The Strait Of Hormuz Just Ate Your Gains

March 9, 2026 | Season 8 | Episode 6

We map how the Iran conflict is pushing oil above $100 and why that single move can hit everything from stock futures to the AI trade. We also use history to stress-test scenarios, then close with concrete portfolio and retirement-tax tactics for staying steady in a volatile tape. 
• pre-market snapshot of equities, oil, and Treasury yields 
• using volatility as a portfolio gut check and risk-tolerance test 
• why the Strait of Hormuz matters to global oil prices 
• oil market inelastic demand and the marginal barrel setting prices 
• what 1973, 1990, and 2022 suggest about post-spike returns 
• two scenario framework for conflict duration and market impact 
• Iran’s modern history from Qajar rule to the 1953 coup to 1979 
• how higher energy prices flow into AI data centers and capex decisions 
• key headlines on strategic reserves, inflation data, and policy risk 
• RMD planning, qualified charitable distributions, and asset location basics 
For more information, please visit our website at www.heroldlantern.com.

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. 

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Transcript

Opening Markets And Middle East

Alan Eppers 0:00

And now introducing Mr. Keith Lanton.

Portfolio Gut Check In Volatility

Why The Conflict Moves Oil

How Past Oil Spikes Hit Stocks

The Economics Of Inelastic Oil

A Fast History Of Iran

Energy Costs Squeeze AI Trade

Headlines Strategic Reserves And Politics

RMD Tax Moves And Fed Watch

Keith Lanton 0:03

Good morning. Today is Monday, March 9th, as we make our way towards the end of the first quarter of 2026. This morning, we start the day with lots of geopolitical news, of course, of what's taken place in the Middle East, and we're gonna discuss that at length. We'll talk about what's going on with the price of oil this morning. We'll put that in some sort of a historical context. We'll also, in order to hopefully give us a better understanding of what's taken place in Iran and in the Middle East in general, do a dive into the history of Iran, the interventionist policies of the West, and the perspective that some countries in the Middle East may have based on their history, just as we have our own perspectives here in America based on our history and what we've been what we've been taught here in in in American schools. So as we take a look at what's going on this morning, we see futures down significantly again, although significantly off their worst levels of the morning. Dow futures down about 500 points this morning. If if you took a look yesterday evening, you may have seen that we were down 1,100, 1200 points on Dow futures. NASDAQ futures are now down about 220, last night over 500, and the SP is down just a little bit less than 1%. Oil, which had gotten close to $120, that's right, $120 a barrel, which was up almost $30 a barrel, up almost 30% at one point, is now up $10, obviously extraordinarily significant. We're a little over $100 a barrel on oil. And the Treasury market, , which got as high as the 10-year at about $420, is now at about a $417. This is a fantastic time to do a gut check as volatility has has roiled markets. This is a time to be able to assess how you're feeling about yourself and your portfolio. Are you feeling queasy, uneasy, feeling like you might need to make some changes to reduce risk? If that's the case, perhaps you bit off a little bit more than you could chew. You took on a little bit more risk than than you are comfortable with, and this may not be the ideal time to make a change, but it's an ideal time to make a mental note that perhaps you are out of your comfort zone, and that long periods of time of performance without significant volatility has lulled some of us into a false sense of complacency that we may need to make adjustments to our portfolios. And this is a good time to make mental notes and truly decide whether or not you can withstand the volatility that's taking place, and that's especially true if you are towards the end of your financial career where your income may be shifting to a less predictable flow going forward. You may not have you know income from employment, and if you're feeling really uneasy, well, this is the time to really assess and think about whether or not you have the appropriate mix of assets in your portfolio. So what's happening in the financial markets? Why have we seen at the beginning of the outset of this crisis here or this this situation in the Middle East where the US and Israel are seeking to defang Iran's abilities to wage war, to arm their proxies and create havoc in the Middle East? Why is it that we are seeing volatility suddenly spike? Well, some are suggesting that perhaps the easy victory that some had been anticipating, , at least at the moment, is not as easy as it was before, of course, for the United States. Iran is significantly far from from the US from a geographic perspective, in order to project all that military muscle overseas. It is quite a tremendous endeavor. There are some who are suggesting that