just get up and move. Anyway, I did get a good education using Google Earth on what the hamptons were and the Sag harbor. And anyway, we’re gonna get some copper pots for the kitchen. So here, I’m gonna go back to this analogy around the Fed and maybe bring this all a little tighter, is that if you go back and look at the federal funds rate, the target rate producer, Mallory, asked me, she keeps saying zero. She asked, hey, you’re saying zero rate. You’re saying zero interest rates. She goes, what do you mean? What do you mean zero? What I mean by that is that interest rates, the Federal Reserve literally took them down to zero. Their target rate was zero.

Wes Moss [00:20:29]:
And that’s why everything else came lower and lower and lower. The ten year treasury was at some point was under two. It was in the 1% range. Mortgage rates are set by that ten year rate. So that’s when you got the two and two and a half percent refinance rates. That’s why 80% of Americans have really low interest rates. Because we had a period of time where rates were, it was called ZiRP, which is stands for zero interest rate policy. When rates are at five, five and a half, it’s hard to even remember back that they were, hey, what do you mean? Wait, wait, wait.

Wes Moss [00:21:03]:
They were at zero? Yeah. The fed funds rate that sets everything went down to literally at zero. And that’s why rates were so low for a while. And that’s what we call, that’s what I mean by easy parenting. We got used to just all candy, no spinach. Easy, low rates, where it makes everything more affordable. Easy to get a mortgage at 3.5% makes your payment really low. And that lasted for seven years.

Wes Moss [00:21:28]:
That was 2008, all the way to 2015. Then we had a little spike in. Rates still weren’t all that high. And then COVID hit. We went back down to zero interest rates. The Fed setting rates at zero. And then because we got all this inflation from money dumped onto the system and the supply chain bottlenecks, because of COVID prices went up. We had 9% inflation, and the Federal Reserve said, wait a minute, we got to do something to slow everything down to slow inflation.

Wes Moss [00:21:58]:
So mom and dad came back home and started implementing, hey, we’re eating spinach, not candy. You guys are all grounded. And that’s kind of what happened. The economic environment got much stricter, and it got more and more and more strict. Fed raised rates 1112 times, and now they’ve stayed put, and everyone’s kind of waiting for things to get easier again. And Powell came on 60 minutes in February and said, we’re thinking about or we’re considering interest rate cuts. We’re going to be careful about it. But instead, the whole marketplace heard, oh, they’re cutting rates.

Wes Moss [00:22:35]:
And the expectations after that meeting, or after his rare interview on tick, tick, tick, tick, tick. 60 minutes. Was that, hey, pals, ready to start easing everything up, lowering rates. So the market was expecting. You wrote that you did this. It was, what, 99% chance of.

Jeff Lloyd [00:22:54]:
Yeah, there was a 99% chance that they were going to cut rates at.

Wes Moss [00:22:59]:
The March meeting as early as last month. And now the market is not even close to that because we keep getting this cotton candy, like, higher, a little warmer, a little hotter, a little stickier than expected. And now the market is kind of in this. Maybe it’s not a dip, the market’s not depressed, but they’re even more eager than ever to get a little bit of leaf from the fed. And that’s, I think, where we stand today, waiting and watching. Hey, are they going to ever ease up our mom and dad, go back on vacation? Is the candy bowl ever coming out again? And right now, it just doesn’t look like that’s coming anytime soon. Right now the marketplace is only expecting two cuts. And I wouldn’t be surprised if we had zero cuts by the end of the year.

Wes Moss [00:23:41]:
That’s possible. And the question is, what does that mean for investors? First of all, you did some research around this, Jeff Lloyd, we mentioned it on the show, but it keeps, the tally keeps moving here. The days in this state of, I’m not raising, but I’m not lowering interest rates. Call it the Fed pause. What happens to markets over that period of time?

Jeff Lloyd [00:24:09]:
Well, yeah, going back to, we look at ten Fed pauses going back to 1974. And historically speaking, the longer the pause last 50 years. Yeah, the longer the pause, historically, the better equity returns.

Wes Moss [00:24:25]:
So this is s and P 500 during rate cuts.

Jeff Lloyd [00:24:29]:
During Fed, yeah, just when the feds pauses, which is what they’re doing right now, historically speaking, the longer the pause, the better the s and P equity returns. In periods where the pause is, is greater than 100 days, the market is up, on average about twelve to 13%. When that pause is less than 100 days, the market average is actually down. So the market goes down if the rate cuts are less than 100 days or the pause is less than 100 days.

Wes Moss [00:24:57]:
And that’s where we are. We’re in the, what, 260 some odd days of this stalemate, if you will. And I think it also just makes people wonder, well, when is it going to happen? And that’s why the fevered pitch continues. There’s, the tension continues to boil. When are we going to get a little bit of relief? When are rates going to go down? And the answer is, we just don’t know. It could literally, it could be the entire, now nobody’s even talking about rate hikes. God forbid we talk about rate hikes. We’re thinking that as long as we get a little bit more relief, which has proved to be really tough.

