July 25th, 2026 - Diversification Beats Headlines

On a sweltering Florida Saturday, the hosts break down a choppy, sideways stock market where AI darlings and semiconductors are stumbling, value stocks and energy are quietly leading, and media-fueled oil price headlines are more sizzle than steak. They hammer home how diversification and steady behavior beat performance-chasing, while also warning that rising healthcare and long-term care costs, plus spotty estate planning, can quietly wreck retirements. Along the way, they riff on everything from Buc-ee’s big paychecks and FIRE fantasies to the small fortune in coins lost in landfills each year.

Transcript

Steven Van Wie 0:00

It's Saturday morning. It's 10 o'clock. That means this is the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 0:07

Hi, I'm Adam Van Wie.

Joey 0:08

And I'm Joey Loss.

Steven Van Wie 0:09

All together again on this, another one in a series of beautiful Saturday mornings. It's just a pleasure to be alive and well outside for a while anyway. It, it is, but you know, it's Florida summer and Yeah, you got to make it all relative or you'll be unhappy.

Adam Van Wie 0:21

Yeah, it's a little hot.

Joey 0:29

I'm glad the lawn is wet, but it feels like it's breathing on me. Yeah, every Saturday.

Adam Van Wie 0:34

This is the— this is the paradise tax time of year. If you want to live in paradise, you got to put up with the heat for a few months.

Steven Van Wie 0:41

Well, as I've said for decades, if it were perfect every day, we'd be San Diego. And believe me, if you think commuting in Jacksonville is bad, try it in San Diego.

Adam Van Wie 0:53

It is not bad here.

Steven Van Wie 0:54

Yeah, we can weed them out. There's still a lot of snowbirds too. So they can't take this stuff, so they go home and we won't miss them for 3 months. But then you all come back with your big American Express cards and things are good again. Anyway, I digress, as is my custom. Welcome back to all the regulars. We rely on you. It's into our 12th year now. And as I like to tell you, if you keep listening, we'll keep talking. If you're new to the show, somebody told you about it, or you happen to have your radio on, or whatever reason, try to listen for the whole hour. You will invariably learn something, and I would even go so far as to say most of the time you might even find it interesting or possibly even useful. If you want to listen to what we have to say, you can do that, but it's much more fun if you guys do what you would like, and that is done easily by calling in 904-222-8255,

Steven Van Wie 1:54

and we will put you at the head of the class and discuss whatever's on your mind. So don't hesitate. We don't bite and never will, I don't think. So don't be afraid of us. Um, lots going on as always. There, there's no— I guess there's, there's no boring time anymore in life. And of course, the political season's kicking up, and we've got an on-again, off-again pretty bad war raging, and it's affecting oil prices. And of course, the media loves so dearly to play that up, and I'll get into that in a little while. But meanwhile, the market— those of you who've listened to me for a long time know I frequently like to find a single word that describes what my feeling about the market was during the past week. And this one was a no-brainer. My word for the week is July. And if you don't understand that, maybe Adam will take it over when he's talking about what happened, or I'll have to explain later. But anyway, take it away. It wasn't fun in my mind.

Adam Van Wie 3:09

Okay. The market's— it's basically stuck in a sideways to slightly downtrend. It's— it really hasn't been that bad, uh, really until we see oil prices reverse, the Fed decide and state that they are not raising rates, and a strong earnings season. I don't think we're going to get out of this thing until then. Completely. It is going to be really tough for the market to move higher under the current conditions. That doesn't mean it's going to crash or that a crash is coming necessarily, Necessarily, but this rut we're stuck in, it could last for a while. And I, I'm kind of in that camp now that we're gonna just see this sort of sideways up and down, more down than up, but up and down type of trading. And honestly, this week probably felt a little worse than it was. The S&P was down just 0.6%. The Dow was off just 0.4%. The tech-heavy NASDAQ was where the bulk of the losses were. That dropped 2.1%. And made the most headlines. The crazy thing about it is that the NASDAQ dropped on strong earnings. Yeah, you got that right. Alphabet/Google,

Adam Van Wie 4:20

they posted strong beats on both revenue and earnings and announced more CapEx spending to come. Under normal conditions, this would probably be good news as it speaks to a healthy bottom line and a company that is investing in future growth. So they're optimistic about the future. That's what you can read into that. However, the market, right or wrong, has decided that all of these companies are overspending on AI development and has declared this to be bad news. So their stock dropped significantly on an earnings beat that was pretty solid.

Joey 4:55

Yeah, I think it fell over 7%. Yeah, not a small day.