you know you look back to the U.S. invasion of Iraq, and that was told the by George Bush Jr. at the time that that would be a you know relatively quick operation, and as we learned it it was not. some also you know drawing parallels to what Russia, who invaded their neighbor, what they experienced in terms of pushback from a much weaker Ukraine, and how that conflict has endured. So certainly there are concerns, none of us knows what the future is going to be. There's all sorts of speculation on whether or not this conflict will go on for one, two, three, four weeks. President Trump himself said he doesn't have a time limit, and that's one of the factors pushing oil prices higher this morning. President Trump saying over the weekend that $100 oil is a small price to pay for a Iran that cannot threaten its neighbors, and he believes that in the long run, if we are successful here with our Middle East policy, that we will see lower oil prices for a long time, so the ends do justify the means. So we will evaluate what's going on. I want to emphasize, you know, factoring in how you feel in terms of thinking about how your portfolio might look six, nine, twelve months from today based on the feelings that you are having today. So why is oil going up so much? Why are we seeing such a spike in the price of oil? Especially those of us here in the United States, when we hear that the United States is now the biggest energy producer in the world, why is it that we are seeing such dramatic increases in the price of oil? We know that twenty percent of all oil does flow through the through the Straits of Hormuz, a narrow waterway in the Persian Gulf, and that the Iranians have made all sorts of threats that they will attack ships there, and therefore we are seeing that that flow cut off. Now normally with a good, what happens is when, for example, if you take something like, let's say beef, and you were to suddenly increase the price dramatically, you would probably see that there would be a big drop in the demand for that good, and eventually people would pretty quickly start substituting into other foods, whether it be chicken or or or other sources of fish or other sources of protein or nuts, etc., and and fruits and vegetables. But the oil market is often described as inelastic. It's an economic term, means it's not that bendable, because people and industries need fuel to function regardless of price. Demand doesn't drop all that quickly when prices rise. And what that means is it creates an environment where the marginal barrel, the next barrel that's being produced, that marginal barrel is what sets the price for global demand for every other barrel. So in a perfectly balanced market, the price of oil is generally tied to the marginal cost of production, and that is the cost required to bring the most expensive, the least efficient barrel to market. And that price has increased dramatically for that last barrel. So to put this in perspective, as an example, if the world demands 100 million barrels per day, and the 100th million dot barrel costs $70 to produce, the market goes towards that $70 price. Again, you may think to yourself, well, the United States has so much oil, why does this matter so much here? Well, if you are a company here in the United States that's producing oil in, let's say, the Permian Basin, and the price of oil is $100, you will factor in, well, how much will it cost me to ship that oil to India or to China or to Europe versus how much does it cost me to sell that oil here in the United States? And you will factor in things like shipping costs, and that's why what we see here in the United States is we see the price of what's called West Texas Intermediate, which is U.S. oil, trade a little bit lower because of those shipping costs than Brent Crude. But those companies are not going to keep their oil at $70 a barrel when the rest of the world's at $100, and they can sell it overseas at $100 less their shipping costs of a few dollars a barrel. So, because of the effects of capitalism, even though their costs have not increased significantly in order to produce that barrel, they will sell it a lot higher because they can. And this is how low-cost producers like the Permian Basin producers here in the United States and Saudi Arabia, who is producing oil for let's say ten or twenty dollars a barrel, they reap that difference as profit and they still sell at the marginal rate. Now, eventually, which is long time sometimes, you might start to see some habits change. But if you think about yourself, you are consuming oil or natural gas, which has also gone up a lot in value, in order to achieve what what it is that you're seeking to do this morning. Perhaps you drove to work this morning and perhaps you have a vehicle that uses gasoline. You didn't change your habits all that quickly and and decide that you're gonna look into ways to take mass transit. If you have a home that's heated by heated by oil, you are probably not looking to to make a quick shift and decide that you're gonna call up your local utility and switch to to gas. So these decisions are