Navigate the maze of financial markets with us as we scrutinize today's lofty equity valuations and the ever-looming bubble debate. Burton Malkiel, the eminent author of "A Random Walk Down Wall Street," joins the fray, sharing his insights on the Federal Reserve's strategy and its impact on job creation and unemployment. We crack the code of market trends amidst COVID-19 and the Ukraine conflict's global economic aftermath, sifting through the complexities of fiscal policies, supply chain woes, and inflationary pressures. Learn how artificial intelligence could supercharge productivity and change the game for stock market investors, and discover why gold and Bitcoin may be the sleeper hits in your store of value search.
Ever wondered why the VanEck Gold Miners ETF seems to march to the beat of its own drum, independent of gold prices? Or how some real estate investment trusts (REITs) are not just weathering the storm but thriving in today's economy? We unravel these mysteries and spotlight four REITs that marry attractive dividends with robust fundamentals. And because financial health goes hand-in-hand with physical well-being, we guide you through the personal finance implications of long-term care planning, underscoring the importance of proactive health management. Don't miss a moment of this episode, filled with the kind of insights that could redefine your investment strategy and fortify your financial future.
** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.
For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure **
To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form
Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern
Navigate the maze of financial markets with us as we scrutinize today's lofty equity valuations and the ever-looming bubble debate. Burton Malkiel, the eminent author of "A Random Walk Down Wall Street," joins the fray, sharing his insights on the Federal Reserve's strategy and its impact on job creation and unemployment. We crack the code of market trends amidst COVID-19 and the Ukraine conflict's global economic aftermath, sifting through the complexities of fiscal policies, supply chain woes, and inflationary pressures. Learn how artificial intelligence could supercharge productivity and change the game for stock market investors, and discover why gold and Bitcoin may be the sleeper hits in your store of value search.
Ever wondered why the VanEck Gold Miners ETF seems to march to the beat of its own drum, independent of gold prices? Or how some real estate investment trusts (REITs) are not just weathering the storm but thriving in today's economy? We unravel these mysteries and spotlight four REITs that marry attractive dividends with robust fundamentals. And because financial health goes hand-in-hand with physical well-being, we guide you through the personal finance implications of long-term care planning, underscoring the importance of proactive health management. Don't miss a moment of this episode, filled with the kind of insights that could redefine your investment strategy and fortify your financial future.
** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.
For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure **
To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form
Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern
And now introducing Mr Keith Lanton.
Keith Lanton:Good morning. Today is Monday, march 11th, almost half way through March, third month of the year. Going to talk this morning a lot about the financial markets whether or not the equity valuations have gotten too far ahead of themselves. We'll talk about bond market and Federal Reserve and whether or not we will see interest rate cuts, whether or not we may or may not see those interest rate cuts. We'll focus on some of the talk over the weekend which had to do with whether or not markets are in a bubble, approaching a bubble. Barron has a lot to say about US equity market valuations.
Keith Lanton:An interesting guest commentary from Burton Malkiel, who is the author of a random walk down Wall Street, now in his 50th anniversary edition, so he's seen lots of financial markets and is a believer in efficient markets, and his views I think could be interesting.
Keith Lanton:And we'll talk about gold, as Bitcoin makes new well time highs this morning hitting 71,000. We'll talk about that, barbela Srella Gold, the old store value and alternative currency in gold stocks. And I'll also talk a little bit about income and be talking about real estate investment trust or REITs. And finally I will sum things up and talk about long term care and whether or not long term care insurance may be appropriate for you into hedge your portfolio. So, to get started, I am going to try and peel us back and give us a good overview of where we are and where we've come from. This is after last week, where we got the employment report on Friday, which showed that we created more jobs than expected, although there were revisions the previous months and we also saw an uptick in the unemployment rate and the inflation and the jobs market highly connected and very dependent on Fed policy and also indicative of the strength of the economy and therefore affecting equity prices.