Adam Van Wie 4:59

No, not at all. And Tesla, they actually missed on, uh, profits and beat on revenue, I think, and they fell like 14% or something like that. Just got hammered. So, uh, just one of those time periods when even good news is considered bad news in the market. The semiconductor sector, which isn't an official sector yet but it should be, saw a huge run-up of 110% in the first half of the year, most of which was not caused by Nvidia. The sector peaked on June 22nd, and since then only one stock has gone up and the rest of the stocks are down. That one stock is NVIDIA with a gain of 0.2%. Since June 22nd, the average stock in that sector is down 23%. But after a run-up of 110%, sometimes that happens. The two weakest sectors recently have been communication services and consumer discretionary. Next week we'll see reports from Meta, which falls in communication services. That's Facebook for those of you that don't know, and Amazon, which falls in consumer discretionary. If those reports go well, there's a chance to turn around both of those sectors. Probably not the whole market because of the reasons I mentioned earlier, but those sectors which are doing very poorly could, could sort of turn around. If the market doesn't like the reports from those companies, those sectors are probably in for a rough time, as is the market. Apple and Microsoft also report next week, and it's a— so it's a really big week for earnings. Interestingly, Apple has the least AI exposure of all the mega-cap tech stocks and is also the only one of those stocks performing well in recent weeks. The earnings season has been notable so far. To start, analysts were raising guidance going into the season, which typically results in less beats because of an elevated— because of elevated expectations, and therefore the market doesn't do very well. Well, the market hasn't been doing well, but that has— the, the, uh, the earnings, um, have been doing really well. In fact, they're kind of off the charts good right now for the S&P 500. So far, 82% of companies are beating their revenue targets and 88% are beating their earnings targets. That's just of S&P 500 companies. If you look at all companies Those numbers fall to 78% for both earnings and revenue. Still really strong numbers. Anyway you look at it, those numbers are pretty fantastic, and yet the market is down. So we'll know more next week when hundreds of more companies report. But honestly, companies are in really good shape right now and have been for quite some time. Bullish sentiment cratered this week, dropping to the lowest level of the year at just below 30%. Interestingly, bullish sentiment hasn't been as high as it used to be in the last few decades. It has used to routinely hit 60 to 70%, but it hasn't even hit 60% since 2010. I blame the internet, social media, and the 24-hour news cycle for making people miserable.

Joey 8:09

Completely agree. Yeah, that's its own topic for some time.

Adam Van Wie 8:12

It is. We should delve into that another time. But yeah, it's a— it is interesting though. For a full 16 years now, we haven't even seen a 60% rate on bullish sentiment.

Joey 8:24

Yeah.

Steven Van Wie 8:25

Imagine that. As you said, with all the news coming out directed at making everybody miserable. Right. Yeah. They were all over this $100 gas, $100 oil thing. And what they didn't say was that's Brent crude and that's not what we run on. And it's down to $98. We'll be right back. We got to pay some bills. Don't go anywhere. This is the Ben Wheat Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 8:50

I'm Adam Van Wie.

Joey 8:51

And I'm Joey Loss.

Steven Van Wie 8:52

And lines are open, 904-222-8255.

Steven Van Wie 8:57

And if you want to use that number, you can take a shot at our trivia question, which is brought to us as usual this week by Paul Lloyd at First Coast Alarm. You can call Paul at 904-636-7888.

Steven Van Wie 9:13

Really off-the-wall question today. What is the value of all the coins that are lost in landfills in this country in a year? Now, I'm not giving you any hints on this one, except it's not zero.

Joey 9:28

I'm guessing you're not including the Bitcoin on that one guy's USB. That's in a landfill.

Steven Van Wie 9:32

I am not including that. But that's an interesting little take on the whole situation.

Joey 9:38

I think that's a cool $600 million or something on its own.

Steven Van Wie 9:42

Did we ever hear a conclusion to that?

Joey 9:44

Yeah, he did find it, and the city wouldn't accept his offer to give him like 30% if they let him dig it up. So it's just gone.

Adam Van Wie 9:52

Crazy.

Steven Van Wie 9:53

Well, that's one of the things that happens when you play with fire, I guess, isn't it? What can you say? All right. Anything else you want to say about the market?

Adam Van Wie 10:02

No, that was it.

Steven Van Wie 10:04

I did have one more thing. If you saw the first-time unemployment claims this week, which is kind of a proxy for layoffs, it was 187,000.

Steven Van Wie 10:18

It hasn't been that low since September of 1969.

Adam Van Wie 10:24

Crazy.

Joey 10:25

What was the '69 stat last week? You had another one.

Steven Van Wie 10:28

Yeah, that was the, the first 6 months of this year. The average layoffs were the lowest average for the first 6 months of a year since 1969. '69. And obviously this is still going. Yeah, we're actually beating the '69 records here. That's just absolutely nuts.

Adam Van Wie 10:46

And you have to remember the population change at that time. So these numbers are even more impressive than the 1969 numbers.

Joey 10:49

Yeah.

Steven Van Wie 10:53

We've at least doubled population because we're not talking about percentages here. we're talking actual numbers. Yeah, absolutely right.

Adam Van Wie 10:56

We're talking—

Joey 11:00

No kidding. I just assumed it was percentages.