Wes Moss [00:25:33]:
Right. The majority of the inflation problem was corrected over the course of about a year and a half or so, it just hasn’t continued to get better because inflation has been pretty steady and not coming down, and that’s happened now for several months. So the market is waiting for. And I think this still probably comes back to how shelter in the latest CPI number accounted for 60% of the high inflation number, that 3.5%. If you take shelter out and make shelter flat, as opposed to up 6% or 5.7% like it was in the last report, then you would actually see inflation in the one and a half to two and a half percent range. Now that’s in a vacuum. That’s looking at one component, but it’s a really big component. Jeremy Siegel a week or two ago pointed out if you look at real time data on zillow or apartment list, rental prices haven’t gone up for a year.

Wes Moss [00:26:26]:
In fact, they’re lower today than they were over a year ago. So at some point you’ve got to think that comes in, in the inflation calculation and we get a little relief. If we get some relief, that means the Fed could actually start to put the candy bowl back out, lower rates a little bit, ease up on the spinach dinners. And I think here’s the bottom line, is that the Fed is taking this very measured approach. They don’t want inflation to reaccelerate. So they’re sticking to this pause and they’re still saying they’re going to ease into cuts. We’re not going to cut anytime soon until we think it’s a good idea and inflation is really behind us. And I don’t think it’s the end of the world for the economy.

Wes Moss [00:27:08]:
This economy is doing really well. Nor is it a surefire win for the US economy and the stock market if we do get cuts. We do know that historically, Jeff, as you just mentioned, the Fed takes a breath when they take a breather like this. It’s a pretty good place for stocks to be in that Fed holding pattern. So we’re seeing solid growth right now. And it’s not as though we need lower interest rates anytime soon. We’d like them. And if you’re looking to buy a home and you’d like a lower mortgage rate, sure we’d like them.

Wes Moss [00:27:39]:
But unemployment rate, we know that it’s at 3.7%. CPI 3.5%. Retail sales up almost three quarters of a percent last month, state of the consumer average hourly earnings increased to over almost $35 an hour. That’s a 4% increase over the last twelve months. Housing market median home price calming down, it looked like it was headed to 500,000. Meanwhile, it’s kind of backed up a little bit. It’s closer to 400 depending on what median home price data you look at. Redfin is a little different than the National association of Realtors.

Wes Moss [00:28:16]:
We’re all around that 400 range, and then we’ve seen manufacturing pickup. The latest manufacturing number shows not contraction like we’ve seen for the last several months, but some expansion. So the economy’s doing is on pretty solid ground. I’m not going to say it’s an amazing economy, but it’s tough to make the case that it’s a bad economy and that’s a good thing for investors over time, whether the Fed cuts once or twice this year or not. How does setting the goal to have income for a lifetime sound? It’s not a trick question. Many happy retirees create income for a lifetime, and it’s something that’s called income investing. It’s a way to harness the power of many different forms of cash flow, including rent, royalties, dividends, distributions and interest. If you’d like help with income investing, you can reach capital investment advisors@yourwealth.com.

Wes Moss [00:29:11]:
Dot that’s your wealth.com. Welcome back to MONEY MATTERS. Your host Wes Moss here along with Jeff Lloyd. And we’ve been very excited about Fedwatch. To me, there’s been this obsession with the market and the media around mommy and daddy Fed. How strict are our economic parents going to be? We had a lot of period. We had a long time when we had zero interest rates, meaning that the interest rates, their target was down to zero. It’s, I mentioned that.

Wes Moss [00:29:47]:
I think I said that the rates got all the way down to sub 2% on the ten year treasury. We looked it up during the break. How loaded the ten year treasury?

Jeff Lloyd [00:29:56]:
The ten year treasury about four years ago got below half a percent.

Wes Moss [00:30:01]:
So people were getting paid less than a half a percent for a decade to then get their money back. When you get back to a more normal interest rate environment, where we are today, I would say is more, historically more normal. Five and a quarter to five and a five and a half, that’s where the Fed has set their target rate. And that dictates where mortgage rates are. It’s hard to even fathom that rates were that low. It seems kind of, this seems crazy. And remember, I remember doing many shows that we’re talking about negative interest rates, particularly in Europe. We had banks where you were paying, you were paying to put your money in a bank.

Wes Moss [00:30:39]:
You weren’t getting paid. That was when we had negative interest rates. It was something like $7 trillion worth of negative interest rate bearing accounts around the world, or bonds. Hard to even imagine that they didn’t write that in the textbooks 20 years ago when you’re studying the economy.

Jeff Lloyd [00:30:56]:
Well, we were joking during the break that that doesn’t even make sense. The tenure at below a percent, ten year government bond, that doesn’t make any sense. But when they’re negative, it literally doesn’t make any sense. You’re not making money on it.