Keith Lanton:Equity prices as we all know, have been on a tear here in the United States, despite the fact that last week we saw that the Dow have its worst weeks since October, and so the core. Nevertheless, markets have significantly already in 2024, on the heels of a very strong 2023, and there is a growing anxiety about bubbles, overheating of the US economy. And I'm going to peel us back now and give some commentary on where I think we are and how we got here. I think financial markets are in the final innings of what began with COVID, or we are in the beginning of the end of a COVID era.
Keith Lanton:Covid, in my opinion, resulted in three market phases, the first being the shutdown, the second being reopening, and then the third, which we are in the late innings of, is the aftermath, the lingering effects of the fact that those first two iterations occurred. Initially, covid brought a shutdown followed by super robust fiscal policy. In the end, the fiscal policy swamped the effects of the shutdown and we got lots of money chasing, initially goods and then, once the economy reopened, there was a lot of money chasing services, things like concert tickets, vacations, airline fare, etc. This was all inflationary, partly because we created all this demand and secondarily because COVID also had the other effect of causing supply chain disruptions.
Keith Lanton:As folks were out of work, we couldn't move these goods around as efficiently and this also exacerbated the inflation. But the supply chain inflation as time went on and supply chains were restored proved to be transitory. Now, just as the transitoriness of the supply chain was being worked its way back into the economy, we did get another outside shock, and that was to our supply chain through the after effects of the war in the Ukraine and the sanctions that were imposed against Russia, and this caused certain goods and commodities to not be flowing as freely. My opinion is the reality is, over time, the Russians and the rest of the world figured out a way to get these goods reallocated, despite the sanctions they were imposed by the West, and some of those costs in the end are higher as they are transported through various additional stops. But nevertheless, these goods and services are making their way into the global economy. So, as things progress, we have the war in Russia in 2022, war in Ukraine, initiated by Russia in 2022.
Keith Lanton:So it's 2022, we have big fiscal stimulus. We have supply chain issues and shortages. We got lots of money chasing to new goods and services and we say to ourselves and, most importantly, the Federal Reserve says to itself what do we do? And with the Federal Reserve does, looking obvious in hindsight, as they say we've got to raise interest rates and we need to do it fast. Things are out of whack. We've got tremendous demand. We've got supply chain problems. We can't even meet this demand. We've got inflation going crazy. So we need to raise rates and we need to do it quickly. And you know what? We also got to do some quantitative tightening, meaning that we've got to reduce the supply of treasuries on our balance sheet because we got to slow this inflation down fast. And 2022 into 2023, we see the Federal Reserve aggressively raise interest rates.
Keith Lanton:Now it's 2023 and the rise in interest rates is causing some sectors of the economy to slow down, specifically interest rate sensitive sectors like housing, instruction and real estate feeling the effects most prominently of the rise in interest rates. But, different than in the past, this rise in interest rates is not enough to stall the economy, perhaps because there's still enough gas in the tank as a result of all the fiscal stimulus that took place, with the benefit of hindsight, to keep this economy moving along, even with the added headwind of of interest rate increases, also in 2023. Last year, we recognized that AI, artificial intelligence, may be reaching a tipping point and suddenly markets are very excited, perhaps giddy, about the potential that we will see increased productivity, which will tremendously benefit margins and stocks and growth rates, and equities continue to move higher as a result of a there being enough gas left in the gas tank from all that fiscal stimulus, some of which is still ongoing, and the excitement about artificial intelligence and the potential for that to be transformative in terms of production. Then we see equities continue to rise until late 2023, as well as into this year, 2024. So now it's 2024 supply chain disruptions of years and the world has quote unquote adjusted to the effects in the economy of the conflict in Ukraine.
Keith Lanton:So what's happening is inflation is easy. Despite that, job growth remains strong, but wages are moderating and, arguably, perhaps the fact that wages are not taking off in the face of increased job growth could be the result of this other politically sensitive issue Immigration. Perhaps some of these folks who have entered the US are finding jobs and therefore they are making it a little bit less wage pressure, as they are willing to work for less. So here we are now. It's March of 2024 and the Federal Reserve is at this inflection point, where inflation has declined, arguably is coming down. The job outlook is still strong, but not as robust as it was in 2022-2023.