Steven Van Wie 11:02

No. Well, we need, we need to reiterate about when it bleeds, it leads, the motto of the media, that that $100 oil, that's what draws people's attention. You say oil hit $100 and all of a sudden people listen. Well, the media quote the WTI, the West Texas Intermediate. That's the routine oil that we produce and use in this country. They quote that all day long. Until something cool happens, like, oh, Brent crude hit 100. That, that's out of the North Sea, and it's very expensive to produce, but it's very high quality. So we always use some of that. We trade with England on this, so we get a little of that. But what we use is over 90% what we produce. the quality is good and all that. So when When Brent goes to $100, ours went up, West Texas went up to about $93.50, something like that. Well, that doesn't sell any listeners on any kind of news. So Brent hits $100, all of a sudden the price of oil hit $100 today. The price of what oil hit $100 today? But that's just a little insight into how the media work. Now they would do it the opposite if this were still a Democrat administration, they'd make it sound as good as they possibly could. So it's always important to understand what you're listening to.

Adam Van Wie 11:53

It—

Adam Van Wie 12:31

If you want to know the actual price of oil, go to MarketWatch, and on the front page there it gives you the Dow, the S&P. At the bottom, there's 6 things that it lists, and at the bottom is oil. That is the actual price of oil, $90.47 as we speak right now.

Steven Van Wie 12:46

And you can also go to Bloomberg Commodities page for free. And I, I just have that in my browser when it opens up so I can check it anytime. So it's very important to understand what you're hearing or you're going to make mistakes based on that. This could change. The price of oil could change in a heartbeat.

Steven Van Wie 13:06

If the negotiations start up again and the first thing that's said by Iran is Hormuz is open, 5 minutes later, you won't believe the price of oil.

Joey 13:18

Yeah, I don't see that happening, but yeah, I mean, for now at least, you know, expect 40 to 50 cents more.

Steven Van Wie 13:25

Yeah, as he said, They haven't suffered enough yet. They're going to.

Adam Van Wie 13:31

Yeah, there's no doubt about it. But I don't know what the— I don't know what the aim of the current— whoever's in charge over there, it is really tough to figure out what they are trying to accomplish.

Steven Van Wie 13:40

Well, what's hard to figure out is who's in charge.

Adam Van Wie 13:42

That is also true.

Steven Van Wie 13:44

It appears that the Iranian Guard is acting independently of everything else. And I don't think that's an easy thing to wipe out. So somebody has to take control. The old Shah's son, who's been living over here since the '70s, has offered to go back and form an interim government to transition into a regular outfit, and they haven't figured out— the radicals don't want him to do it, and the people don't have any power because they were disarmed a long time ago. It's just, it's a real honest-to-goodness mess. I'm with Adam. I don't think it's going to get resolved very soon.. But beware, when it does, the market's going to breathe a sigh of relief and the bottom's going to fall out of the oil price. And that would be a wonderful thing. So don't hold your breath, but watch for it. That's important. All right, guys, want to jump in anything in particular or shall we just start hitting the stacks?

Adam Van Wie 14:43

Well, I've got, I've got an interesting fun fact here. Good. All right. You've got large, medium, and small-cap stocks, and you've got

Adam Van Wie 14:55

growth and value in each of those. If I asked you what the worst-performing of those style indicator boxes, if you broke it out into 6, what the worst-performing over the last year was, what would you guess? So would you say medium growth, medium value, small value? Last 12 months.

Steven Van Wie 15:18

The last 12 months?

Steven Van Wie 15:21

Hmm. I would probably think large value.

Adam Van Wie 15:27

And you would be wrong. Large growth.

Steven Van Wie 15:29

Good.

Steven Van Wie 15:33

Talk about your trick question, huh? I didn't see that coming.

Joey 15:35

Yeah.

Adam Van Wie 15:36

And it's by quite a large margin. Isn't that interesting?

Steven Van Wie 15:39

No kidding. It is very interesting.

Joey 15:39

Yeah.

Adam Van Wie 15:42

I did not see that coming, but I just—

Steven Van Wie 15:44

It's been It's been driving the Dow from 25,000 to 50,000 plus, but not lately, apparently.

Adam Van Wie 15:52

Yeah, it's, uh, it's actually been, um, it's actually been value that's been winning

Adam Van Wie 15:59

relatively over the last year.

Steven Van Wie 16:01

Well, for some of us, that's really good news. If you're a value investor, it means you, you emphasize things like dividends and

Adam Van Wie 16:05

Yeah, for sure.

Steven Van Wie 16:12

interesting things. Warren Buffett was a value buyer, and he, he built the whole company by looking for a company that was undervalued,

Steven Van Wie 16:24

making it a value stock, I guess. And I cannot really fault his results over his lifetime. So something to think about. I, on the other hand, I used to work with a guy who was always concerned about how he was invested with growth versus value, large versus small, and he was wrong every single time. It was almost like it was cause and effect. He'd shift everybody to value and then growth would take over. And you can't look at yesterday and predict tomorrow as a 100% thing. It's just one more of those many, many, many reasons we have to diversify. Then you don't have to guess.