made very slowly, very carefully, and therefore the imbalance in terms of the marginal demand for oil does not change very quickly, and we do not see a big drop in demand when there is a big price hike. It takes a long time, and that is what we are seeing and experiencing, and that is why the price of oil is going up so much, because of the fact that that marginal barrel is gotten very expensive. Now, let's take a look. Let's talk about history, let's talk about what has happened in the past. What does this mean for my portfolio? How should I be reacting? What should I do? The answer is nobody knows exactly what the future holds, nobody knows exactly what is going to be. And if you're beating yourself up for not anticipating this, not predicting this, just stop. Nobody has a crystal ball, but we can look backwards and we can make educated, intelligent decisions. So, how have markets performed after major oil spikes? Well, in general, after major oil spikes that have persisted and that have persisted based on long periods of time of conflicts persisting, as well as when you're in environments when the Federal Reserve is raising interest rates, which fortunately we are not in that environment at the moment, although there is some fear that we will be, then what we see is that when we are not in those environments that the oil hikes when we look at markets going forward tend to be more favorable. But when we have long periods of elevated prices, and especially when we have periods of elevated prices along with rising interest rates, this is when things don't look so good down the line. So looking at recent history, when I say recent, let's go back about 50 years, if we go back to 1973, which was the oil embargo, that was viewed as when the US really started to change some of their energy policies here in our country. Back in 1973, after prices surged here in the US, six months later the SP was down 17%. One year later we were down 41%, and two years later we were down twenty-eight and a half percent. But if we look more recently, we look at in 2022, which feels like a lifetime ago to some of us, when Russia invaded Ukraine, that was more of a temporary spike. We saw oil surge over $100 a barrel, just like we're seeing today. In fact, it got over $120 a barrel. And if we look if we look out, we will see that six months later, markets were still down, they were down 11.5%. One year later we were still down twelve percent, but two years later we were up fifteen percent. And if we go to the 1990 Gulf War, six months out we were down five percent, one year later we were up eight, and two years later we were up seventeen percent. So what does that mean? Well, some are suggesting that what we are seeing today is most analogous to the knee-jerk spike we saw in 1990, which is that period where markets were higher six months later and one year later, and if that's correct, then then perhaps perhaps President Trump in suggesting that this is going to be a situation where we see dramatically lower prices because of the policies that the U.S. is engaging in alongside their ally Israel, then we will see that financial markets and oil are dramatically lower six months from now. Then there's the other possibility that you have to weigh, which is that this conflict will be more drawn out than originally anticipated, and that's being necessarily thought of, and therefore that oil prices will stay elevated for longer. The Iranians will continue to pester the United States despite the overwhelming superiority of the Israeli and the U.S. military, and as a result of that situation, oil prices will stay elevated, and we will see financial markets struggle going forward. Those are the two scenarios you need to weigh in your mind, and you need to assign probabilities to them and make sure that your portfolio is constructed properly based on those expectations. So, how did we get here in terms of what's taken place in Iran? Many of us know about the hostage situation, the hostage crisis in 1979, when the Iranians took Americans as hostage during the revolution, where they overthrew the Shah and some would argue really changed the American psyche in terms of what we are willing to accept, and the use of American military power may have been dramatically affected by that by that event, especially post-Vietnam where the US was prior to that retreating. So ha so the United States has historically certainly had a lot of influence as a result of what takes place in Iran, and we've been very focused on Iran, which was a country that used to be called Persia. But in order to take a look at what's what's gone on in Iran, we need to go back in history and take a look at how Iran got to where it is today. So, taking ourselves back to Iran back to the s late 1700s, 1789, till about the turn of the twentieth century, till about 1905, Iran was run by the Kujar dynasty. And this was was a was a Shah type almost like monarchy that was running Iran and during the Kujar dynasty, when you go back and take a look at the the history, the Iranians and the Russians were fighting with one another. And between 1789 and 