November 1st, 2025 - Experimenting With Socialism

The Van Wie Financial Hour provide insights into market trends for October, addressing concerns about a possible AI bubble and the alternative minimum tax's resurgence. The conversation also touches on tax planning strategies, implications of local elections on markets, and listener questions about financial strategies and net worth.

Transcript

Steven H Van Wie 0:02

Morning. It's 10 o'. This is the Van Wie Financial Hour. I'm Steve Van Wie.

Steven H Van Wie 0:03

Clock.

Adam Van Wie 0:06

Hi, I'm Adam Van Wie.

Joey 0:07

And I'm Joey Loss.

Steven H Van Wie 0:08

And Joey makes the full house complete here today as is becoming more and more usual. In fact, I just made sure that we get the intros up to date. So probably by next week when we come back in, we'll all be included in it. How about that?

Joey 0:28

All right. Full time band member.

Steven H Van Wie 0:29

Yeah, yeah. You know, there's an old saying, when you're paying the bills, you should get some credit.

Adam Van Wie 0:30

Got the promotion.

Steven H Van Wie 0:37

And from now on you're going to. Anyway, I digress, as usual to all the regulars. Thanks for always being there. Okay, like I say, you show up, we show up. That's how it works. Real simple. And if you're new to the show, found out about it either on purpose, by accident, referral or whatever, then try to stick around for the hour and I promise you'll learn something. And even more so than usual with all the things that are going on and with the year end in sight, this is a busy time of the year in our business and it ought to be for your own personal lives too, because tax planning, although we say it is a year round thing and we mean it, it gets particularly interesting at a time like this. So any little tips you can pick up? Good market's been good. There's going to be some areas where people are going to have some gains and there's some old nemesis things that are popping back called the amt. It's going to influence more people than before. Don't even like saying those words, but it's kind of like Rosie o'. Donnell. It tries to go away, but you just can't really quite get rid of it.

Adam Van Wie 1:51

Okay,

Adam Van Wie 1:53

random analogy.

Steven H Van Wie 1:55

It hit me this morning, I guess I hadn't had my second cup of coffee yet. Anyway,

Steven H Van Wie 2:03

where was I? Yeah. Oh, yeah. Welcome to everybody. As usual, we will have a

Steven H Van Wie 2:11

trivia question right after the first break. So lines are open at this point. 904-222-8255.

Steven H Van Wie 2:18

Where if you want to change what we're talking about, it's as easy as calling in and changing the subject. And we'll talk about what you want to do. So no excuses if you have something on your mind and we're not covering it. All right. The long national nightmare Annual one is over. October is in the rearview mirror. And it left us 100% certain that it has deserved its reputation as a volatile month. And it has also Dispelled yet again the notion that it's a terrible month. Because it wasn't.

Adam Van Wie 2:38

Yep.

Adam Van Wie 2:51

No, not at all. In fact, it was a pretty good month. But first I want to talk about the AI bubble because you really can't turn on a financial news station right now without hearing talk about are we in an AI bubble? And I'm not saying we're not. But I'm also definitely not going to declare that we are. Because first of all, if bubbles were this easy to predict, we would never be in one. Think about that. If everyone already knew, why would you be buying? It just wouldn't happen.

Adam Van Wie 3:23

The other thing is, bubbles don't usually happen. With a backdrop of companies beating earnings at a 78% rate, which is among the best in history this quarter so far, and revenues beating at a 74.8% rate, which is in the top 10% of all earnings seasons in history. On top of that, 11.3% of companies reporting have raised their forward guidance and only 5.1% have cut. That's a huge spread between raises and cuts.

Adam Van Wie 3:54

That type of spread we haven't seen since the post Covid crash days of mid-2020. So just to give you an idea of how unique that situation is, that's when everyone had cratered their forecasts because of COVID and then all of a sudden people realized the world wasn't coming to an end and sudden were actually doing better than they were before, especially those that were online. So those were, that was a huge guidance raising time. And we're, we're kind of matching that right now without the backdrop of having just crashed. So what I'm trying to say is that companies are making a lot of money right now and that is what is propelling this market forward. Not a bubble currently. Now that doesn't mean it can't lead to one because it definitely can. But I would say that the overall health of corporate America is very strong right now. And this isn't just tech companies either. Communication services and consumer staples actually have higher beats beat rates than the technology sector. So consumer staples, not exactly the, the area of the market that's been on fire this year has a think about that. It's got a higher beat rate than tech companies. So really strong fundamentals going into the end of the year. That's. And to me that's pretty exciting and gives some justification to where we are valuation wise. So all of the mega cap stocks have now reported and it went pretty well. Amazon, I think Amazon had the best report despite, despite saying that they were cutting 14, 000 management jobs. In fact, I think those 14, 000 management jobs probably needed to be cut. And the reason for that is they've tripled their workforce since 2018. As you might remember, over the last four or five years, it's been kind of a hiring spree just to keep up with demand and the lack of workers. So it's very possible that during this tripling of their workforce, they hired a few people who maybe weren't up to the average at Amazon. And I think now they're just kind of cleaning that out and going back to. Right. Sizing their management team.