Joey 17:08

Somebody, uh, this last year made like an inverse Kramer index, and it was one of the best performing, which— Kramer's done a lot for, I think, talk financial radio. But gosh, he's been on the opposite of a heater for quite some time.

Steven Van Wie 17:18

Absolutely.

Steven Van Wie 17:23

You can do a positive Pelosi and a negative Kramer, and you probably become very wealthy. Yeah, for sure. I love it. Yeah, Kramer Kramer's a, what, a victim of his own success or something like that. Yeah. And I, you know, back in the old Kudlow and Kramer days, they got so well known that people would listen to them and it turned out to be a really bad idea. In fact, when I was younger in this business and just getting started, people would ask me if I listened to Kramer and I said, why would I do that? And I said, look, I'll tell you what, I'm trying to get your business. How about this? I'll push my sleeves up and I'll get up on my desk and jump up and down and wave my arms. And then will you be my client? No.

Joey 17:28

Yeah, now you're diversified.

Joey 18:15

Yeah. I have some data organized here that I think tails really nicely off Adam's market wrap. And it's just a chance for me to get on the diversification soapbox. Great. Good case. I feel like right now is a really good moment to talk about why good diversification matters. Um, so it feels like the market is down in a material way, but if you really look at what's going on under the hood, there's just been a lot of rotation. Things are not materially down. It's certain parts that have been really hot, pointing to, uh, Adam's large growth point. You know, the stuff we've been staring at and saying the market's up, the market down, but really we're just talking about a part of the market. That particular part, large growth, has not been doing as well. As many other parts of the market. So if you look in other places, unsurprisingly, energy is the top-performing sector year-to-date. It's up 32.7%. Mm-hmm. And of course you have emerging markets and things like that outside of the US that are doing very well. But energy has held the number one spot for 124 of the year's 139 trading days. Technology has only led two. Wow. And the market feels like it's way up because it is relative to where it was at the bottom after the start of the Iran War. But a lot of this is just kind of smoke as far as what's really happening. And a good way to put this is an investor who chased the AI trade in June is down 20-plus percent. The investor who owned the entire market is up 8%. Nobody had to be right about anything for that month as long as you owned a little bit of everything. Yeah. And I think that's one of the challenges of investing is you can be really right for 1 or 2 months. Like if you'd own semiconductors for, you know, last quarter, you had a great time going into this quarter. It's not quite the same story, but there are other things that are doing well. And so overallocating to single things can really hurt you over the long term.

Steven Van Wie 20:00

You can— that's the cruising over all the market results this morning doing my regular show prep. I noticed that one of the biggies lately has been SPTM. Now these guys know, 'cause we use it a lot, that's the total market index, small, medium, large, and it has been doing well because inside that there are pockets of things that are doing well at any given time. So it's something to think about, this whole diversification thing is very, very important for your portfolio. Much more to come after we pay a few more bills, so don't go away, we'll be right back. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:40

I'm Adam Van Wie.

Joey 20:41

And I'm Joey Loss.

Steven Van Wie 20:42

And I remind everybody that the lines are open, 904-222-8255,

Steven Van Wie 20:49

where you can take a shot at our trivia question. What is the value of all the coins that are lost in landfills across this country every year? I give you your first hint. Think big. There's a lot of them. So, if you get a metal detector and go to a landfill, oh wait, you'd probably get a lot of cans and bottles and scrap metal.

Adam Van Wie 21:13

And you'd probably get arrested also. So, don't do that.

Steven Van Wie 21:17

And that would only be if you didn't get eaten by a bear.

Adam Van Wie 21:21

It depends. Okay.

Steven Van Wie 21:22

Yeah, I probably don't recommend that whole landfill thing. But the total value annually in lost coins, I wanted to bring up one thing and then Joey's going to talk a little.

Steven Van Wie 21:34

There's a measurement called living comfortably in America and the breakdown, so you understand it, is for a family of 4 based on 50% needs, 30% wants, and 20% savings. In this country right now—

Adam Van Wie 21:52

Is that after taxes?

Steven Van Wie 21:55

It doesn't say so. It doesn't say. I'm saying, I'm thinking it might. When I give you the bottom line on it, I think that it might be easier. There are only 3 cities where the family of 4 living comfortably needs less than $200,000 a year to live comfortably. 3 cities.

Adam Van Wie 21:58

It must be taxable.

Joey 22:20

That's got to be pre-tax.

Steven Van Wie 22:22

Yeah, for sure. Those cities are New Orleans, Memphis, and San Antonio. There are also 2 cities where 400 is the minimum. You can probably guess.

Adam Van Wie 22:23

There's no way.

Adam Van Wie 22:35

New York and San Francisco or LA?