1920-ish, the Kujar dynasty r united Iran, but as they were uniting Iran, they had lost significant territory to the Russians. So modern day Georgia, Armenia, Azerbaijan, which as you may remember were part of the Soviet Union, those were part of Iran. When you go back and look at the historical record, and those pieces of former Persia, now their own independent countries, were were part of the Soviet Union. So st Russians and the Soviets had a strong interest in Iran and in acquiring territory. Coming into the twentieth century, the Iranian people who had sacrificed territory were getting dissatisfied with the Kujar dynasty. They were fed up with what they saw as corruption as the as the leaders enriched themselves and didn't share it that they viewed with the people. This is pre-oil, keep in mind, and that led to mass protests, and in 1906, the then leader of the Kujar dynasty, Mozafar ad-Din Shah, was forced to sign what was called a fundamental law establishing an Iranian parliament and an Iranian constitution, and as a result, Iran was one of the first democratic revolutions in the Middle East. Now, moving forward about another fifteen years into the nineteen twenties, Iran continued to weaken, the Kujar dynasty, , which had been forced to share power with a parliament, was weak, the economy was shattered, and the country was in the midst of being picked apart by the Russians in the north, and now by the British, who were now the preeminent power in the Middle East, and they took a strong interest in the Middle East because by now people are starting to focus on oil. And what happened here in the 1920s is there was a coup d'etat, and this was led by Reza Khan. Reza Khan was a commander in the strongest unit within the Persian military, and Reza Khan was the father of the Shah that we know of who was deposed in the 1970 revolution. So Reza Khan in 1921 led a group of of Iranians and they seized the government with almost no resistance. They had some assistance from from the British forces who were looking for a strong man who could stabilize Iran. The British wanted to make sure that they had access to the oil, and they were also concerned about the Russians who were in the midst of a Russian or communist revolution, and they wanted to make sure that Iran did not become communist. Now, Reza Khan didn't immediately become Shah. By 1983, though, his influence was significant that the Kujar king appointed him prime minister. Shortly thereafter, the king left for medical reasons, and he never returned. Now, Reza Khan wanted to turn Iran into a republic, however, the religious clergy and the traditionalists opposed a republic. Again, back to the tug of war we're seeing in Iran today between folks who are more modern and folks who are more fundamentalist. And he was afraid that this this torsion, this twisting would tear the company apart. So that's why he shifted back to the idea of a monarchy from a more constitutional form of government. So in 1925, the Iranian parliament officially deposed the Kujar dynasty, and they offered the crown to Reza Khan. This is 1925, and he chose to align the country more with the country's Persian roots rather than with its Islamic roots or its Kujar dynasty roots, something that the fundamentalists did not view favorably. So he crowned himself Shah in 1926, and the Shah's would rule Iran, both he and his son, until 1979, although there were bumps in the way. So when Reza Khan was elected, now you could see the historical parallels here, in 1936 he issued a decree, and in 1936 that decree banned the Islamic veil, the hijab, in public. This is the opposite of what we're seeing here today. You can see history here, two sides of the same coin. He viewed the veil as a symbol of backwardness, an obstacle to women participating in the modern economy. He actually had the police forcibly remove veils from women on the streets. And it wasn't only women that he was focused on. He banned traditional tribal clothing. Men were required to wear European style suits, and later he required that men wear fedoras, which were popular in Europe, especially in Paris, as he was seeking to take the country away from its fundamentalist religious roots and move it towards a more Western system. In fact, he also changed the legal system. He replaced the sharia, the Islamic courts, which is something the country's gone back to, with a secular civil code based largely on the French model. He established the University of Tehran in 1934, built thousands of primary and secondary schools in a Western model. And perhaps his greatest achievement was the construction of a railway, a 1,400-kilometer railway that connected the Persian Gulf to the Caspian Sea. Now that railway would figure prominently going forward. Again, history has a has a long arc, and we'll talk about that railway in a moment. So, despite Rezikon's successes, he started to feel lots of pressure as World War II approached. In 1941, the powers that had once seen him as a useful strongman decided that he was a liability. What had happened is Rezikon had developed close economic ties with Nazi Germany. And