Wes Moss [00:31:10]:
Oh, speaking of, that just reminded me of something economically that makes no sense. And you brought this up and this has to do with coins? Americans. More than half the coins in the United States are sitting. Half of all the pennies, nickels, quarters, dimes that have been manufactured in, I guess, a mint factory. More than half of all of the coins that are in the United States are sitting in a jar somewhere. Or they’re in the. Under the backseat, underneath the seat of your tahoe somewhere.

Jeff Lloyd [00:31:47]:
Well, it’s better sitting in a jar than a trash can because you read this article in Americans throw away $68 million worth of coins each year.

Wes Moss [00:31:58]:
$68 million just goes into the trash because people don’t really like to use pennies anymore. Now, this was amazing to me, is that the cost to make a penny is more than a penny is worth. So if you look at the cost to make a penny, it takes, it costs almost four cents, three point seven cents to make a $0.01 penny. So the government is losing 270% on that nickels cost. And a nickel, remind me, that’s what, $0.05, right. Costs almost twelve cents to make a nickel worth $0.05. So that’s a -131% dimes, fortunately, only cost about $0.05.

Jeff Lloyd [00:32:41]:
Yeah, so when the US met, when the US mint is making pennies and Nichols, they’re losing money.

Wes Moss [00:32:47]:
Hey, we’ll make it up in volume. We’ll make it up in volume.

Jeff Lloyd [00:32:50]:
That’s like business 101. That does not make sense.

Wes Moss [00:32:54]:
What do rocky the Mountain lion, Harry the Hawk and Benny the bull all have in common?

Jeff Lloyd [00:33:02]:
Jeff Lloyd, they are all NBA mascots. And, and they all make more money in a year. Then Caitlin Clark is going to make over her four year deal with the Indiana fever, just, just her base salary. Those three NBA mascots will make more.

Wes Moss [00:33:21]:
A year than her entire contract, her four year deal. So she is. So we know that she went number one. We’ve talked about the Caitlin Clark effect. I think it’s interesting she’s been fun to watch when my kids are more excited to watch Caitlin Clark play in NCAA’s than the men’s tournament and watching North Carolina, even though North Carolina got knocked out early. So I think that’s part of it. It really does potentially change the game. We think of her as kind of the.

Wes Moss [00:33:50]:
Maybe as Tiger woods was to golf, she is to women’s basketball. We’ll see. You’re a dad of. You’re a sports dad, and you brought some interesting research back from a volleyball tournament, I believe.

Jeff Lloyd [00:34:04]:
Yeah, we were, you know, last week, y’all talked about inflation at the Masters or the lack of inflation at the.

Wes Moss [00:34:11]:
Where inflation goes to die.

Jeff Lloyd [00:34:12]:
Augustus. Where inflation goes to die. I was at a volleyball tournament and came across a menu and just could not believe the prices that I was paying.

Wes Moss [00:34:25]:
Where were you guys in.

Jeff Lloyd [00:34:27]:
I was in Louisville, Kentucky, for a volleyball tournament. It was a three day volleyball tournament, so we were there Thursday, Friday, Saturday, came back Sunday.

Wes Moss [00:34:37]:
For your 14 year old daughter?

Jeff Lloyd [00:34:38]:
My 14 year old daughter. And I just couldn’t believe the prices I was paying for some of just regular items, especially after seeing all the items at Augusta. So to get a bottled water, it was $4. So that’s twice the amount you were paying.

Wes Moss [00:34:55]:
That’s true. Augusta, it was $2.

Jeff Lloyd [00:34:57]:
You know, everyone talks about the sandwiches at Augusta, how good they are, but also how cheap they are. You know, you get a barbecue sandwich at the Masters for $3. At volleyball, $9.

Wes Moss [00:35:06]:
Some pain, $3.

Jeff Lloyd [00:35:07]:
Barbecue, three times as much for a barbecue sandwich. Coffee, double. I’m paying four for a burnt cup of coffee. Masters, two. And then sweet tea, $5. At the volleyball tournament, that’s $2 at the Masters. So I’m paying two and a half times. So that’s.

Jeff Lloyd [00:35:23]:
That’s real personal inflation pain. For me, it is the.

Wes Moss [00:35:28]:
And it’s also youth sports. What’s that doing? What is youth travel sports that we’re a victim of doing to America? I don’t know. We’re both in the middle of that mix. Hey, I love it.

Jeff Lloyd [00:35:40]:
I had a great time. Not only am I paying more at the concession stands, I’m paying to drive up there or fly up there sometimes pay for the hotel, pay for the ticket, pay for the ticket surcharge that the credit card processing company that controls all the tickets makes you pay. It’s like a 20% convenience fee to buy online ticket for these tournaments.