Steven Van Wie 22:39

Actually, you're close. San Francisco and San Jose. Of all places. Yeah, I just thought that was kind of an interesting look at life. All right, Mr. Joey, what do you got?

Adam Van Wie 22:43

Oh, okay.

Joey 22:51

Those numbers, those studies are interesting, but before I go into my thing, um, those studies are interesting, but it's really worth looking under the hood at like what they include. I promise that $200,000 and $400,000, they are absolutely including daycare for the 2 kids that they assume in that scenario, and they're probably assuming like a pretty high-quality daycare.

Adam Van Wie 23:08

I think you're probably right, um, which, you know, that just doesn't feel exactly right because

Adam Van Wie 23:15

I think that you can— I think making $200,000 in most cities, you're probably living okay.

Joey 23:22

And while as a financial planner, I love to see 20% savings, it's a pretty aggressive lifetime savings rate for a broad sample discussion, especially at that time when you have two young kids. Yeah, that's usually the lowest saving period of your life.

Adam Van Wie 23:36

Yeah.

Steven Van Wie 23:36

Fortunately, 401 eliminates some of your tax burden. As you put part of your 20% down. But most people, as they say, don't get the 20%. I saw something— sorry to—

Adam Van Wie 23:49

you wouldn't even be— you couldn't even put 20% of your $200,000 salary in your 401. yeah, I don't know that that is not a great estimate of the cost of living.

Joey 23:54

So that—

Steven Van Wie 24:00

No, but it does tell you something.

Joey 24:02

It does. It's obviously high. Yeah. Yeah. It's going up.

Steven Van Wie 24:05

And as Joey knows better than anybody sitting here, the cost of having young kids It starts bad. And then as Adam knows, as they get older, it gets worse.

Adam Van Wie 24:16

It goes, it ebbs and flows.

Joey 24:17

But I think it's like a U, like it starts high. I think it chills out a little bit and then travel sports come and your life's over. I think that's what I've gathered from that.

Adam Van Wie 24:26

And then college, you're just dead.

Joey 24:28

Yeah.

Steven Van Wie 24:28

Then it's done. I saw on the news yesterday one of the most interesting pieces I have ever seen on TV. It was a chart from an ad for Buc-ee's, what their employees make.

Joey 24:41

Oh, I think I know this.

Adam Van Wie 24:42

Yeah, they get paid quite well in a lot of cases.

Steven Van Wie 24:45

General manager, about $2.5 million. And something like a food manager gets about $200 grand. It's just insane what these people pay. And I'm sure it's hard work. They did say they're in their rules are You're not checking your email or your investments or whatever. You're here to work. That's it.

Adam Van Wie 24:47

Yeah.

Adam Van Wie 24:52

That's correct.

Joey 24:52

Wow.

Adam Van Wie 25:09

Work.

Joey 25:10

Well, if you've ever seen the foot traffic, I don't know how you check an email once. It's popping in there.

Adam Van Wie 25:13

There's no way. You are. Yeah. Those, those people behind the counter doing like the sandwiches, they are, they're making them as fast as they're being purchased. Like there's no way you could be checking email.

Steven Van Wie 25:25

I have not yet had my first introduction, but if I ever see one on a sign ahead, I'm going to pull in and just look around because the whole concept is so fascinating.

Adam Van Wie 25:36

You should go. It's worth seeing.

Joey 25:38

Feels like a duty to take you there because it's like the symbol of America in some way.

Steven Van Wie 25:42

Yeah, well, look, look at all the soccer fans. Yeah, came over here. Yeah, they were beyond blown away.

Adam Van Wie 25:51

I, I hate crowds and I'll go to Buc-ee's because it's just a cool experience.

Steven Van Wie 25:55

It's amazing. They Well, it's a Texas company and they captured the spirit of the Texas independence and hard work and success and all this stuff. So congratulations to them. Don't know if it's a public company, do you?

Joey 26:11

I don't think it is. I don't know if somebody owns them or they're their own. I don't even know.

Adam Van Wie 26:12

I don't think so.

Adam Van Wie 26:16

They have private backing. Probably.

Steven Van Wie 26:19

My guess, because of where they're from, be a handful of oil guys. Who, you know what a unit is in Texas?

Adam Van Wie 26:23

That's what I'm thinking.

Adam Van Wie 26:28

Don't know.

Steven Van Wie 26:28

A unit is $250 million.

Joey 26:31

Okay.

Steven Van Wie 26:32

That's how the oil people compare themselves to each other. Ah, well, he's got a couple of units and he's got 4 units. That goes back into the '70s, I believe.

Joey 26:42

So old. Never been a part of one of those conversations, sadly.

Adam Van Wie 26:43

Did not know that.

Steven Van Wie 26:48

Well, maybe the part about, well, he's got it. I don't.

Joey 26:51

Yeah.

Steven Van Wie 26:52

All right, Joey, what's up?