Joey 6:03

And for scope, they had 350,000 corporate jobs. So we're talking about like 4%.

Adam Van Wie 6:06

Right.

Adam Van Wie 6:08

Yeah. It's not a big number.

Steven H Van Wie 6:10

Yeah. Flattening your management into fewer tiers is never a bad thing, the way I see it.

Adam Van Wie 6:16

Yeah. So they were interviewing someone who worked at Amazon and they said when he got, he was saying that when he got hired he was like six levels away from the CEO Bezos, and now he was like 28 levels away from Pesos.

Steven H Van Wie 6:28

So he must be doing a terrible job.

Adam Van Wie 6:31

Yeah, but his job hadn't changed. That was the weird part. This. The report from Amazon was so good that the Stock jumped up 9.6% on Friday. They beat on revenue and earnings and raised their forward guidance. Apple also had a strong quarter with revenue in line with expectations and earnings that were higher than expected. But they raised their forward guidance by quite a bit. And in the market really like that. They said the fourth quarter is going to be pretty stellar. Overall, the S and P earnings are up about 7.3% versus last year. But if you exclude the MAG7 stocks, that number falls to 6.1%, which is still a really big number. So like I said, just fundamentals were good all around and I'm pretty excited going into this quarter about where we sit. The week was a bit volatile, as Fed weeks usually are. But we did see the Fed cut rates for a second time in a row, another 25 basis points. However, they didn't guarantee a rate cut at the next meeting, which in my opinion they never should because a lot can change between now and then. But the market didn't like that and it caused the market to drop on Wednesday and Thursday before rising again on Friday. Now that we're out of October, perhaps we can, we can change that and resume our volatility free climb through the end of the year. I doubt it, but it would be nice.

Steven H Van Wie 7:52

Well, wish in one hand as the old saying goes.

Adam Van Wie 7:55

Exactly what happens. I've got a bit more to wrap up after the break, but we're coming up on it all right.

Steven H Van Wie 7:56

Yeah.

Steven H Van Wie 8:01

When we have many things to talk about after that. But it's that time of year again where I get to complain about all the colas that Uncle Sam applies to things and how unfair it is to regular old taxpayers. So I've got a few of them. They're, they're holding out on some things, but they, they're starting to piecemeal it out despite the government shutdown, which is just another one of those things that I want to complain about. But you got another 45 minutes to listen, so why not? We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. 

Steven H Van Wie 8:30

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 8:36

I'm Adam Van Wie.

Joey 8:37

And I'm Joey Loss.

Steven H Van Wie 8:39

And we do have, as usual, trivia questions sponsored by Paul Lloyd at First Coast Alarm. Get a hold of Paul at 904-636-7888.

Steven H Van Wie 8:51

Residential commercial, whatever your security needs. Okay,

Steven H Van Wie 8:58

little snapshot of America right here. Americans say that if they had a net worth of 830, $39,000, they would be financially comfortable.

Steven H Van Wie 9:10

Okay, I'm just reporting what they said. I'm not reporting the truth of the matter, which we'll get around to. But what would make them feel financially wealthy? How much money? And it's, I'll give you a little hint. It's in seven digits. That's the only hint you're going to get for a while. So get it within about $100,000 and, and you will be declared a winner. All right, that's it, Adam. We've got a little more to wrap up on what really came out to be an excellent month, if you could stand the volatility, as usual.

Adam Van Wie 9:44

Yeah. For the week, the S and p was up 0.7%, the Dow was up 0.8, and the Nasdaq had a really nice week, up 2.2% for the month. Let's see here. We were up 2.5 on the Dow, 2.3 on the S&P, and 4.7 on the Nasdaq. So Nasdaq really just having a great year and a really strong month

Adam Van Wie 10:05

at this point. The market is actually on track to potentially meet or even exceed the gains of last year if the current pace holds. Despite October being a bit more volatile than the last few months, we actually got off pretty easy this year. The maximum drawdown in October was just 3.16%

Adam Van Wie 10:23

while the median for all October's maximum drawdown is actually 4.6%. So much less volatile than the normal October. It just felt high because we haven't seen any for since April. Really.

Joey 10:36

It's kind of shocking. Near all time highs too. You think think it's right for volatility?

Adam Van Wie 10:38

Yeah.

Adam Van Wie 10:41

Yeah, definitely.

Steven H Van Wie 10:43

Even the lowly small cap index, the Russell 2000 lost 1.4 in the week but for the month it's up 1.8. So you know, it's nice to see a positive number on the little, little guys out there.

Adam Van Wie 10:56

We don't, don't normally talk about politics on the show but I did want to mention this just because it was interesting. The there's several elections going on. Early voting is underway in several places. One of them is New York City. It's interesting because the leading candidate is among other things, a socialist. And I did a little research and I found out that the top 1% of taxpayers in New York City pay 48% of all the taxes. So what happens if you tax those people out of the city? Your revenue, I mean you stand to lose potentially half of your revenue. That's insane. That is a real danger that they are in right now.