Wes Moss [00:36:03]:
Maybe in 20 more years, we’ll be looking back and say, do you remember the era of travel sports? Because today we look back when we were kids, they didn’t have all that. Well, it’ll be interesting to see now, but let’s go back to Caitlin Clark. She’s going to make $338,000 over four years. That’s according to the. I guess this is the WNBA is the collective bargaining agreement. So it’s about 76 grand in the first year. It is kind of amazing. Steph Curry makes $50 million a year.

Wes Moss [00:36:33]:
He makes about, let’s say here it makes 50 million a year or. Yeah, a million bucks a week. Makes a million dollars a week. 82 regular season games. Getting paid about 630, $30,000 per game, 160 grams grand per quarter of basketball. So he’s making more and a quarter, really double what Caitlin Clark is making for the entire season. Now, of course, we’ve got. She’s got all these other massive endorsement deals, right? Nike’s making her own shoe.

Wes Moss [00:37:06]:
We’ve got State Farm. I think she hugged Jake from State Farm. Yeah, I was out to the DM.

Jeff Lloyd [00:37:13]:
We were watching the WNBA draft. Caitlin Clark gets picked, you know, comes from the crowd, goes up to the stage, takes a picture with the commissioner. While she’s walking off, the first person that gives her a hug, Jake from State Farm.

Wes Moss [00:37:27]:
And then. And Gatorade. So Gatorade, State Farm panini, which sounds like a sandwich maker, but I think it’s trading card company. And then, of course, Nike. So she’s gonna be just fine. It just. It is kind of interesting that the NBA mascots, rocky the mountain lion of the Denver Nuggets makes 625 grand a year. That’s the mascot.

Wes Moss [00:37:47]:
And Harry the Hawk makes 600. Again, these are mascots making quadruple what Kayla Clark is making. Just interesting. Again. She’ll make it up in endorsements, of course, so nobody’s feeling bad for her. Let’s see, where do we go here? Jeff Lloyd? I think partially, not that this is brand new, but we’ve got. Can you believe we have tension in the Middle east? So we have a new flare up. A new flare up.

Wes Moss [00:38:15]:
Another new flare up in the Middle east. And every time this happens, of course, we always worry about what is next and how does this escalate. And we think about what happens to the world when it comes to these. I guess the nice way to say it is geopolitical tensions. The reality is we’re talking about war. We’re talking about things that scare us. They cost human life. They impact our whole entire lives, our families.

Wes Moss [00:38:39]:
And then, of course, the economy, the stock market. What does it do? Makes us scared and nervous, which is why investing is so hard, because there’s always something bubbling up somewhere, and sometimes it goes very wrong, and we end up in a real conflict, a real war. But the question is, what does that do to markets if you go back to the early 19 hundreds? So the first one on our list here, if you’re tracking, quote, geopolitical events really are wars for the most part. You start with the russian or the Russia Japan war back in 1904. Question is, what happens to markets a year after these conflicts or six months after these conflicts? World War one. Then the escalation of World War one, the D Day Suez Canal, Berlin, the Berlin problem in 1961, the cuban missile crisis, the Six Day War. Again, this is a very long list here. And in some periods of time, a few months later, the markets are not good and they’re not in great shape and they’re down.

Wes Moss [00:39:39]:
But if you look out six months later, over 60% of the time, markets are positive, on average, up about four to 5% if we’re giving it some time. And then a year later, almost three quarters of the time, markets are positive. Twelve months after, on average, 11.8, almost 12%. So as difficult as all of these periods are, and as scary as they are, because we don’t know where they lead, do they get worse? Is always the question. It’s always the boogeyman around the corner that’s scarier than the boogeyman right in front of us. Question is, where does this go? We know historically, over time, markets have been able to recover from these events, and that’s just, that’s the reality and the resiliency of markets. But you just, that worry that human instinct that makes investing really hard is we don’t know. We haven’t lived through this one yet.

Wes Moss [00:40:33]:
It could be different this time. That’s what investors say to themselves. And that’s why you see these pullbacks and markets have pulled back here a little bit over the last couple of weeks.

Jeff Lloyd [00:40:42]:
Yeah. And I think it’s just a good reminder for the listeners out there, certainly the human tragedy and element through all these conflicts. We’re just talking about taking a step back from that and taking a step back from the scary headlines that we’ve seen over the last couple of weeks. And just looking from a market perspective, 3613 years down the road, markets historically are positive, on average after these, here’s the.

Wes Moss [00:41:10]:
Before we talk about some of the ETF’s that we wanted to at least talk through. Again, we’re not making recommendations here because we don’t everyone listening may be in a different spot and what may be good for you may be not good for someone else. Everyone has different risk tolerance and time horizons. So when we talk about specific exchange traded funds as just these are, these are examples to help educate things to be looking at. I don’t know if they’re right for you or not, but they’re at least interesting to research and learn about. And I think that’s part of the reason we like to bring up specific ideas to go research. In the meantime, I want to talk about fast food price inflation because there’s a really cool study from, I found this on, you found this, I think, on finance, buzz, but it’s a really comprehensive study from all the well known fast food restaurants. Some of these, I wouldn’t say necessarily fast food, but I guess you could call them fast food.