Joey 26:54

So on the topic of higher prices, Fidelity just put out an annual estimate report for the lifetime retiree health cost expectations, and that number rose by 7.5% this year to a whopping $185,500.

Joey 27:11

That's what the headline said, at least. And obviously that's meant to be a bit of a shocker, but that's spread across 25 or 30 years. And I always like to look at that report because obviously when we're doing financial planning for clients that are looking at retirement, we're trying to think hard about what is a reasonable number to use as far as lifetime expenditures. And we actually use quite a bit higher than this, but on an annual basis, that comes out to $6,000 to $7,500 a year, which sounds about right when you think of like mild out-of-pocket copays, things like that, Medicare premiums, Medicare—

Steven Van Wie 27:42

And it's an upward sloping curve. The older you get, the more —with healthcare services you're going to need.

Joey 27:43

It is an upward slope.

Adam Van Wie 27:47

Usually 2 pretty high-cost years right at the end. Yeah.

Joey 27:51

And so this actually excludes that. I think they pull some fraction of a number in and lump it into the one number for everybody analysis here. But as far as planning goes, we use 2 really big expensive years based on a Genworth cost of care study at the end.

Steven Van Wie 28:05

And I think it speaks well for the whole concept of long-term care insurance. And I'm— I tell everybody that I see in the office who is of a certain age, and I don't mean real old either, that if they can afford it, get a traditional long-term care insurance policy. There are these so-called hybrids, life insurance and annuities and so on, that have an accelerated income rider on them. They call them hybrid long-term care policies. They're not long-term care policies, period.

Joey 28:39

No, they're actually great. They're useful.

Adam Van Wie 28:41

They are. And a lot of people can't get underwriting for long-term care insurance. There are ways around that using some of the other products, which is a really good use for them.

Steven Van Wie 28:46

And so tougher than nails.

Steven Van Wie 28:53

And according to our local expert, Stan the Annuity Man, he actually prefers— at least he did last time I talked to him, which has probably been a year— he preferred some of the new life insurance products over the annuity products. That are using the accelerated riders.

Adam Van Wie 29:09

Yeah, there's pros and cons to all of them. You should, if you're in that market, you should talk to a good planner about what your options are.

Steven Van Wie 29:17

But yeah, but if you can afford a long-term care policy, get one.

Adam Van Wie 29:21

Well, see, I disagree with that blanket statement because I think that if you're under a certain amount of assets, then don't get one. And if you're over a certain amount of assets, then don't get one because it's a waste of money.

Steven Van Wie 29:33

Yeah, there's always been an income range that That applies to more than anything.

Adam Van Wie 29:37

Well, really, it's a, I think, an assets range more than an income. Yeah. Because if you're under, you're not going to get wiped out because you just don't have the assets to wipe out and you'll probably end up on a Medicaid or something like that type of plan. But if you're over, you can just self-insure and pay it out of pocket because the couple hundred thousand off of a $10 million portfolio is not going to break you.

Steven Van Wie 29:40

Yeah. You can turn those into money.

Steven Van Wie 30:03

And bottom line on all of these discussions is just what Joey said. That $185,000 is not per couple either. That's an individual. Yes, great point. That's right. So if you are beginning the process of financial planning, you're going to hear a lot about that if you come and see us. And the other thing it affects so much is early retirement. There is a push out there by a lot of people that want to retire early in their 50s or low 60s or something like that. And then of course there's that group called FIRE, Financial Independence Retire Early, which we debunk at least once a year on the show because it's ridiculous. The answer to the FIRE when you get out early is you get out and retire and then you get a job because you can't afford not to. That's true. Just leaves me a little cold all the time. But for the, for the rest of people, it is one of the biggest problems that the three of us face day to day. Somebody comes in, wants out because they can, partly. You can't just go out if you can't go out financially. But if they could, the biggest problem we face is what do you do about health insurance? For sure.

Joey 31:19

Well, and there's things you can do in different phases of life. So I've got a list here. Um, while you're working, if you have access to a high deductible plan that involves an HSA, saving to that HSA is one of the best things you can do. You get a tax deduction for money that goes in. Any growth that happens in the account, uh, throughout your lifetime is tax deferred. And then if you end up using it for healthcare or you reach a certain age, then all the distributions end up tax-free as well. So they call it triple tax advantaged.

Joey 31:48

And then there's all sorts of planning. If you continue listening through October, November, I'm sure we'll get back into pre-retiree or retiree healthcare before age 65, which is its own income planning thing. There's a lot that can be done to control what healthcare costs.

Steven Van Wie 32:04

Yeah, we've seen a lot of disappointed people because they've got everything in order except for one thing, that they can't get the health insurance covered without paying an astronomical fortune. Yeah, I'm, I was always irritated about the HSAs because the day it became a really good idea for me with my 65th birthday and you can't get one. Isn't that nice? We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 32:33

Hi, I'm Adam Van Wie. 

Joey 32:34

And I'm Joey Loss.