when World War II broke out, Iran declared neutrality. However, Britain and the Soviet Union were very worried. And then what happened is in 1941 the Germans invaded Russia, and this created a problem for the Allies. The Allies needed a way to send weapons to the Soviet Union to keep them in the war. Remember, the Germans were invading the Soviets, and we needed to help the Soviets get them weapons. And the best way to do that was through that railroad that was built back in the 1930s in order to feed arms up to the Russians. But that path was blocked because the Shah was staying neutral. So what happened is the Allies in 1941 ran out of patience. And they launched a operation, a two-pronged attack. The British invaded from the south while the Soviets invaded from the north, and the Shah's army collapsed. And they gave the Shah a choice either abdicate the throne or see Iran occupied. And in order to save the dynasty, what the Shah did was he what he he set up abdication papers and he was planting the seeds for his son, M ammad Reza Shah, who would ultimately be the Shah of Iran in more recent times. He was setting sowing the seeds that for the future so that his son could return if he played ball with the Western powers. So the Shah left, there was a massive pac power vacuum. The Shah that took over, well, he was just 21 years old and not a strong leader yet at that time. And what he did was he made an alliance with a gentleman who was rising to power, Mohammed Mossa Daig. Mr. Mr. Mosa Daig, he was trying to he's a Swiss educated lawyer, veteran politician who had opposed the Shah's rise to power, and he was seeking to create a a parliamentary form of government, a democracy. And what happened is he consolidated power. And then, after the end of World War II, when he was in power, he signed a law that nationalized the oil industry. Well, the British, who at the time had British petroleum and were still a major world power, they were very unhappy with the nationalization of the oil industry. So what they did was they got together and encouraged their friends in the United States to seek to have greater control over Iran, and they sought to bring back the Shah's, the Shah that we know. And in 1953, we saw the United States and Great Britain put together a lot of lot of propaganda against the current administration. The CIA paid off newspapers, journalists to publish anti-Mossadegh articles, labing him a communist sympathizer, threat to Islam. This kind of rings back to the days here that we see with what's taking place in the internet. Well, it took place before the internet, they staged pro pro-Mossadegh rallies, and during those rallies for the current leader, they would loot shops and attack mosques in order to turn the country towards the Shah. And what happened is in 1953 we saw the coup that had a massive butterfly effect take place, where the British and the Americans orchestrated the rise of the Shah of Iran in 1953 as they brought back the sun, who led the country and saw it a pro-Western country from 1953 to 1979 when the Iranian Revolution occurred and they overthrew the Shah. The Shah also engaged in lots of pro-Western policies like his dad, and there was constantly conflict, and in 1979 we saw the pendulum swing to the extremists, which is where we are today. So we can see that the influences and the effects of what have happened in Iran, the powers that be, the Western powers that that participated in actions in Iran, whether it be Russia, whether it be the United States, whether it be Great Britain, whether it be Islamic fundamentalists, whether it be more moderate, Western leaning ideologies in Iran. We see that this was a cauldron going on now for hundreds of years, and we are once again experiencing the boil. And the effects that we're seeing are the result of other policies that you know Western powers have taken that have influenced Iran and the Middle East, specifically the Iran, Iraq war that took place when the United States then later invaded Iraq and took down Saddam Hussein. Well, that left the power vacuum that the Iranians now had a lot more power because their big foe is no longer on their border, and they were able to build up their military and and encourage other Islamists like Hezbollah to become proxies like Hamas, and this has led to a lot of instability in the Middle East. So the butterfly effect, you know, change here, wait ten years, you get another effect later. So we are seeing that today, and perhaps arguably another butterfly effect, an unintended consequence of what we're seeing in Iran, was the result of the Russian invasion of Ukraine. So the Russians going into Ukraine, certainly it's been a significant bog that they've been tied down in. So the Russians, who in other times might have been a lot more vocal about their opposition, a lot more supportive of Iran, even though they are offering some support. Really, the Russians don't have the bandwidth to engage in Iran, and this is one of the reasons why the United States and Israel see this as a golden opportunity to make change in the Middle East. So here's the entire arc, the