Wes Moss [00:42:09]:
And just how dramatic the price increases have been. Because the reality is the reason we want, the reason we’re investing to begin with, whether we’re looking at dividend paying stocks or just the market in general, we’re investing to be able to outpace inflation. So we have these geopolitical events that take us down and scare us in the moment. But then you have what I would consider just a really heavy weight on your back as you’re running this marathon. That’s called investing and saving for retirement. That’s just always there. It doesn’t ever go away and it weighs us down. The value of our dollars continue to, we call it wilt over time.

Wes Moss [00:42:48]:
We know over the course of economic history, a dollar is quickly worth ninety seven cents and then it’s very quickly worth ninety cents. And because it’s only a couple percentage points per year now last summer it was 9% a year. Inflation. Imagine over the course of a decade just how much purchasing power we lose when it comes to those dollars in our wallet. If they’re not invested and they’re literally sitting there as actual physical dollars, they’re will too. Now the reason behind that, of course, is inflation. Everything gets costs more. If your dollar is staying there, it’s not keeping up, then it’s, then it’s worth less on a relative basis.

Wes Moss [00:43:28]:
And there is no better example than the last decade in fast food because these are prices that we see on the, I don’t know if you call it the screen or when you’re ordering at a fast, what do we call that? You drive up. It’s at the drive thru.

Jeff Lloyd [00:43:44]:
The drive thru menu.

Wes Moss [00:43:45]:
The drive thru menu, yeah. I guess you just call it the drive through menu. What’s that again? This is through. Who did this study?

Jeff Lloyd [00:43:51]:
Well, yeah, this was finance buzz.

Wes Moss [00:43:53]:
Finance buzz over the past ten years. So we’re going to 2014 to 2024. They point out that actual inflation, I think they’re probably just using CPI here, is up a little over 30%, so they say 31%. I think it’s a little more than that, but we’ll take it for what they’re saying. Every single restaurant that they studied has raised their menu prices more than that. So it’s not just that we find companies stay in line companies often are outpacing inflation. So we looked at subway and Starbucks, we looked at Arby’s, we looked at. My eyes are, I can’t, I can’t see all these Popeyes, Taco Bell, McDonald’s, Burger King.

Wes Moss [00:44:38]:
And the prices of specific items are really incredible. If you look at the McDonald’s McChicken, this is a sandwich, I believe it is up over that ten year period, 199%. Inflation’s up 31. The McChicken is up almost 200%. The McDouble up 168%. Just you know what medium fries. Jeff Lloyd up 138%, all topping the list, by the way. That’s all McDonald’s.

Wes Moss [00:45:10]:
McDonald’s is arguably the one with the. Well, McDonald’s clearly here has by far the most inflation, up about 100%. We’ll go into some of the other restaurants as examples, but we’re going to do a quick break, then. More money matters. Fast food inflation straight ahead. Jeff Lloyd, so much fun when you’re here. Not that it’s like fun when Connor Miller’s here, too. But you’re both, you guys are just both so good.

Jeff Lloyd [00:45:39]:
Just bring a different energy.

Wes Moss [00:45:40]:
You know, the purchasing, protecting purchasing powers. We were talking about fast food prices. The culprit, as you coined, is mikflation, up about 100% over the past decade. If you’re looking at the menu at McDonald’s, the least bad when it comes to menu inflation, Starbucks and subway up only 39%, which is just a little above inflation. Some of our favorites, of course, right in the middle here, chick fil a and wendy’s, right around that 50, 55% level of inflation. But really, it’s Popeyes and McDonald’s that for some, it’s Taco Bell, Popeyes, and McDonald’s that have really taken it to the menu and just risen prices dramatically. And this is something that we wrote this week. We know from history that one of the, not the only way, but one of the best ways to insulate ourselves against inflation and protect our purchasing power going back 150 years is that companies just in the s and P 500 have been able to grow their dividends at a rate that is nearly double the rate of inflation now.

Wes Moss [00:46:52]:
Double the rate of inflation. That sounds a lot like what McDonald’s doing. They’re increasing their prices more than double the rate of inflation in the last ten years. But that means that, and mathematically, inflation over that huge period of time is about 2% on average per year. Dividend growth is 3.7, not quite four. So not quite double, but substantially higher over time. That means, think of it this way, that in an average year, a basket of goods and services that cost $1,000 a year ago now costs $1,020. That’s the inflation.