Steven Van Wie 32:35

And I remind everybody that lines are open 904-222-8255

Steven Van Wie 32:40

and our trivia question's still out there. What is the value of all the coins that are lost in landfills every year in this country? Think big. It's amazing to me. And that's why I always like to do trivia questions. I like to make a point. And I don't know if this is much of a point, but it sure is interesting when I get surprised by the answer, then I use it on the air. All right, Joey, you want to hit another topic?

Joey 33:07

Sure. So this week Russell Investments put out a number on the value of advice from advisors, and, uh, they are not the first to do this. We— Vanguard had put out an Advisor Alpha study many years ago that's referenced a lot. Um, Morningstar also put a report out called the Gamma Report, and it does its own analysis of what an advisor is worth. Russell has the best, uh, at least the most bullish opinion on what an advisor is worth. I wanted to walk through the breakdown and kind of get you guys' thoughts. So it says the overall value of working with a financial advisor across your lifetime amounts to an annual alpha of 4.92%.

Joey 33:47

Now that's a lot higher than what we've seen from the other reports.

Steven Van Wie 33:51

Approximately double. Yeah. So 35, 40% more.

Joey 33:55

Morningstar puts it at 2 to 3% roughly. And the Morningstar Gamma report puts it at like 1.82%.

Steven Van Wie 34:03

And these are results net of fees, I presume.

Adam Van Wie 34:07

Yes, these are— that would be net of fees. It would have to be.

Steven Van Wie 34:10

Yeah, they couldn't report it otherwise, I wouldn't think.

Joey 34:13

Um, so they put the primary— now each of them have different, uh, drivers for the biggest thing, but the two of them are the same. So Russell and Vanguard both say that the biggest affecting lever is behavioral coaching. So talking through periods, I think the last few years, like the tariffs, right, where we got several calls in the weeks leading up to the moment where those tariffs are going to turn off— turn on, and the market's diving, helping people stay in their seats. And those moments are worth a tremendous amount of money across a lifetime. So every year, are you getting 2.3%? No. But in some years you might get 10% when there's a big thing that happens, and the lifetime value of that amounts to something like 2.3% is what they're saying. Vanguard has that at 1.5%,

Joey 34:56

and then Morningstar, on the other hand, says that The biggest value add is on asset location. So owning your biggest growth assets in the places that make sense tax-wise and withdrawal sequencing. And those are all things that I think are valuable. Definitely. I could see just depending on how you weight the data, you end up in different places.

Steven Van Wie 35:14

Yeah, they're real things. And we've all talked about these things numerous times with clients or potential clients or whatever. But, you know, if If somebody— this is the old sage here— if somebody comes into your office on what we call a suitability— suitability is a meeting where someone comes in that we don't know and they don't know us, and they're looking to see if we both think it would be a good idea for them to become a client. One of the first things that is a red flag to me is they'll open up and say, hi, What do you cost? And at that point, they somehow aren't really generally qualified to be an upcoming client. That is not the correct thing to ask a financial planner upfront. Upfront, you do a lot of things differently than that. What do you do? How do you do it? And then you can get into results and costs and all that stuff. But when someone's number one, goal is to save money, it's not going to last. So think about that.

Joey 36:21

You guys agree with me? I do, because I think there's a lot of clients who come in and we've had several meetings with people where we're like, you know what, based on what you're already doing and the questions that you have and the scope of the engagement that we see, it's just not going to be worth paying us what we charge to do that.

Adam Van Wie 36:37

Oh, it happens quite a bit. Yeah, frequently, I would say.

Joey 36:40

And it's the right thing to do for everybody because in our case, We don't want a 6-month relationship. There's a lot of work that goes into setting it up. We want a 10-year, 20-year, 30-year relationship. So it makes sense for us to be honest about that. And, um, on the other, the other side, you know, if people are focused on cost, they may not realize the gaps that they're dealing with. So Bank of New York Mellon put out that 53% of ultra-high net worth families, this is households of $10 million or more in net worth, do not have a wealth transfer plan fully in place. The cost of that is immense. I mean, probate alone, let's say half of that subject to probate, you're looking at $600,000 of fees. Geez. Depending on the state. I mean, $300,000 to $600,000. You know, just there's a range and a lot of that has to do with the state setup on that. But you're talking about a handful of conversations, paying a couple lawyers, sitting down, getting everybody in a room, having a conversation, and then talking about it with the family. That is a potentially multimillion-dollar set of events.

Adam Van Wie 37:39

You're avoiding a $30,000 lawyer fee, right, to pay $300,000 in probate.

Joey 37:44

And a lot of times I don't think $30,000— I'm just—

Adam Van Wie 37:47

you're making that up.

Steven Van Wie 37:48

But yeah, I mean, I actually think it's under $10,000. Those services, I believe, have come down over my adult lifetime. Yeah, I think, you know, part of it's just the, the ease of producing documents now. They've got a lot of what would be boilerplate, but it's, it's customizable to your situation.