Steven H Van Wie 11:39

Well, there are real estate agents in various parts of the world that are thanking Mamdani already. One of them is south Florida. The other one is north New York.

Adam Van Wie 11:50

Yeah.

Steven H Van Wie 11:51

And the other one is in New Jersey. New Jersey gets its act together and they're really thinking about this on Tuesday and they get a decent governor in there. New Jersey could be in for the best couple of years in their history. Yeah, we'll see.

Adam Van Wie 12:06

I just thought that was really interesting. Like what is the actual contribution of the top 1% in New York? And these people saying that the rich don't pay any taxes. Well, actually they pay half your taxes.

Bob 12:17

So.

Steven H Van Wie 12:17

Adam, you heard him. Anybody can afford to pay 2% more.

Adam Van Wie 12:23

Anyone, anyone? So easy. Yeah. On top of what is already one of the highest tax states in the country.

Steven H Van Wie 12:30

Yeah. It's absolutely ludicrous that people are listening to this guy and believing that there's something for nothing.

Adam Van Wie 12:38

Well, now there is one prediction or one of his promises I think he will fulfill and that is to lower real estate prices in New York because of falling demand.

Steven H Van Wie 12:49

And you say what? Yeah, yeah.

Adam Van Wie 12:52

So there is that.

Joey 12:54

Make the lipstick of the building like 50% off.

Steven H Van Wie 12:56

Yeah,

Steven H Van Wie 12:59

that. I guess you'd call that an upside to it, wouldn't you?

Adam Van Wie 13:02

Yeah, I mean that's. That Is what people say is driving this election is. Is the affordability rental. Mostly affordability in New York.

Steven H Van Wie 13:11

Well, it's easy to solve. You just freeze it.

Adam Van Wie 13:13

Oh yeah, that'll help.

Joey 13:14

Yeah.

Steven H Van Wie 13:15

Then all those landlords will walk away and then he can dominate the market by just taking those buildings and leasing them.

Adam Van Wie 13:22

Turning them into government run grocery stores. What could go wrong?

Steven H Van Wie 13:24

Exactly. This is a plan developing.

Steven H Van Wie 13:30

You know, we've tried this before here.

Adam Van Wie 13:33

And there, around the world a couple of times.

Steven H Van Wie 13:35

I don't remember it ever working out quite the way it looked on paper. You.

Adam Van Wie 13:39

Yeah, no, I was.

Joey 13:40

We've talked about GAD Saad a couple times recently in the office and he's a fascinating Canadian professor. Knows more about American freedoms than probably most Americans do. And he was talking about a conversation he had with another expert on socialism and he said, great idea, wrong species. It's like we're just not built for it. You know, we're gonna try it over and over, but not our nature.

Steven H Van Wie 14:02

He's a character. Yeah, like. Okay, well, enough of politics. Although I promise you there will be politics in the market next week with a lot of big elections on the line and if any of them go well for the conservative side, I think the market will really like that. Don't know what's going to happen.

Adam Van Wie 14:23

State level elections don't usually. I don't see that driving the market.

Steven H Van Wie 14:27

It has the volatility, but it doesn't really change the direction of anything.

Joey 14:30

Could hurt Muni bonds in New York.

Adam Van Wie 14:32

But yeah, longer term that it could.

Steven H Van Wie 14:34

Definitely could. Oh, well, where do we go from here? Let's go to the color the farm.

Adam Van Wie 14:38

Well, it looks like we have a caller.

Steven H Van Wie 14:43

Good morning, Bob. How's everything?

Bob 14:45

Good morning. Good morning. We had. We had a great day with our cows yesterday. Yes, yes. We found out the.

Steven H Van Wie 14:50

It was.

Bob 14:54

The true value of our cows. You know, they're. Cow prices are up.

Steven H Van Wie 15:00

Didn't know that as of as we talked. It might be the perfect timing just because beef prices are on the hoof. I even are. Right now.

Bob 15:08

Oh yeah, good. Yeah. And they're trying to import beef from Argentina and the farmers are insisting that it be labeled not from America.

Adam Van Wie 15:21

So.

Steven H Van Wie 15:24

I would think Argentina would want to put their own label on it because Argentinian beef. I grew up in the 50s and 60s learning about places like that and they were known for their beef.

Bob 15:35

Yeah. But American beef has gotten a lot better now too with the breeding, selective breeding, etc.

Bob 15:42

Hey, I missed Adams. I caught the 5.1%. Company's

Bob 15:50

downgrading their forward earnings. What was the percentage of those upgrading?

Adam Van Wie 15:55

It was 11.3%.