Wes Moss [00:47:27]:
It’s 22% more. But a portfolio of dividend growth companies, or really just s and p 500 companies here that yielded $1,000 a year ago would now yield $1,037. So things got $20 more expensive, but you get 37 more dollars in order to do that. So dividend investors, on average, got, and this is over long, long period of time, a real or inflation adjusted raise of about 1.7% per year. It’s not. And that’s not including the impact of price appreciation. We’re just talking about the cash flow and really the free cash flow in most cases, and earnings that get distributed out from companies after they know what they’re making, given year, they set their dividend policy, and they really try to stick to it. Case in point, as an example, we just got an announcement this week from Johnson and Johnson.

Wes Moss [00:48:26]:
That company has risen. The dividend. They’ve cranked it just a little bit higher every single year now for the 62nd year in a row, so sick. Over six decades, 62 years in a row, they’re paying out a little bit more per share. A little bit more per share. None of them sound like a whole lot. This one was what Jeff was at $0.05.

Jeff Lloyd [00:48:49]:
It was a five cent increase.

Wes Moss [00:48:50]:
Only $0.05. Nobody cares. $0.05. What’s the big deal?

Jeff Lloyd [00:48:54]:
Percentage basis, percentage wise, that’s 4.2%. So that’s outpacing inflation by 0.7%. Because if you look at the year over year inflation print, that was 3.5%. J and J’s dividend, 4.2%.

Wes Moss [00:49:10]:
Very much in line with what we’ve seen over the course of history. You know, it’s a little early in the day to be thinking about Taco Bell, but I can’t help but smile as we look through this list of menu items that have increased. And this is where we see this. We know. The reason I think is important is that, you know, a big Mac. Now, they. I think McDonald’s was smart to not overly inflate the price of the Big Mac, only up 50% over the last call it decade. But some of the other areas are not so good.

Wes Moss [00:49:40]:
The quarter pounder with cheese meal went from $5, a little over $5, to about $12. That’s a 122% increase. Medium fries, up 138%. McDouble, up 168. That’s why over the course of the last year, on average, the McDonald’s menu is up 100%. Starbucks has kept their foot off the inflation pedal, only up 39%. Chick fil a, Arby’s, Wendy’s, kind of right there in the middle of 55. But some of these taco Bell items, that.

Wes Moss [00:50:13]:
I don’t know who buys these. I feel like this is for kind college of. I don’t know who does this. Cheesy Gordita crunch has doubled in price. 249 now at $5 today or $4.99. The beefy five liter burrito is up 132%. Do you ever. Have you eaten taco Bell lately? I have.

Jeff Lloyd [00:50:32]:
And I have to say, the cheesy Gordita crunch is phenomenal. So, you know, I’m paying double what I paid ten years ago. I’d probably even pay even more.

Wes Moss [00:50:42]:
You’d go triple. You know, at Starbucks, I feel like for a decade, people. A decade ago, people were making fun of how expensive Starbucks was, and maybe that’s why they have been really careful about this. So the mocha Frappuccino is up only 32% in the past decade, and the chai tea latte is only up 30%. And if you notice, I feel like there’s been a little less ire on Starbucks prices. It’s maybe because they’ve been. They’re arguably the lowest inflators on this list. They’re the least culprit, if you will, on this list.

Wes Moss [00:51:20]:
Now, we do that to point out that there’s only a few ways to keep up with inflation, and that is to invest in areas that inflate along with inflation. It’s a pretty simple story, if you think about it. Every one of these companies is an example of that. These are companies that are selling a product. It’s getting more expensive, so they’re raising their prices, and they’re doing it. And they’re doing it beyond the rate of inflation. Hence, we see big companies are able to pass that savings, not savings, pass the cost along to the consumer. And a lot of times they get away with passing even more than they need to pass on as they are trying to increase their earnings over time.

Wes Moss [00:52:01]:
Hence, we go back to 1871, to 2024. We look at how dividends, dividends have done as far as growing in the S and P 500, and they have almost double the rate dividend growth, almost about double the rate of what inflation has been over the course of over 100 years. So inflation has been about 2% per year. If you go back 150 years, the rise in how much companies have paid out, this is just the S, P 500 as a group has been 3.7%. So not quite 4%, not quite double, but substantially above the rate of inflation. Even over the past twelve months, if you look at numbers, we know that inflation has been three and a half. That was the latest CPI report. Dividend growth has been 4.6.

Wes Moss [00:52:45]:
So not a double, but it’s still outpaced. Now, one of the things we said we’d talk about here today are just if we’re looking for. So first of all, that’s just the s and P 500. And however, if you’re looking for companies that specifically are able to raise or have been able to raise their dividend over time, there are ETF’s that do the same thing or look for the same thing. And again, I’ll couch this with the thought that it’s hard here on an investment of money, a retirement show. We really can’t make any recommendations to go buy or sell anything because everybody in the audience is different. Different risk tolerance, time horizon, financial situation, tax bracket. There’s a long list of variables that make everyone really unique, and that’s why we can’t say you should buy and sell any given security, ETF, mutual fund stock, you name it.