arc of history, and hopefully it gives us some perspective of what may be to come. Okay, let's let's talk here. What is becoming is higher oil prices. Oil right now up about $12 a barrel as we speak, approaching $103 a barrel. One of the other reasons perhaps that we are seeing some so so much volatility, other than the rise in oil prices, which in of itself is super volatile and the oil a big input into so many different things. But one of the things that oil is a big input into is artificial intelligence, not directly, and it's not just oil, it's oil and natural gas. But electricity has been one of the main factors powering financial markets because electricity powers artificial intelligence. So one of the big inputs into the AI revolution has been electricity and the cost of electricity. So as we see oil and natural gas move up dramatically in price, the AI sector feels the pressure through three main channels that we'll discuss, and this is perhaps one of the other reasons we're seeing so much volatility in stocks that we'd normally think of as more immune. Companies like Microsoft, Google, and Amazon, which operate massive data center fleets. While they often have long-term purchase agreements, an overall increase in energy prices does raise the floor for new contracts and operational overhead. Also, if you're thinking about future build-outs, future capital expenditures, if energy costs become too high, the return on investment on building new AI factories diminishes. So, what does that mean? That factories that were planning to be built may not get built. Well, this certainly affects hardware providers like NVIDIA whose chips go into those AI data centers, Broadcom, AVGO, the the companies that build out the electricity for these companies, like Eaton and Vertiv, which are companies that build out the infrastructure, the data centers themselves, the REITs like Equinix and Digital Realty, and secondary chipmakers like Marvell, all impacted here as energy prices rise. Investors may rotate away from infrastructure AI stocks into what has not been working before, which is AI software stocks that aren't as tethered to power consumption. And that's what we're seeing. We are seeing some weakness in the AI trade, and we are seeing some rotation back into the sensitive software stocks. Alright, so let's talk a little bit about about the markets and the news flow this morning. As I mentioned, we are pointing to a lower open, Dow futures right now down about 600, SP futures down about 80, NASDAQ futures down about 300, as oil is over $100 per barrel this morning. Bloomberg reporting that the United Arab Emirates in Kuwait have reduced oil production as the Straits of Hormuz remain nearly closed. President Trump says there is no timetable for the Iran war, telling reporters I never project that, whatever it takes, he said to CBS News. Crude oil futures, as we mentioned, pulled back from their highest levels, and that's among reports that the G7 will discuss the joint release of energy reserves, according to Financial Times. At the moment, the U.S. is their strategic petroleum reserve hours here in this country is at about 60% of capacity, which is on the lower end of history. So we might be a little bit more judicious here in the United States about releasing some from our strategic petroleum reserves. Reports are that China is near full on theirs. They have about three to four months of oil, , according to reports coming out of China, without factoring in any imports that may take place over the next few months. So a little bit of buffer both both in the United States, , but particularly in China, who is the second largest consumer of energy. We also do have some big economic data coming out this week. CPI on Wednesday and the January PCE price index on Friday. Spike in oil will not show up in these prints, though it is worth noting that the expected monetary path has certainly been muddied as investors fear higher energy prices will seep into inflation readings. Taking a look overseas, Asia Pacific region had a poor start to the week amid a continued rise in oil. Keep in mind that countries like Japan and South Korea and India are extremely dependent upon oil and do not have much, if any, domestic production. They are viewed as the most sensitive to changes in oil prices, so Japan's down five percent, India down just under two percent, , South Korea down six percent this morning. European markets down anywhere between one and basically two percent in in Europe. Other major news this morning is that the new supreme leader, the son of the former Ayatollah, has been named Supreme Leader in Iran. Reports that Israel has struck major fuel depots in Iran. This is something that reports this morning are suggesting that the Trump administration is not as favorable on the first real disagreement they're saying between the US and Israel as the U.S. reports are anyway, saying that they prefer that that they stay away from the energy targets at this time. Also, there's been some conflicting reports coming out of Iran where the President of Iran apologized to Gulf Strikes and will