Bob 15:58

Okay. Double that. Okay. The other thing that I wanted to bring up, you know, you were talking. You allayed many of my fears about the AI bubble. But one of the things that I wanted to bring up, I listen during the day when I'm out on the tractor to all the talk show hosts, not necessarily the financial people. And all the talk show hosts are even talking about an AI bubble, which is, you know, that's crazy. They don't know what they're talking about. Once you listen to what you had to say about, you know, the earnings, corporate earnings, and that's really what's driving the market. So not necessarily the AI focus.

Adam Van Wie 16:00

Yeah.

Steven H Van Wie 16:35

Well, that's how you know what's going to happen. You just listen to those guys and do the opposite. Or if you want to condense it, listen to Kramer and do the opposite.

Bob 16:40

That's exactly.

Joey 16:45

Yes.

Bob 16:45

Yeah. Running the op. Run in the opposite direction. We're also hearing stuff about offices dispersing ahead of the change in New York. I guess North Carolina has picked up some financial offices. Texas and Florida. Do you think Wall street will disperse if things change in New York?

Steven H Van Wie 16:48

Exactly.

Steven H Van Wie 17:04

Already is.

Adam Van Wie 17:05

I think it's already happening. Yeah.

Joey 17:07

Okay.

Steven H Van Wie 17:08

The new stock exchange in Texas is pretty picking up listings over and over and over. I think that'll just accelerate.

Steven H Van Wie 17:16

Where would you rather live? You know, if you're working on the street? I. I would go to Dallas or I'd go to Florida. I go anywhere to get out of New York. And that's no matter who gets elected. Imagine how much different it'll be if the wrong guy gets elected. I don't hesitate to say that it's almost a slam dunk that he will be so.

Bob 17:40

Yeah, but we're. We're also hearing that property values are soaring in upper state New York as a result.

Adam Van Wie 17:45

Yeah. So I'm not surprised. But so far There are over 300 hedge funds, private equity and financial service firms in Palm Beach county, and 70 of those have relocated there from New York.

Steven H Van Wie 17:59

Wow.

Bob 18:00

Oh, whoa, whoa, whoa. That's. That's huge.

Steven H Van Wie 18:04

And one from. From Chicago. The wealthiest man in Chicago moved on to Palm Beach.

Bob 18:10

Wow. Wow, wow, wow.

Steven H Van Wie 18:12

That's. That's.

Bob 18:14

We don't get that information on the radio. I mean, you know, we're getting it today on the radio, but I mean, normally during the week, you don't hear anything.

Steven H Van Wie 18:23

It doesn't fit the narrative of most of those people.

Adam Van Wie 18:25

Yep. They manage approximately 300 billion in assets out of South Florida now.

Steven H Van Wie 18:30

That's.

Bob 18:31

Wow. Wow, that's you.

Steven H Van Wie 18:34

Well, it's going to, it's going to be a pivotal year, one way or the other, for. Wall Street.

Bob 18:38

That's for sure. There's some underlying currents that, you know, can. Can really drive things forward.

Joey 18:40

Yeah.

Steven H Van Wie 18:46

Meanwhile, all those, all those naysayers, have they checked out the value of Nvidia lately? The market cap?

Joey 18:54

5.

Bob 18:55

Yeah.

Steven H Van Wie 18:56

Trillion. Dollars.

Adam Van Wie 18:56

Yeah. That's. That's why people get scared, though. Yeah.

Joey 19:00

Yeah.

Bob 19:00

Yeah. Well, and then. Then there's one guy talking about that a lot of these AI companies are moving money back and forth between them to buy chips.

Adam Van Wie 19:09

Yeah. And that is. There is something to that. And they are financing a lot of the growth with debt, which can be scary as well. So it's really easy to make that case right now. But then you. You have to look at the whole.

Bob 19:23

Market, the earnings driving.

Steven H Van Wie 19:26

It's. All right, we got a minute.

Adam Van Wie 19:28

No, I think he was saying the overall market was being driven by earnings, but we kind of lost him. Yeah.

Joey 19:33

I don't know.

Joey 19:36

But, Adam, I agree there's some debt financing, but it's not bubble like debt financing. No, we're in early phases of that. I think we've got ways to go before it starts to feel like.

Steven H Van Wie 19:46

Okay, Bob, we got half a minute. You want to take a shot at the trivia?

Bob 19:50

I didn't hear it, guys. I was pulling a chicken out of the freezer.

Steven H Van Wie 19:54

Okay. On the average net worth of Americans, say they're comfortable. 839,000. What would it take to make them financially wealthy. Feel financially wealthy? And it's seven digits.

Bob 20:07

839,000.

Bob 20:10

1.2

Bob 20:12

million.

Steven H Van Wie 20:13

Too low. But you're. You're setting the bracket, and we appreciate it.

Bob 20:17

Okay. All right, Enjoy this, guys.

Steven H Van Wie 20:19

Thanks for the call. All right, we'll pay a couple bills. Be right back. Don't go anywhere. This is the Van Wie Financial Hour. 

Steven H Van Wie 20:26

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:28

I'm Adam Van Wie.