Keith Lanton:We have an extremely strong stock market, something that perhaps causes the Fed to be concerned about overly giddiness or excitement, and therefore what we have is we have the Fed holding the Fed funds, rated five and a quarter to five and a half percent, but inflation arguably somewhere in the neighborhood of low threes.
Keith Lanton:Therefore, we have a very high real interest rate. So what is the Fed to do given this backdrop? Well, the Fed is now navigating the narrow path between euphoria on the upside and the potential despair or the abyss that some are calling for, if the economy were to tip over and we were to be reminded of the 2008-2009 Great Recession or the 2000.com bubble. If we keep interest rates too high for too long, we keep that real interest rate too high, we overly compensate and we unnecessarily push ourselves into recession, which is where the Federal Reserve is now navigating that path today, and it looks like today, based on the information that we are getting, that we are expected to see a Federal Reserve that is going to raise rates two to three times, perhaps this year, and we will get some critical data later this week, specifically tomorrow, when the Bureau of Labor Statistics releases the consumer price index for February.
Keith Lanton:We can sense the estimate is for a 3.1 percent year-over-year increase, matching the January figure. Core CPI, which excludes volatile food and energy, is expected to rise 3.7 percent, two-tenths of a percentage point less than previously, and the annual change in the core CPI would be at its lowest level since May of 2021. So, against that backdrop, we take a look at where financial markets are this morning and what is going on specifically today. And we've seen Dow futures this morning down about 160 points as we continue to see some weakness following the sell-off last week, and we see S&P futures down about 22 points and that is that futures down to 88 points. And we are going to digest what the markets get this week in terms of information on inflation, which is going to be really important, on Federal Reserve policy and therefore, potentially, interest rates and therefore potentially how we value the markets, specifically the stock markets, with that inflation and interest rate information being absorbed into the picture. A 10-year yield on the Treasury is at about a 408, roughly unchanged, oiled down slightly this morning. The two-year note of one basis 0.25450. Today, you know the issue of economic data, of note In corporate news Boeing stocked down about two and a half points.
Keith Lanton:The criminal inquiry being opened into Boeing. According to the Wall Street Journal, nvidia this morning down about 1%, down about seven points. Some copyright lawsuits accusing Nvidia of using information that they shouldn't have in order to do some artificial intelligence calculations and therefore they're being sued. We're seeing this artificial intelligence lawsuits permeating the space here as the courts have to decide how to treat artificial intelligence and the use of information in order to create other information from that information and what the copyright legality is, and that is something that was going to play out in real time over the next several years. Coinbase this morning up about 17 points about 7% as Bitcoin hit a new record high at 71,577. Netflix this morning getting an upgrade, perhaps on the heels of the Academy Awards last night, where Oppenheimer won Best Picture, seven Academy Awards. And, speaking of Oppenheimer, the company Oppenheimer reiterated and now perform on Netflix and raise their target to 725 from 615, and applied materials this morning down about one point, despite them raising their quarterly dividend by 25% to about 40 cents a share.
Keith Lanton:In the Asia Pacific region we got a lot of diversion. China and Hong Kong markets up strongly, anywhere between 7.10 of a percent and 1.4%. Japan, though, down about 2.2% on concerns that Japan is going to move away from their negative interest rates and start raising interest rates, perhaps as early as this week, or start raising them from the negative rates to perhaps zero or even positive, if you can believe that. Today, after the close, oracle and Adobe both reporting earnings. On Thursday, the Census Bureau is reporting retail sales for February, looking for that to increase 7.10 of a percent month over month, after declining 8.10 of a percent last month. And then on Friday, university of Michigan releasing consumer sentiment index for March. In February, consumer expectations of the year ahead inflation was 3% close to a three year low, suggesting that inflation expectations are well anchored.