seek to de-escalate tensions, but then just after that statement, the Iranians then went and attacked their allies again with drones and missiles, so not sure if the president of Iran is empowered, perhaps left hand not talking to the right hand there. Axios reporting that the US and Israel are considering sending in special forces to seize Iran's nuclear stockpile. Wall Street Journal reporting that an Iranian drone damaged a desalinization plant in Bahrain. Here in the United States, the Senate is discussing the Save America Act, which is a voting reform bill. President Trump says he will not sign any other legislation until the Save Reform Act is passed, and the senators on the Democratic side have vowed that that is not going to happen, thereby potentially holding up legislation here in the United States. The Republican majority has discussed the possibility of getting rid of the ability for the Senate to filibuster, which requires sixty votes in the Senate. That would kind of be the nuclear option here. The concern among Senate Republicans is if they were to do that, well then going forward, if the Democrats ever were to come back into power, that they wouldn't abide by the s filibuster rule either, and therefore they are hesitant to do that. So that's something to watch. Domestically, also domestically, here we are seeing long lines at airports due to the DHS shutdown, leading to some frustration here in the United States. Alright, it's getting getting a little bit late here. so just one last item to discuss here when we're discussing individual personal portfolios. Barron's talked about strategies for taking care of your mandatory IRA withdrawals. So one of the real pieces of good news over the last you know several years is that financial markets, markets here in the United States have done fantastic. And as a result of that, individuals' retirement accounts, individual IRAs, 401ks have increased significantly in value. But if you're approaching that age of 73, suddenly you are required to take what are known as required minimum distributions, , money out of your retirement account. And if you've done real well, those RMDs could be big numbers and they could push you into high tax brackets, 30, 33, 35, 37% is the is the rate on ordinary income. Keep in mind when you take money out of your retirement account, even if your stocks have appreciated significantly, you do not get to pay capital gains tax rates on that appreciation, that is ordinary income. So, what can you do to diminish some of that ordinary income? Well, one of the things is if you're charitably inclined and giving to charity already, you can make charitable gifts directly from your IRA through a qualified charitable gift, also known as a QCD, which counts towards your RMD obligation. This year you can give up to $111,000 through a qualified charitable distribution. Now you won't get a charitable deduction, but the fact that your RMD is increasing your income means you're effectively getting the deduction. So if you're in 37% federal bracket, a 7 or 8% state bracket, let's call it 45%, you give a QCD. In effect, your charitable contribution is being subsidized by the government by about 40 to 45%. That might be an effective strategy if you're planning on giving to charity and have the the means to to do that. Also, you may want to think about how you construct your portfolio, what the assets go into your taxable accounts, what goes into your IRA. If you're looking at taxable bonds, you might be better off putting taxable bonds into your retirement account because you're gonna pay ordinary income taxes on that anyway, and putting your growth stocks into your taxable account, your regular account, because the appreciation there will be subject to capital gains and not ordinary income. So a strategy you might want to think about going forward. Another thing to think about, we've got some Fed meetings coming up, the Fed's meeting again in a few weeks. , expectations are that they will not change interest rates, but some are speculating that if the job weakness continues and the economy continues to flutter here with high energy prices, that despite the high energy prices, the Fed may look past the temporary or transitory nature, dangerous words we know. And Barons is suggesting that we possibly could see a rate cut come April, especially if we see a little bit of relief in terms of energy prices. Hopefully we will. So that's a potential catalyst for financial markets. If markets start anticipating that the Fed may may may give them some more wind at their backs with with a rate cut. Of course, that a lot depends on what takes place here with oil, energy prices, and the success of U.S. military operations in the Middle East. That's everything I've got.

Alan Eppers 38:18

Thank you for listening to Mr. Keith Lantern. This podcast is available on most platforms, including Apple Podcasts and Spotify. For more information, please visit our website at www.heroldlantern.com.

Sophie Cohen 38:35

Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Pest 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.