Joey 20:29

And I'm Joey Loss.

Steven H Van Wie 20:30

And I remind Everybody, lines are open. 904-222-8255.

Steven H Van Wie 20:36

And the trivia question remains, how much net worth would it require the average American to feel financially wealthy? And we know it's above 1.2 million. And of course, you learn the value today of what the average person thinks, because it's pretty much wrong. Very hard to find an average person, isn't it?

Steven H Van Wie 21:02

Anyway, it's that time of year again when they start releasing all their COLAs and increases and all this kind of stuff. And every year I go through the same thing. And you'll see the blog in a week or so. It says my annual COLA complaints. Because it is, it's always a complaint. We pay these people to calculate the so called cost of living or the inflation. And we all know they do a pathetic job. But what they do just as poorly is, as calculating it is applying it. You can make any kind of adjustment you want. One that really hits me this year that I've never seen before is that they're raising tax brackets in two different steps. The lower two have one rate and the other ones have another rate. So therefore, when you make a little more money, your cost of living increase changes a little. Or what possibly could be the logic in this thing. Another one, this one's a subtle one. They are raising the IRMAA brackets. Now, those of you who've listened to the show a long time know IRMAA means Income Related Monthly Adjustment Amounts. It's an amount that you pay extra for your Medicare B and D if you have it or sometimes if you don't based on your income. It is ready for this. An income tax that they don't call an income tax, but that's what it is. They are more like a.

Adam Van Wie 22:44

It's more like a income penalty. I feel like, yeah, tomato, tomato, fair enough.

Joey 22:50

But yeah, I love that they say income related as if there's anything else not induced or it's, it's income specific. It should be called the double Medicare tax. Second time.

Adam Van Wie 23:01

Yeah, you paid for this once. Now you make too much money, you're gonna pay for it again.

Steven H Van Wie 23:05

I had a little inspiration this morning and it hit me that there's a fine line between stubborn and stupid. Wanna know how fine. I looked up in the Webster's collegiate dictionary, the two words stubborn is on page 1164,

Steven H Van Wie 23:22

stupid is on page 1165. And when you close the book, they touch.

Steven H Van Wie 23:29

Now, if that is not the most useless piece of information you get this hour, I don't know what will be.

Adam Van Wie 23:35

Okay, you're gonna have to try hard to top that, I guess.

Steven H Van Wie 23:38

So anyway, they're, they're just nudging those IRMA brackets a little tiny bit. So if you make an extra couple of bucks, it's gonna cost you again. And I just, I detest the way they sneak these things in because they don't call it an income tax. And when they say the marginal tax rate, they're talking about 30. What, what is it now? 35. Is that top rate?

Joey 24:02

37. Yeah.

Steven H Van Wie 24:03

Okay, well, it's not, because guess what else is coming back? The. It never went away. But the, the alternative minimum tax for corporations, you all probably know, that went away in 2017. It did not go away for individuals. So it is a second tax system that requires everybody to basically do their taxes twice. Now, under the TCJA in 2017, the number of affected people dropped sharply. The biggest reason for that was the limit on state and local taxes, the SALT deduction. In order to find the alternative minimum tax income, you have to add back in your SALT deduction the untaxed income or interest. I mean, things like that. So this year, because salt went up to, up to and including 40,000 for some people, it's going to capture a lot more people in the alternative minimum tax, which goes up as high as even 42%. So that's another one that they're going to sneak around. Imagine what we pay to our various and sundry tax professionals to do our taxes every year, and imagine what part of that is doing them twice. Couldn't we just get around that? And, you know, it all started because somebody was mad at a couple hundred families who didn't pay enough income tax, because what did they do? They adhered to the US Tax code. So what should you do? You should change the US Tax code. It only takes an act of Congress, but no, an act of Congress was much more complicated by inventing the alternative minimum tax. It didn't go away, didn't solve the problem. And it was set to hit about 7 million people this year. It's going to be a little bit less than that now that they've calculated it, but that's up from a couple hundred thousand. So it's going to add millions of taxpayers into the alternative minimum tax rules. Now, if you want to see tax planning made even harder than it is, throw that one in there for sure. And who does a lot of tax planning? People that make more money. People have more expenses. In other words, the target market for the amt. So that's my little bit of tax bad news. I have other tax bad news and other tax good news and other types of bad news.

Adam Van Wie 26:09

Wow, that's a big.

Joey 26:42

On that thought before you leave that, you know, one of the things that we talk about, whether it's Medicare brackets or AMT and things like this, you know, so many people, I imagine a lot of listeners give to their church, give to other organizations they care about, whenever there's a moment like this where there's A broad tax break. But there's all these tax traps behind it. You really got to be careful for. It just escalates or elevates the value of being thoughtful about how you give. If you're going to give 100,000 or 10,000 or whatever it is, you know, giving it in a specific way after some tax planning can really make a material difference in your tax savings on top of the goodwill that you're already going to give.

