On The Ride with Mac & Chad, Karl Eggerss was interviewed discussing all-time highs for the stock market and what’s driving it.
Mac: Oh man, I feel you. I like that, dude. That’s nice. 95.3 FM 1520 AM. It is The Ride on KOKC with Mac, Chad, producer Ryan. Bringing in Karl Eggerss. Karl is with CreatingRicherLives.com. What’s up, brother? You still traveling?
Karl Eggerss: I am traveling. I’m actually in Florida looking at the ocean so it’s not bad. But I said, “You know what, I’ve got to get away from that and go talk to these guys about what’s going on because…
Mac: I’m glad. I’m glad that you took the time.
Karl Eggerss: I did. I did. I help a brother out so-
Mac: Because right now-
Karl Eggerss: We have all-time highs in the stock market right now as we speak. And things are pretty good right now, especially for those that are invested. And we obviously know a lot of this is with the trade deal going through. I think this week kind of encapsulates what the markets are focused on. Which is they’re focused on profits of companies which are starting to come out. They come out once a quarter, all the companies, the big companies report their earnings. And so everybody’s watching that this week. And they’re also watching the trade deal getting inked and that’s superseding the impeachment.
Karl Eggerss: And again, I think investors really do look at this and say, “What really is driving markets up or down?” And for the common Joe that’s out there working, maybe driving, listening to us right now they’re going, “Yeah, I see news come across. Everything seems to be breaking news nowadays. What really impacts my 401(k), my portfolio and what doesn’t?”
Karl Eggerss: And you can see some of the political stuff, it’ll make the headlines more than anything, but does it really impact the portfolio? And the answer is a lot of it does not. And the stuff everybody needs to focus on is the trade deal, economics, interest rates and the profits of companies. That’s what is driving this.
Mac: Karl Eggerss, CreatingRicherLives.com. Go ahead, Chad.
Chad: Yeah, I was telling Mac right before we came back from break, I just saw the Dow was at 29,297. I said, “I think that’s the highest the Dow has ever been, ever.”
Mac: Ever been.
Chad: But we also had the US-Mexico-Canada trade agreement passed the Senate today. So it’s on the way to the president’s desk after a year. And phase one of the China deal he signed yesterday. That tells you a lot that the markets aren’t worried about the president’s stability right now.
Mac: Yeah. Not too concerned. Yeah. Hey, I’m glad you’re-
Karl Eggerss: No, they’re not.
Karl Eggerss: I was just going to say they’re not and it does seem to be this kind of cascade of good news. We seem to have avoided what people feared as a recession last year. We thought we were getting close, but we still didn’t think we were going to have one and we didn’t. But we’ve gotten through that.
Karl Eggerss: We’ve got the couple of trade deals going through and the most important thing right now seems to be the Federal Reserve is not fighting against this and raising rates and choke off the economy. They’re actually very accommodative. And so rates are still very low so folks can still refinance. They can go borrow money for cars, houses, to fund their business. Those are huge things.
Karl Eggerss: And let’s not forget, and I think we’ve talked about it recently, is the tax cuts that went through. It was marginal for the average individual what it did. But for businesses it was even a bigger deal. And there are some rumblings of tax cuts 2.0 coming that would be more targeted towards individuals. And it wouldn’t surprise me if President Trump times that later this year. Right? Coming into the election.
Chad: Oh, I’ll bet money on it right now. That’s an August, September announcement.
Mac: Hey, Karl.
Karl Eggerss: Why wouldn’t you, right?
Mac: Our executive producer Ryan has a question, brother. He wants to talk to you for a sec.
Ryan: Hey, by no means I’m not an expert, but I’ve always been under the impression that December and January is usually a slow time in the stock market with the holidays and stuff. Is that true? And if so, what does that speak to the strength of the economy that we’ve just kept surging through as the calendars flipped?
Mac: I think you’re asking better questions than I am. Dude, what the…?
Karl Eggerss: That’s not bad. Yeah, why don’t y’all swap microphones there? That’s awesome.
Karl Eggerss: It’s a good question. People think that there is some seasonality to the stock market and the economy and both are true. But having said that, December’s usually a good month for the stock market and it was no different this year. Eighteen, December of ’18, was very different. It was a horrible month. It was one of the worst ever for the stock market in the month of December. And it was primarily because, as I just alluded to, the Federal Reserve at that point was raising interest rates and everybody was worried about the economy. You need the Fed cutting rates if we’re worried about the economy. And so I wouldn’t base my decisions on the calendar per se, but there is some truth to when traders go on big holidays, there is some truth to September and October being kind of rough for the markets. But December it’s been actually better than worse for the markets.