Keith Lanton:So back to the theme that we began this discussion with earlier and then is equity market valuation and Barron's front page headline story. Certain stocks had valuations that will be hard to stain. Barron saying the technology stocks propelling the S&P 500 have raced ahead while leaving much of the rest of the market behind. Some key takeaways from the Barron's editorial team valuations on the priceless tech stocks based on profits and sales are approaching the peak values reached in late 2021, before the big NASDAQ sell-off in 2022. Stocks like Microsoft are valued at more than 10 times estimated sales 10 times sales used to be considered pricey and some stocks like Cadence Design Systems, cloud Fair and Nvidia are trading for nearly 20 times projected 2024 sales. Once upon a time, 10 times sales was viewed as pricey. Scott McNeely, the former CEO of Sun Microsystem, said 20 years ago at 10 times revenue.
Keith Lanton:To give you a 10-year payback, I have to pay you 100% of revenue for 10 straight years in dividends. That theoretical exercise is infeasible because companies have significant costs and can return a fraction of revenue to investors annually. Mcneely's point was that at high valuation, investors are relying on long payback periods to justify their holdings. That 10 times sales level is now widely breached, as favored growth stocks regularly trade for as much as 20 times sales. About 10% of the companies in the Russell 1000 are trading for 10 times sales or more, and it's not just tech companies. Five companies with the highest price to sales ratio in the S&P 500 that have market values of 50 billion or more include Visa. Eli Lilly, robotic surgery leader, intuitive surgical arm holdings.
Keith Lanton:Windstop yes, the company that makes wind Costco and even the old, tried and true stock, wd40, symbol WDFC all traded lofty multiples. Now, lofty valuations haven't kept many of these stocks from making huge gains. In video, of course, is more than tripled in the past year, despite having a consistently high price to sales ratio, as revenue and earnings have blown past estimates. And if you can grow your revenues at a super fast clip, well then, training at 10 times sales perhaps isn't as alarming, because those sales are growing so rapidly that that 10 times figure is not as relevant. The same can be said for Eli Lilly, as investors have ratched up their expectations for side drugs for the rest of the decade. But the risk of owning high flyers was illustrated by the recent drop in Snowflake, the hot data aggregation software company that has one of the loftiest valuations of any sizeable public company since it went public in 2020. Its stock is down 25% since late February when it released mild, disappointing financial guidance for 2024, less in being that when a stock trades 20 times sales and for over 100 times earnings, it is vulnerable to even a small miss. Now we talked about the fact that Nvidia is growing rapidly. So stock like Nvidia, which is trading for 36 times projected earnings. Based on that multiple does not look ridiculously expensive as it does when looking at sales, and it could be argued that that's because Nvidia is growing very rapidly, both its earnings and its sales. But if a company is not growing as quickly as Nvidia, or that growth rate is expected to slow down, then you have to be very mindful of what those ratios look like. Nvidia's net interest margins in the latest quarter hit 56%. That trounces apples 25% and the average company in the S&P 510%, and is close to the Visa and MasterCard, who arguably have quasi monopolies in their businesses. But there are issues even for Nvidia. Concerns about its revenue growth Wall Street expects a slowdown to 20% in 2025 and the sustainability of its margins, which have more than doubled in the past year, are at risk. Those risks don't seem to be reflected in the stock, which gained 10% during the past week, despite a pullback on Friday hitting 900 last week.
Keith Lanton:Another record high Nvidia, is up 80% this year. Stock is valued at $2.3 trillion. The typically bullish ARK investment chief, kathy Wood, warned about Nvidia last week in a letter posted on her firm's website. She cited Nvidia's guidance for sequential deceleration in growth and falling lead times for its processing chips to 3 to 4 months, from 8 to 12 months. Another explosive stock has been Eli Lilly, whose stock is up about 150% in the past year. Eli Lilly is expected to earn $12 this year, next year expected to earn $18 and then in 2027, they're expected to earn $30 a share, which means it's currently trading at $25,000 and $27,000.
Keith Lanton:Earnings. Its reliance, though, on diet drugs makes it vulnerable to unexpected side effects from the medicines, other setbacks and competitive threats. So not a lot of room for error built into these lofty valuations. Restaurant stocks typically trade at market PE ratios. Mcdonald's is currently trading at 23 times earnings in a market that's generally valued around 21 times earnings. We have a wind stop. In a class by itself, wind stop is valued at nearly 20 times projected in 2024 sales. It's trading at over 100 times earnings. That is a big valuation for a company that is expected to grow profits in revenue by about 25% in each of the next two years.