Steven H Van Wie 27:22

Speaking of things like that, too, the new deduction for people 65 and over 6,000 a piece, that is not dependent on how you file your taxes or anything. It is phased out. And it's phased out at a pretty low level, especially for a couple who both have incomes, RMDs, anything like that. So it's not as impactful as it would otherwise be. And it's. I wish I would stop saying this. It did not eliminate tax on Social Security.

Adam Van Wie 27:56

Yes. That really annoys me, too.

Steven H Van Wie 27:59

I believe in truth and labeling, and I'm just as adamant about it. If it's Donald Trump or the Democrat Party, I don't care. I want it to be truth and labeling. It is an additional seniors tax deduction. Fine. It's not that I'm not willing to take it.

Adam Van Wie 28:18

No, I like the deduction. Just. It is not eliminating tax on Social Security. That's just a complete bs.

Steven H Van Wie 28:19

Yeah, absolutely.

Steven H Van Wie 28:26

Nor would you want to. That's what bothers me. If you stop taxing Social Security, every penny Americans pay on their Social Security earnings is directed directly back into the system, which is already way too close to going broke. That would accelerate it. It seems like every time they. They discuss this whole problem, they get it exactly wrong. Everybody suggests things that are going to make the system go broke sooner, not later. What's the alternative to that? There's only one tax. The rich. They can't figure it out. And I don't know how they're going to do it, but they're going to do it. But I wish we would just do something once in a while that was transparent and made sense to the people and the chances of that in Washington, D.C. goose egg. So just warning you about a few things. I'll have a lot more over the next couple months about what gets passed and what doesn't get passed and how it's targeted to the wrong people, all that stuff. But that's what we've got for now. And it's not pretty.

Joey 29:34

In my book, one of the best weapons, you know, when you're looking at these deductions and you think you're phasing out or you're about to be over Medicare or any of these other things. One of the best weapons that you have is gifting highly appreciated stock, which I think in the current environment affects more people than other periods of time. You have a lot of people who have huge gains in Nvidia. You have a lot of people who have huge gains. I mean, there's just a variety. Any of these big tech stocks. And if your financial plan says, hey, I'm good, and you're planning to give anyway, just don't forget that you can gift appreciated stock, which helps you in two ways. One, it's like from a tax deduction perspective, it's the same as if you gave cash. If you give $10,000 of appreciated stock versus 10,000 of cash, it's the same as far as calculating a tax deduction. But the thing it also does is it eliminates your need to pay capital gains tax on that appreciated stock as well. So there's a hidden tax benefit behind it. I think people forget about that.

Steven H Van Wie 30:29

Yeah. In fact, it even applies in a little different manner to people giving their children or the grandchildren or something. They might want to give them cash. So they sell some stock and give the kid cash. Don't do it that way. Give them the stock and let them sell it. Their tax bracket will either be zero or darn little. And yours is just going to. Just going to go up because of the sale. So tough one. Bosco, we got about a minute maybe. Let's set it up. Good morning, Bosco.

Joey 30:43

Right, right.

Caller 31:02

Good morning.

Bob 31:02

Good morning. How about that Amazon?

Steven H Van Wie 31:06

Not. Not a bad day, huh?

Bob 31:09

I agree. And it came just when I needed it.

Steven H Van Wie 31:14

Well, I'm glad.

Caller 31:15

A bunch of it.

Bob 31:15

You know, I'm glad we could provide that.

Adam Van Wie 31:18

Yeah. For most of the year, Amazon had been lagging behind the S and P. Exactly. Until recently.

Steven H Van Wie 31:22

Yep. So what's on your mind exactly?

Caller 31:26

I wanted to try one and.

Joey 31:29

One.

Bob 31:30

And three quarter million, let's put it that way.

Steven H Van Wie 31:32

All right. 1.75.

Steven H Van Wie 31:35

Still a little low.

Bob 31:37

Wow.

Steven H Van Wie 31:38

My conclusion there is people aren't quite as dumb as they seem sometimes because you're not wealthy at 1.75 these days unless you got an awful lot of permanent income built into it. So I appreciate it, but we got to keep going. All right. We got to run. Anything else on your mind? I'll put you on hold through the break if you want to talk after.

Bob 31:57

No, I'm good to go. I'm good to go. Good program again. Thank you. Thank you. Now I was fun.

Joey 31:59

It's good.

Steven H Van Wie 32:01

Thanks so much.

Steven H Van Wie 32:06

You never know when you're going to hear from him. All right, we got to take one more quick break. We'll be right back. This is the Van Wie Financial Hour. 

Steven H Van Wie 32:10

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie

Adam Van Wie 32:12

I'm Adam Van Wie. 

Joey 32:16

And I'm Joey Loss.

Steven H Van Wie 32:17

And we remind everybody, trivia question is still out there. How much net worth would the average American desire to feel financially wealthy? We know that it's above 1.75 million and we don't know how much higher. So you want take in? Give it a shot. Just pick up the phone and Mike already has. Good morning, Mike. What's happening?