Adam Van Wie 38:06

I was, I was just assuming if you have $50 million that you have a more complicated situation. At $50, I think that's right. Yeah. Or whatever that number looks like. But yeah, for a normal average couple, I don't know. I think you can get that done for a few thousand dollars.

Steven Van Wie 38:21

Yeah. And even if your, your worth is underneath what the current limits are, you don't know if those current limits for taxes will be in place down the line. That's one thing to consider. But there's always the probate. If you don't have any estate planning done, the probate court's going to be a necessity and you don't want that. But besides, it makes everything public. Yeah. And that's just one piece.

Joey 38:44

I mean, there's— I mean, think about one other area I'm just cherry-picking is some people have a ton of assets and all of those assets are exposed and they have minimal insurance because they're super cost-sensitive. And what happens if they're in a car accident and someone hits their Aston Martin? What do you think the first thought is of somebody who gets in an accident with a guy driving an Aston Martin? Absolutely. This guy's got some money. I got to call that 7777 billboard and get after him.

Steven Van Wie 39:06

You know, this goes back— I got a printout here— goes back to October of 2024, and it's called 8 Important Financial Questions to Ask Your Aging Parents. We had an interesting meeting this past week where a couple who's been with us a long time, they brought in two grandchildren, 14 and 17, I think. Yep. And we asked them up front what the rules were. Is there anything that they can't know? Nope. Wide open.

Adam Van Wie 39:37

Full transparency.

Steven Van Wie 39:39

It was very refreshing.

Adam Van Wie 39:41

I don't think I've seen that before. Not with grandkids. Not with grandkids. With kids, yes.

Steven Van Wie 39:47

But they, they're doing generational planning and they want the kids knowledgeable. So here's a few of the questions from this 2024 thing that I thought were pretty good, actually. First, what— this is what you ask your parents. What are their wishes for their money? That's a really good question. You're just going to throw it at a court or something like that, or is there something you want? Do you want charities or any other organizations? You want everybody to split things equally, or has somebody had like an advance or whatever? That's just a good starting point. Then do they have an estate plan? And that estate plan is what we were just talking about, where you have to designate many different things about how you want your estate handled. And if, if not— my dad died intestate. He didn't have much money, but He did not have a will. In fact, he had an appointment to make a will when he died. So there you go. So it went— his estate went to the state of Florida, who allocated it according to the laws in the state of Florida. And he had 3 kids, so they sent us all our share of it. And we talked to each other and sent it all back to mom because she needed it worse than we did. But that's the kind of thing that can happen to you if you don't take care of business upfront. How are your parents funding their retirement? What's their income going to be? Where are they going to get it? And is it going to be significant enough, etc.? Have they designated a power of attorney? Power of attorney is somebody who can act on your behalf to do certain things. And in today's environment, you got to be very careful about who you give it to and how many you have and and all those things. Do they have updated beneficiaries? This is one that we deal with constantly. People come in and they've designated beneficiaries for their IRAs or whatever, and you know, life changes. You might have more kids, you might get a divorce, on and on. You have to— you should annually update your beneficiaries just to make sure you're not doing anything wrong. How will care be provided? What we were just talking about, long-term care or other whatever. How can important information be accessed? If you die and you haven't left access to your important information, it's on you. That's it. And how to have a conversation? The number one thing, initiate it. Most parents want their kids more involved than they are. Most kids want to be more involved with their parents. They just don't get it started. That's a good lesson to remember. Every year I had two sources on this. One of them says $68 million and one of them says $62 million. And I don't really care which one's right. That's a lot of coins in a landfill, isn't it? And it happens for so many reasons, especially—

Adam Van Wie 42:49

That's insane.

Adam Van Wie 42:54

I mean, who uses coins? I can't remember the last time I had a coin in my pocket.

Steven Van Wie 42:58

I'm guessing this number will decline. It will. Because of exactly what you said. But you go home and every now and again go through the creases in your couch and pick up all that stuff. You never know.

Adam Van Wie 43:10

Yeah.

Steven Van Wie 43:13

Are we there? We got one more minute. We got one more minute. Okay, good. I had to chuckle a little bit with this one. And it's kind of the, the, um, follow-up, I guess, on the estate thing. 43% currently of first marriages wind up in divorce. I always thought it was a little higher than that. I thought it was higher too. 57% of second marriages wind up in divorce. I thought it was closer to that number. Uh-huh. And 67%

Steven Van Wie 43:48

of third marriages fail. You do not apparently learn by practice.

Joey 43:54

Yeah, practice does not make perfect. Yeah.

Steven Van Wie 43:56

And I'll tell you one more thing, as a mathematician, if you divide what you've got in half 3 times, you're not gonna like it. No. How to approach zero without really trying. All right, little levity for the end of the day. We've had a good time. Thanks for listening. We'll see you back next week.