Keith Lanton:Even a great company like Costco, it could be argued, is trading at the elevated levels. This is it, despite the fact that Costco pulled back the end of last week as well on the heels of their earnings and the retirement of their CFO. Costco is trading around $730 per share, up 50% in the past year, and Costco is now trading at 45 times projected profit. Costco is a great business with a fanatically loyal customer base, renewal membership rate at over 90% and arguably Costco has a really deep moat due to their rock bottom prices. But Costco has historically traded around 35 times forward earnings. Currently it's trading around 45 times forward earnings and this is despite. The company has a low double digit projected earnings growth rate in the next two years.
Keith Lanton:Now if you're looking for the award for the most expensive stock, erin said that may go to arm holdings. She trades at 35 times sales based on projected revenue in its fiscal 2025 year. The company does have an attractive capital-like chip design business and did report strong results in December. But Barron's argues its valuations off the charts based on both sales and earnings, with the stock trading for 90 times projected earnings of $1.50 per share. And then earnings figure include sizable stock-based compensation. Of course, arms thin float. It's just 10% of the stock outstanding may be contributing to its high valuation, and many companies in the tech sector are even more expensive than they look because they continue to emphasize an earnings measure that includes significant employee stock compensation. A range of companies report inflated non-gap earnings measures, including Tesla, nvidia, salesforce and Oracle, and the difference between gap and non-gap earnings can be significant. Some tech companies, like Microsoft, meta and Alphabet, only report gap earnings. So if you're looking at the earnings from those companies and you're comparing it to some others, you may not always be comparing apples to apples.
Keith Lanton:Speaking of these valuations in the market, I said I was going to bring up the thought process that Burton Malkiel, who wrote a random walk down Wall Street and what he has to say about these valuations he's generally viewed as a rational thinker on equity valuations and he had a guest commentary in Barron's and he says the market has that dot com feeling, but he says don't bet on the bubble bursting. So he remains cautiously optimistic, not suggesting there can't be a pullback. He's not suggesting that things don't look exactly like they did in 2000. He says the US stock market has been on fire. S&p is up 24% in 2023. Games continue into 2024. And full of stocks associated with artificial intelligence have been on a tear.
Keith Lanton:And of course, nvidia, poster child for the games in the Magnificent Seven. He says these results have led some market observers, such as Jeremy Grantham and Jeffrey Goonlach, to declare the stocks are in a bubble and overvalued, just as they were in the dot com bubble at the start of 2000. He says, to be sure, valuations are extended. Cyclically adjusted PE ratio, or CAPRATIO, is at 34, double its historical average at 17. Earnings multiples, as we just mentioned, at 23, well above historical PE ratios of 16. No wonder some see clear parallels to the internet revolution and expect that a similar collapse is likely. But he says this isn't early 2000. Valuations were considerably higher at the start of 2000 than they are today. That CAPRATIO is at 44, 10 points higher than today. One of the most highly touted tech stocks of that time had a triple digit PE based on trailing 12 month earnings. The average PE in a Magnificent Seven today is 42.
Keith Lanton:He says this isn't to argue that the stock market is exhibiting none of the irrational exuberance that Fed chair Alan Green-Scramb described to the internet bubble. Trees don't go to the sky and future competition may well encroach in NVIDIA's leading position. Evidence and transformative technologies have often proved unrewarding for investors. Railroads in the 1850s greatly increased communication and commerce, but the accompanying speculative bubble in railroad stocks collapsed in 1857 causing punishing losses. Airlines and television manufacturers transformed the economy, but early investors lost money. It's important to understand and realize that the extent and length of market bubbles can be ascertained only after the fact. He says it was late 1996 when Greenspan coined the rational exuberance, but the bubble didn't deflate until early 2000. Investors kept putting money in the market after Greenspan's warning, earned generous returns.