Caller 32:41

Hey, good morning, guys. Well, what's happening will probably be at 8 o' clock tonight. I'm from Brooklyn, so I'm a Dodger fan.

Steven H Van Wie 32:50

Oh.

Adam Van Wie 32:50

Oh, yeah. That's a. Yep.

Joey 32:53

Close one last night.

Adam Van Wie 32:54

Yeah.

Steven H Van Wie 32:55

Yeah, no, I used to be a Braves fan, too, but then they moved and now I'm not.

Caller 33:00

Well, Freddie Freeman, I don't think they should ever let him go, but that's another story. Yeah, I'm going to take a shot at the trivia. But before I do, I'm just going to mention something and forgive me, it's not exactly financial, but earlier this week, Tommy Tuperville, who's a senator, I believe, and he was once the coach of Ole Miss at one time and he gave a two hour speech to an empty chamber of Congress about the threat of Muslim extremism. And he's not kidding what's going on in Dearborn and other places, I think people should start being more aware just for the personal opinion. And as a former New Yorker where nobody's parents or grandparents in the 50s or 60s would have ever given this guy Mondame a second look, it's just like people have either drank the Kool Aid or the devil is prevalent. Something's going on.

Bob 33:10

Sure.

Steven H Van Wie 34:09

You are so right. All right. Do you want to take a shootout, a number?

Caller 34:13

I do, I do. I'm going to. If Fortune, if what I read in Fortune magazine is correct, 2.3 million.

Steven H Van Wie 34:23

Fortune nailed it or you did or we did or whatever.

Caller 34:27

Everybody nailed it. So let's do what you guys are very good at. Let's give it to charity.

Steven H Van Wie 34:34

You are a fine gentleman and we will do exactly that.

Caller 34:37

Okay. Have a great weekend, gentlemen.

Adam Van Wie 34:39

Thanks, Mike.

Steven H Van Wie 34:40

Appreciate the call.

Joey 34:41

I think Mike's the only caller that has a better batting average than Freddie Freeman.

Steven H Van Wie 34:45

Well, he's

Steven H Van Wie 34:48

just an adamant reader, just always reading things and absorbing information. But he's got a memory that would certainly belie his age. At most people's memories, at any age, he has good recall. So it's always fun. And you know, I've been doing this a long time. There's always a point to the trivia. There is a lot of range in what makes somebody actually wealthy or feel wealthy. 2.3 million is not a bad number. But if you are going to live off of that, you know, 4% of that

Steven H Van Wie 35:25

80, some 90,000,

Steven H Van Wie 35:29

that's not going to do it. So most people don't even know how to compute their net worth. And it starts with the value of all your tangible assets in your home, the unmortgaged part of your home and all that stuff. But there's also something that I call equivalent net worth that we talk about once in a while when you've got a cash flow from something that's going to last a lifetime. You know, pension, Social Security, anything like that annuity, that's the same as having a pile of money. So if you've got one of those, just multiply it by, multiply your annual take by 25 and that's what a 4% withdrawal rate would give you. So it's very, very difficult to actually compute a reasonable, honest and useful net worth. But at least my point for today is at least people are finally starting to get the idea that $100,000 isn't going to do it. We've seen this way too often. People come in with a little bit of money and that quit my job and live happily ever after. 2.3 million is not a huge number, but it's a lot better than Americans used to do.

Joey 36:37

I think you made a great point in there. We have a fair number of clients who are like retired firefighters or retired military and they've got, you know, maybe not the biggest net worth because they never made top dollars compared to the private sector. But if you did that equivalent net worth calculation you're talking about, a lot of them are wealthier than a lot of the private sector clients we have. One in one in particular comes to mind. He's got, you know, he, he certainly paid his dues and he's got full disability. It's like four or five thousand tax free a month for life. I mean, that is worth over a million dollars, you know, and so when you put that into the net worth picture, some of these young veterans who are in their late 30s, early 40s are actually quite wealthy in real terms.

Steven H Van Wie 37:18

My mom had that. She had an equivalent net worth of about a million bucks. The difference between a real net worth and an equivalent net worth is when she dies. So did it.

Adam Van Wie 37:28

Yeah. That's the downside.

Joey 37:31

That's a great point of smoke.

Steven H Van Wie 37:33

Just point of interest, how. What is the net worth of most people in this country? And it actually peaks when you're between 70 and 74.

Adam Van Wie 37:44

Yeah. Right before you really start the drawdown phase.

Steven H Van Wie 37:48

But it peaks at $438,000.

Adam Van Wie 37:52

So. Yeah, I mean I think we have a number of clients that have not substantially more than that and live very comfortably. But it all depends on how much Social Security you get. Is your house paid for? Do you mind driving used cars that are paid for? I mean there's so many factors that go into this, but if you. There are a lot of people that can live comfortably on 6 to 800,000 plus a couple of Social Security payments. So it's not like you have to have 2.3 million. It just really is about lifestyle.