Karl Eggerss: And of course now we look and say, “Well retail sales, what are they doing?” And there’s a huge transformation going on from obviously going into stores and clicks. And the clicks are still doing very well. So the Walmarts of the world are doing extremely well. Obviously Amazon is doing well and they’re taking that market share from these brick and mortar stores. And that continues. That’s not a surprise. But when you look at the overall number, it’s still a very good.
Karl Eggerss: And one thing that came up this week that is still very quiet, the housing market is improving and the inventory of homes is very, very low right now and you’re seeing building permits go up, you’re seeing some really good stuff in housing. And housing is huge because when people buy a house, what do they do? They got to fill it up with stuff.
Karl Eggerss: And so they buy a house that means that they’re borrowing money from a bank, typically maybe 80% so the banks doing better. They’re going to Home Depot and they’re buying appliances and they’re just doing all this stuff that goes along with owning a home, buying lawnmowers and that has this massive trickle down effect. So what we look at is building permits and the construction of that because, it’s kind of a leading indicator to say, well people are getting permits. That means they’re going to start constructing the home a few months later and it’s going to be sold and occupied even a few months later after that. So those are the types of things we look at on a daily basis, and that stuff’s improving right now. It’s a very healthy thing. I would say to balance this out the area we need to see improvement in is manufacturing.
Karl Eggerss: Now we know we’re moving to a service economy. There’s no doubt about that. But we still need to see global manufacturing pick up. And it may be bottoming here, but that’s one kind of eyesore for the global economy has been the overall manufacturing sector. So again, it’s a piece of a puzzle. The bears will sit there and say, “Oh, it’s horrible, and therefore we’re going to have a horrible stock market in an economy.” It’s one piece of the puzzle and we need to look at the whole puzzle. And overall, the whole puzzle is pretty good. It could be growing faster, but we’re going at a pretty nice cruising speed here.
Mac: That’s Karl Eggerss with CreatingRicherLives.com. You’re in Florida. It’s 39 degrees where we’re at and where you’re going to freeze in about an hour and a half. Just so you know, Karl. Chad, go ahead.
Chad: Yeah, I mean I almost hung up on him when he said he’s in Florida. Just 37 degrees here. I mean we didn’t want to talk to you. Right? We’re mad at you right now.
Karl Eggerss: It’s only 73 degrees. A gentle breeze on the beach. It’s not bad. I am working down here by the way.
Mac: Right? Yeah. Well you know what, shame on me. You are working. I’m sorry Karl. I didn’t mean to offend.
Karl Eggerss: You didn’t get to see but I used air quotes when I said working.
Chad: That’s awesome. That’s awesome. Well, if people want to know what’s happening with their 401(k)s, I promise you the Dow be at 29.297. It went up.
Mac: See, I don’t know. I was talking to somebody and they were like, “The only people that actually follow that is the ones that have money to invest in it.” And so like John Doe with four kids and he does drywall for a living, trying to make sure they can get food on the table. How could he start to get involved? Obviously going to your website CreatingRicherLives.com but what’s some advice you got for him?
Karl Eggerss: Well, number one, you start with education and number two, if you can save $50 a month there are places to be able to do that. You can save something. There’s people all over the map listening to this right now and at very different income levels and experience levels, but you have to get started doing something and it’s got to be a part of your budget. I mean, I guarantee you there’s $50 a month that’s probably being used somewhere else that can be substituted to go into something.
Karl Eggerss: And again, a lot of these mutual fund companies, if you commit to a monthly withdrawal out of your checking account, they will waive all the minimums. It’s extremely cheap nowadays. Ten Best. And you don’t need an advisor to do that. I mean, these mutual fund companies will help you out and say, “Look, this was the right fund for what you’re telling me, and it’s $50 a month.” And then as it grows over time, then it becomes something. And you say, “Okay, now it’s big enough to where maybe I need to start diversifying. Maybe work with an advisor.” But remember, an advisor is not just helping you invest. An advisor’s helping you put that plan together to even know, “Can I afford $50 a month and where would it come from?” You got to get started.
Mac: You’re talking about $50 a month? That’s a latte and a cake pop at Starbucks.
Chad: Oh man.
Karl Eggerss: Precisely. Yeah, yeah, yeah. Maybe one latte. That’s all it is really.
Mac: Hey, enjoy the rest of your work, brother. We appreciate you, man.
Karl Eggerss: Hey, thanks guys. Appreciate it. Take care.
Mac: Really though. Travel save, man. We’ll talk to you soon. All right. That’s Karl Eggerss, the website CreatingRicherLives.com. This is The Ride on 95.3 FM or 1520 AM. We’re going to take a break. We’re back after this. Hang tight.