Keith Lanton:He says there are no doubt many similarities to the internet bubble, but today's market may better resemble the market in 1996, when prices continue to rise for years, than early 2000, when prices collapse. He goes on to say the AI revolution is only in the early innings. Most importantly, what's his opinion of what an investor should do? He said valuations are rich and long run returns are likely to be lower than we've recently experienced. But the stock market likely remains the best vehicle for growing wealth and young people investing regularly to build a retirement nest that can take advantage of dollar cost averaging. If there is a market decline, they will be buying more, but older investors should hedge against the possibility of a sharp down draft of stock prices. Those investors who have taken advantage of tax favored retirement plans and now have substantial required minimum distributions should consider reducing their equity exposure. He advises that money required for 2024 RMDs should be reduced to a minimum of $1,000 be invested in short-term treasuries of federal money market funds. Similarly, 2025 and 26 RMDs invest in short-term treasuries where you'll be guaranteed a positive rate of return. Investors should never dollar-cost average on the way out, because it means selling more of your nest egg if the markets decline.
Keith Lanton:So mentioned we discussed different asset class. Let's talk about the asset class of the precious metal gold. Gold is broken through. We are seeing gold prices up at around $2,200 an ounce and this is a record high for gold. You could be forgiven if you didn't notice.
Keith Lanton:With the rest of the equity markets trading at or near record highs, a lot of attention has not gone to gold, but Barron saying that the gold miners could be the next stocks to make a meaningful move upward. The precious metal gold competition for attention isn't just coming from stocks anymore. Fans of alternative currencies continue clocking the Bitcoin, which also soared to records this past week, even this morning sending another record. So why bother with the so-called Barbellus relic If gold isn't the shiny thing anymore? Why care at all about the companies that mine the metal? Even if gold hits new highs? The Vanick gold miners exchange traded fun, better known as GDX, trades at roughly half of what it did back in 2011. If we go back to 2011, the Spiter Gold shares ETF at that time had assets of $76 billion, which actually exceeded the assets of SPY or the S&P 500 ETF. Today, gld has assets of about $56 billion and SPY is about $500 billion. So in 2011, gld had assets greater than SPY. Today it's about 10% of SPY. If you're looking for a contrarian indicator and this is occurring even as gold hit record prices this may be the indicator that you are looking for.
Keith Lanton:Despite the outflows from gold ETFs, bullion has nonetheless continued its bull market. As investors and speculators abandon gold, central banks have been buying. They added 1,037 tons last year, just shy of the previous year as 1,082 tons. China continues to be an active buyer, now holding over 2,200 tons of gold. The other disconnect has been that the record bullion prices have been being logged almost daily, yet the prices of the shares of miners have been stagnating and in many cases even declining Over the past two years. The S&P 500 is up about 20%, while GDX is down 20%. The entire gold mining industry stock market value is about $300 billion. That's less than Home Depot, for example. Gold mining stocks are arguably valued at a deep discount to current gold prices, which sets the market up for a potential mean reversion.
Keith Lanton:Jeep stocks often remain cheap for longer than contrarian buyers anticipate. What they typically need is a catalyst to move them higher and, if you look back historically, one of those catalysts has been an easing of monetary policy. Now, monetary policy has not eased as quickly as markets expected. But the Fed is expected to pivot and if you look at previous Fed pivots, like in 2000, from 2000 to 2008, gdx was up 400% when the Fed was cutting rates. In 2016, gdx was up about 238% from January to August of 2016. And when the Fed was cutting rates in March to July of 2020, gdx almost doubled and was up about 200%. So perhaps, with the potential for rate cuts coming, perhaps the catalyst is there for some of these gold mining stocks to appreciate, as they have not followed the price of gold higher.
Keith Lanton:Taking a look at income, discuss an income potential opportunity. Barons discussed four REITs real estate investment trusts to consider buying. Now. Shares of real estate investment trusts have trailed the market. This is despite the fact that some offer very healthy dividends, attractive yields and solid fundamentals. Key culprit of the underperformance of REITs has been higher, for longer, interest rates. Higher rates hurt REITs because, like utilities, they are capital intensive and carry a lot of debt. Even if REITs stay around current levels, there's a positive backdrop because the headwind of increasing rates is arguably behind us. So Barons mentioned four REITs.