Steven H Van Wie 38:17

Absolutely.

Steven H Van Wie 38:23

Yeah. And along those same lines, here's an interesting one. Susie Orman managed to lay another egg.

Adam Van Wie 38:30

That's two and a couple doing that more and more lately.

Steven H Van Wie 38:33

Yeah, it's crazy. Now I know that she's not young anymore, but she's not crazy. But she's just forgetting some of the lessons she learned so well along the way. And she personally is very wealthy, as you know. Very wealthy. Although she can't seem to quite put her finger on at all. But she says about annuities, somebody says might it make sense to buy an annuity with some of her $7,000? Not her, Susie, a client. A 50 year old client in taxable brokerage assets for tax purposes and income. And Susie replies no, no, no, because it never makes sense for tax purposes. Well, that's funny, I thought when you bought an annuity that was going to pay you later, it was tax deferred the whole time.

Adam Van Wie 38:51

Very. Yeah.

Adam Van Wie 39:27

Yeah, there are times that makes sense. It's not my favorite planning tool, but there are times to use it and.

Steven H Van Wie 39:32

There is no never in financial planning that I know of, or at least very few. We could probably invent a couple. But she's. I don't know what's getting into her, but I just thought I'd pass it along. Nothing personal. The only reason I bring it up at all. I've spent years and years and years following Susie and she was one of the first people I ever started reading and I've agreed with her something in the 90s, percentage wise of everything I've ever heard her say. But lately she, as I said, she laid two eggs in two months. So I don't know.

Joey 40:07

It's a lot easier to sell absolutes when you have a podium that large. You should never fill in the blank. It's pretty much.

Steven H Van Wie 40:17

That'S an inherent risk of giving advice to a broad audience. Masses. When people ask me something, I always remind them and say, you can ask me anything you want, but I'm going to answer it with a question and then another one.

Adam Van Wie 40:30

Yeah, but I, I guess like you're right though, like on her pulpit it's. If you're, if you're talking about the average person, should I put money in a 401k or a deferred annuity? Obviously the 401k.

Joey 40:42

Yeah, yeah. And I think, you know, Dave Ramsey has, you know, massive platform, you know, has to do the similar thing. And over time I've come to have a softer stance on his approach to things. Like, I think it's, it makes sense for who he's talking to and what he's trying to do. Is it ever a bad idea to pay down your house? I mean, sometimes there could be better options available to you, but nobody's going to look back and say, I really wish I hadn't decided to fully own my house, you know, so once you.

Adam Van Wie 40:48

Yeah.

Adam Van Wie 40:56

Right.

Steven H Van Wie 41:09

Pay off your house, you don't have to leave it paid off either.

Joey 41:13

Right. You can always make it a.

Steven H Van Wie 41:15

Speaking of equivalent net worth, you can turn your house into a cash flow stream real easily.

Adam Van Wie 41:19

Yeah. These days you can. Again, another tool that is something you could fit in a financial plan, but it shouldn't be the. I think if it were Suze Orman answering the question, no. She would probably say, no, you should never do that. But there are lots of reasons why you should do it. It's just for the right situation.

Steven H Van Wie 41:38

Yeah. You know, there are a lot of people as they get older, you're talking, no one's talking to you, you're talking to one of them.

Steven H Van Wie 41:46

Paying it off makes no economic sense, but it starts to get more comfortable feeling every day. There'll come a time, I'm sure, but not yet. Excuse me. All right. There's $2 trillion out there in unclaimed 401ks and there are ways for you to get them. And if you, if you think there's anything out there that you don't find or that you can't find or can't remember, and even if you don't think so? There's a retirement savings lost and found database at the government. Just Google that and it'll pop right up. Just check. You know, not everybody has to forget money. But $2 trillion in forgotten 401ks, it's sad people. Come on, get on. No one's going to take care of you any better than you do. Speaking of which, 401ks, our generous government is probably going to give us another $500 for our 401k deferrals. And so far the word has come down. Know how much they've raised in the IRA donations?

Adam Van Wie 42:54

Zero. Yeah, of course.

Steven H Van Wie 42:55

Yeah, that's it. How can you go through what we've been going through inflation wise and come up with a stupid number like 0 for 401 or for IRAs? They're already way behind the company sponsored system.

Joey 43:13

They're just too attached to attractive round numbers like make it 8,250 if that's what makes sense. Let people that 250 matters.

Steven H Van Wie 43:19

You know, I've got a million old sayings as you know and one of them is no one has ever paid a tax professional to compute, compute their taxes. You pay a tax professional to compute your taxable income and plug it in a computer does that for you. Now getting to the taxable income, that is a big deal and that's why you pay these people. So just something to remember, anybody can calculate their own taxes, but you better be right about what you're taxing and how you're taxing them. So all right, well those are fun things to think about toward the end of the year. We'll be on the tax thing real hard for the next several weeks I'm sure because of the year end coming. All right, well have a good day. We'll see you next time at the exact same place. Thanks for listening. This is.