Wes Moss [00:53:38]:
However, I think it’s also important to be able to bring up some of these investments and learn from what they are trying to do, and then you go make a decision whether it’s right for you in your particular situation. A couple of areas, and we’ve talked about these over the last few years, but there are ETF’s out there that try to only hold companies that are able to grow their dividend. One of my favorite charts of the year is going into, if you think about any financial application, whether it’s Bloomberg or if you’re on Apple stocks, you’re going to see a chart. And it’s always the chart of the stock price. What I love to do is pull up a chart of only the dividend. So if you’re only looking at the dividend, I went and looked at some of the holdings in this first example, which is the Spider S and P 500 dividend ETF, which is Sdy. It’s about 140 companies inside this one basket. So think of an ETF.

Wes Moss [00:54:42]:
ETF stands for exchange traded fund. These are the evolution from mutual funds, mutual funds. There’s a daily price, closes at the end of the day. It’s a basket of companies ETF, very similar, except it’s valued every second of the day. So the index, if you’re looking at this spider S and P 500 dividend ETF, it screens for companies that have consistently increased their dividend for at least 20 consecutive years. That’s the pool they’re looking at. And then it weights that by yield, etcetera. It’s looking at the index.

Wes Moss [00:55:19]:
It’s looking at is the s and P high yield dividend aristocrat index. So that’s where it comes from. And this is a really broad, it’s a big index. This is similar to the S and P 1500 index, again looking for 20 years of consecutive increases. So if you go back and if you dig a little deeper, you’ll find companies inside of that ETF. And again, about 140 of them. I pulled out about a half dozen, Exxon, Johnson and Johnson, IBM, Abbvie, Medtronic, Clorox, Lockheed Martin, Aflac. And I wanted to just test and double and triple check that.

Wes Moss [00:56:02]:
In fact, their dividends are going up over the course of time. And that’s exactly what you’ll find. Now, not in every single case do they go straight up, but in most cases here, if you’re charting just the dividend, not talking about price here, just the amount that these companies pay out per share in any given year, they look like very. They look like escalators, they look like a gentle set of stairs, if you will, going from, if you look into the chart from the lower left to the upper right. Now, some are better than others. If you look through here, you can see Lockheed Martin, as an example, has been a formidable dividend increaser, whereas a company like Aflac, it’s much more muted, but at the same time, the lines are going, the stairs are moving higher. And that’s what this, as an example, this ETF is trying to do. Here’s another example.

Wes Moss [00:57:01]:
This is the ishares core dividend growth eTF. Now, this is even more diversified, with a slightly less stringent dividend policy. Here where SDY is 20 years, where the dividend increases. Dgro, which is the, is the symbol for iShares core dividend growth ETF. The criteria here is just five. They want five. This particular ETF wants five years of uninterrupted annual dividend growth from, let’s call it a big universe of dividend growers. They also want to make sure that the dividend that gets paid out is not exceeding 75% of earnings.

Wes Moss [00:57:39]:
So here’s another. This is another caveat around earnings and dividends. If a company earns a dollar a share and it’s paying out ninety cents per share, then it’s giving back almost everything that it’s making. And in some cases, that can be a little bit of a. That’s a hard policy to do year after year after year, and also be able to increase the dividend. So it goes back to this Goldilocks concept. It doesn’t. We don’t want the very highest dividend yielders.

Wes Moss [00:58:06]:
We don’t want the lowest either. So we want some that are to some extent right in the middle. So then they narrow that universe down. And they also want to make sure that dividend yields are not in the top 10% of the universe. So you don’t necessarily want the very highest payers either. A lot of times that’s going to. You can run into problems if you have a stock that’s paying 8% or 12% a year. That’s just very often not sustainable for the most part.

Wes Moss [00:58:36]:
So we’re looking for somewhere in that Goldilocks, not too hot or not too high, not too low when it comes to the dividend policy. Some of these same companies. So Exxon is an example, Microsoft, Chevron, JP Morgan, Apple. So you’ve got some technology names, you have banking names, you have energy names. Procter and gamble is one, Home Depot. Those are all examples of some of the holdings inside of an ETF, like the iShares core dividend growth ETF. So these are examples that, as you dig down a little deeper, we know the overarching goal of the ETF, only hold dividend growers over time, and then we can dive in a little bit deeper and see what they actually hold. And that’s where you can start to get a little comfort, a little more knowledge around what you’re actually owning makes sense.

Jeff Lloyd [00:59:34]:
Yeah. And you mentioned, you’ve highlighted the company diversification, and I know you talked about it a little bit, but within these ETF’s, you get broad in some of these ETF’s you get broad sector exposure, you get the financials, you get healthcare, tech, energy, utilities, all in the same ETF. But across a broad spectrum of companies.