Keith Lanton:I'll share them with you, one of which is Kimco Realty Symbol KIM yielding about 4.9%. This is an operator of strip mall shopping centers, which has become somewhat of a dirty word in the internet era, but the parents saying that there are still strong tenants in many strip mall shopping centers. Kimco Realty is known to attract some of the most in demand of these tenants. Many times these strip malls have essential businesses in them, like the post office or a large grocery store, and Kimco Realty, they say, has done a really good job in that space and, like I said, yielding 4.9%.
Keith Lanton:The first on the list is Prologis, symbol PLD, yields about 2.9%. This is a company in the industrial sector with a big presence in warehouses and other aspects of global shipping. Obviously, e-commerce is an area of pros and prologis has been a beneficiary. Next up is VC Properties, symbol VICI, yielding about 5.7%. Its portfolio includes real estate in Las Vegas, including Caesar's Palace, and investors have been doing well, as the folks going to Las Vegas and gambling has been a beneficiary, as we talked about in the beginning, as people seek out those experiences. And finally, the last one mentioned here is Well Tower, which yields 2.7%. This is a company that has a senior housing portfolio. This growth is being helped by the agent boomers, creating demand for assisted living space.
Keith Lanton:This is an area or sector that was hurt during the COVID outbreak for obvious reasons, as seniors were staying put and not wanting to move into new places and move around, and post COVID we're seeing a rebound in senior housing. Finally, I'll wrap things up as we transition from senior housing into long term care, planning for long term care is a challenge and three things to consider. One the costs for long term care can be enormous. The solutions are limited and the discussions heart to stomach, which is why most people think about long term care and then move on to another thought. But an estimated 70% of older adults will eventually need some long term care and since Medicare does not cover this, it's important to consider how it will get paid for.
Keith Lanton:Long term planning for long term care can be more detrimental to your portfolio than any market downturn. So three things to consider. One take care of yourself. By some estimates of the, 80% of the factors that influence aging are under your control. Eating healthily, avoiding excess of drinking, getting adequate sleep and exercise, maintaining strong social connections go a long way toward lengthening your health span. Then, in turn, can shorten the duration of long term care or possibly prevent the need for it all together.
Keith Lanton:Number two the real tough decision deciding whether or not to buy insurance. The main decision for pre-retirees is whether to self insure against long term care risk or to buy insurance policy. Mass majority of people choose the first, which is self insuring, either by default, because they don't want to deal with it, or because insurance policies can be pricey and options can be limited. Financial advisors generally recommend, according to Barons, that their clients at least consider long term care. They generally consider the best candidate to be those with 500,000 to around 2 million of investable assets. Anything less than you will likely deplete your resources and go on Medicaid for long term coverage. Rules vary by state, but generally you have to impoverish yourself to qualify Getting more than 2 million and you can probably afford at least to partially self insure.
Keith Lanton:There are two types of long term care coverage traditional long term care coverage and life insurance policies with a long term care rider. Both usually limit the duration and dollar amount of coverage. Many older policies offer an unlimited coverage and, although the need for care is usually around three years, some policy holders need care for a much longer period and this cause insurers to rack up big losses, which is why they now limit the duration of coverage Premiums for long term care policies vary greatly. Traditional insurance is use it or lose it, whereas hybrid policies offer a death benefit if care isn't needed. The death benefit generally amounts to a return of premium paid plus a slight return, while the amount of care is kept at a higher level. Both types of policies require medical underwriting to qualify. If you do choose to self insure, many advisors suggest making assumptions about the care that will be needed, calculating how much that might cost in your area, and then sending aside that amount of money in a high yield savings account for other safe vehicles.
Alan Eppers:Thank you for listening to Mr Keith Lanton. This podcast is available on most platforms, including Apple Podcasts, Spotify and Pandora. For more information, please visit our website at www. heraldlantern. com.
Sophie Cohen:Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Past performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice or trade recommendations.