Wes Moss [00:59:54]:
Well, you don’t really think about technology companies paying dividends. But over the last decade or so, we’ve seen more and more of that happen. So in the case of DGro, as an example, the iShares core dividend growth ETF, 17% of the companies inside there are within technology. They’re in the tech space. We have, as you maybe would expect, 16% of the companies are healthcare. A little bit more known for paying dividends, 7% are utilities. They’re well known for paying dividends. Over time, of course, banks, part of that 18% are financials.

Wes Moss [01:00:34]:
But again, you’ve got lots of different sectors here that are contributing to that grouping of companies that this particular ETF is looking for and trying to hold and screening for companies that have been able to raise the dividend for five consecutive years. Now, it’s not necessarily an exact hard and fast, so there’s usually some exceptions, particularly when you have that many companies in an ETF. You’ll even find some exceptions in the Spider S and P dividend ETF where they may not have raised consecutively, but the trend is certainly higher. So it’s not an exacting rule, but the parameters are very clear of what they’re trying to do. And again, for investors looking for cash flow, depending on the cycle you’re in and the stage you’re in when it comes to your retirement planning, whether you’re pre retirement, on the verge of retirement, or well into retirement, we have different goals at different time periods. So this is something for folks looking for current income, potentially. And it’s something I think at least, at least worth looking into getting a little bit more information about. Again, I can’t say it’s right for you or not, but certainly something interesting here as we’re talking about dividends and dividend growth so we can buy our favorite fast food and combat, as Jeff Lloyd calls it, mikflation.

Wes Moss [01:02:00]:
I can’t believe we’re wrapping up already. Jeff Lloyd we started out today saying that we, we had a nice email from a listener through our website, your wealth, yourwealth.com, and said, I feel like I learned something when I listen to money matters. So I wanted to really remember that today and double down on making sure we’re helping people learn something here on a Sunday morning. We appreciate people tuning in. Yeah.

Jeff Lloyd [01:02:25]:
And that’s not patting ourselves on the back. It’s just a nice reminder. Okay.

Wes Moss [01:02:30]:
It’s just a little bit.

Jeff Lloyd [01:02:31]:
Just a nice reminder to us and our listeners. Like, we want them to learn from this show. Week in, a week out, I think.

Wes Moss [01:02:38]:
That I like to use here today, we talked about fast food inflation. I think it’s easy for us to wrap our heads around menu prices that we know, that we’ve seen. And if they double over time, that’s a really good example of inflation. Dividends as an example, one of the tools on our toolbox in order to protect our purchasing power, we talked about how the market’s obsession with mommy and daddy fed, meaning that it’s almost as though parents were out of the house for about seven years. If you go back to zero eight, all the way through 2015, the Fed kept interest rates at. They literally were at 0%. Mallory through the break was like, wait a minute, wait, zero. Wait.

Wes Moss [01:03:22]:
How could it be zero so soon? We forget of how crazy interest rate policy was. It was all candy, all easy, all low rates. We could do whatever we wanted. Money was, quote, free. And then here we are over the last, call it year and a half, and it’s all spinach. And mom and dad are home. The house was a mess, so they’ve employed the strictest of policies. You’re all grounded.

Wes Moss [01:03:45]:
We’re raising rates. No iPhones for you. And we’re all sitting there with bated breath waiting for mom and dad just to calm down and go back. Vacation. Can you lower rates a little bit? Do we have to eat spinach for every meal? And that’s where we are. And I think that’s why the market is so obsessed with this. Doesn’t, doesn’t seem like we are going to have a whole lot of easing of interest rates. And guess what? It’s okay.

Wes Moss [01:04:08]:
This economy in the stock market can still do fine. Now if the ten year treasury rate goes all the way up to 5% and it’s starting to approach that, sure. I think it’s a tougher road for stocks for a little while, but we’ve lived through the course of economic history with rates in the five and a half percent range for many periods of time. And guess what? The economy did just fine. So it’s not as though we can’t get through that. It’s not the end of the world. If the Fed doesn’t cut three times this year, they may cut zero. And I think this economy will still be ok.

Wes Moss [01:04:43]:
The market won’t like it as much, but it doesn’t mean that companies still can’t earn, grow earnings, cetera. So I don’t look at this as this obsessed fed watch and are they going to cut or not? I think the reality here is we have a pretty good economy and that’s really what I care about. And whether we cut or not, this economy is in pretty decent shape.

Jeff Lloyd [01:05:04]:
Jeff Lloyd no, it is. And just a reminder, if the Fed doesn’t cut, the economy should be doing just fine.

Wes Moss [01:05:13]:
That’s a great point. It means that things are still on a trajectory that’s strong and they feel like they don’t want to juice the economy by lowering rates. So if I had to choose one of the two, I’d choose the no cuts. It means the economy’s still moving in the direction we would all like to see. And I think that’s really what investors want, at least over time.

Mallory Boggs [01:05:37]:
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Mallory Boggs [01:06:25]:
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