Stock Price Movements

Summary

Podcast Summary: "Stock Price Movements" on Jill on Money with Jill Schlesinger

Release Date: February 4, 2025
Host: Jill Schlesinger, CFP®
Platform: Audacy

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Introduction

In the February 4th episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger delves into the intricacies of stock price movements amidst economic uncertainties. Co-host Mark T. McGowan joins her to analyze recent market events, address listener concerns, and provide actionable financial advice. The episode navigates through topics such as the impact of tariffs, stock volatility, retirement strategies, and real estate equity considerations.

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Main Discussion

1. The Impact of "Trump Tariff 2.0"

Time Stamp: 02:26 – 04:40

Jill opens the episode by addressing the resurgence of tariffs, dubbed "Trump Tariff 2.0," and its immediate effects on the economy. She explains that tariffs, taxes imposed on imports, can lead to increased costs for companies and consumers alike.

• Jill Schlesinger: "Tariffs tend to lead to more inflation. They can be bad for growth." (03:05)

Mark emphasizes the concern that these tariffs could drive up inflation rates, potentially leading to higher interest rates and job losses.

• Mark T. McGowan: "We could see some job losses." (04:11)

Jill reassures listeners not to panic over market fluctuations, highlighting the importance of staying informed and referencing their detailed blog post on the topic.

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2. Listener Emails and Stock Volatility

a. Nvidia Stock Drop

Time Stamp: 04:40 – 07:38

Mark discusses an email from Chris, a listener who owns a significant position in Nvidia stocks. He recounts Nvidia's recent 17% drop in stock value following competition from Chinese company Deepseek, which introduced a cost-effective AI model challenging Nvidia's market dominance.

• Chris (Listener): "When it goes up, of course I'm happy. When it goes down, I always think I should have sold before." (05:43)

Mark addresses the behavioral aspect of stock investing, advising Chris to assess whether Nvidia remains a compelling investment at its current price and to consider diversification to manage risk.

• Mark T. McGowan: "If it is money that you don't need and it is really in the less than 10% of your overall investments, then you already made your bet with the devil." (06:46)

b. Health Insurance and Retirement Funds

Time Stamp: 07:38 – 10:42

Patty writes about her husband's job loss and the subsequent increase in their health insurance costs. Despite having $4.2 million in investments, Patty opted to file for Social Security benefits early to cover the additional expenses.

• Patty (Listener): "Our health insurance was $300 a month, and now it's $1200." (08:13)

Mark critiques her decision, suggesting that with substantial investments, she should reconsider filing for Social Security prematurely and explore other funding strategies.

• Mark T. McGowan: "Undo that Social Security filing. It's ridiculous." (09:12)

c. Retirement Strategy and Roth Funding

Time Stamp: 10:42 – 13:53

Gary seeks advice on his retirement strategy. Approaching retirement at 66, he plans to draw $4,000 monthly from his IRA to fund their living expenses while fully funding their Roth IRAs with available funds.

• Gary (Listener): "Should we continue to fully fund the Roth?" (12:25)

Mark approves of Gary's strategy, highlighting the benefits of reducing taxable traditional IRA balances in favor of tax-free Roth accounts, especially if they anticipate being in a lower tax bracket post-retirement.

• Mark T. McGowan: "I love this plan. It seems like a great plan for Gary and his wife." (12:43)

d. Early Retirement Considerations

Time Stamp: 13:53 – 16:26

K and her partner, both in their early 60s, express concerns about retiring next year due to high living expenses and wish to move towards travel-focused lifestyles. With a combined net worth of approximately $3 million, they face the dilemma of whether their savings are sufficient for retirement in a high-cost state.

Mark advises them to reconsider claiming Social Security early and to project their income needs at typical retirement ages (67 or 70) to ensure sustainability.

• Mark T. McGowan: "Do not send us anything at 62. No one's claiming Social Security at 62 unless you tell me you're in terrible health." (15:49)

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3. Housing Equity Dilemma

Time Stamp: 16:26 – 19:55

Towards the end of the episode, Mark presents a hypothetical scenario involving a 50-year-old single individual with significant equity tied up in real estate. The question revolves around whether to liquidate home equity to increase financial flexibility despite potential short-term costs.

• Mark T. McGowan: "If you're somebody who is wrestling with should I sell my house, free up the equity, be a renter, should I try to do that? Am I somebody who really needs to think about how to get more liquid?"

Jill and Mark discuss the challenges of accessing real estate equity, especially in a market where property prices have surged and affordability is strained. They encourage listeners facing similar dilemmas to reach out for personalized advice.

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Insights and Takeaways

• Behavioral Finance: The episode highlights common behavioral biases in investing, such as the reluctance to sell appreciating assets and the tendency to panic during market downturns.

• Diversification and Risk Management: Emphasizing the importance of not overexposing oneself to individual stocks, especially volatile ones like Nvidia, and the benefits of diversification to mitigate risks.

• Retirement Planning: Advising on optimal strategies for drawing down retirement funds, the importance of timing Social Security benefits, and the strategic use of Roth IRAs to manage tax liabilities.

• Real Estate Equity: Discussing the pros and cons of liquidating home equity for financial flexibility, especially in high-cost living areas, and the impact of current market conditions on such decisions.

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Conclusion

In this episode, Jill Schlesinger and Mark T. McGowan provide valuable insights into navigating stock market volatility, optimizing retirement strategies, and managing real estate investments. They underscore the importance of informed decision-making, behavioral discipline, and personalized financial planning to achieve long-term financial stability.

Listeners are encouraged to visit jillonmoney.com for more resources, including detailed blog posts and opportunities to engage directly with the hosts for personalized advice.

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Notable Quotes:

• Jill Schlesinger: "Tariffs tend to lead to more inflation. They can be bad for growth." (03:05)

• Mark T. McGowan: "If it is money that you don't need and it is really in the less than 10% of your overall investments, then you already made your bet with the devil." (06:46)

• Mark T. McGowan: "Undo that Social Security filing. It's ridiculous." (09:12)

• Mark T. McGowan: "Do not send us anything at 62. No one's claiming Social Security at 62 unless you tell me you're in terrible health." (15:49)

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Connect with Jill on Money:

• Website: jillonmoney.com
• Contact: Visit the "Contact Us" section on the website for personalized inquiries.
• Newsletter: Subscribe for weekly financial insights every Friday.

Transcript

[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Mark T. McGowan]

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[Jill Schlesinger]

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[Unknown]

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Welcome to the Jill on Money show. It's Tuesday, February 4th and the tariffs are in place.

[Mark T. McGowan]

So wow.

[Unknown]

Here we go.

Trump tariff 2.0. Now listen gang, I know that this is a lot. This is going to be a story that has many pieces to it. So what I want to be clear about is in the initial early morning of the aftermath of these tariffs, the basics are that a tariff is a tax or a duty that is imposed on a certain class of imports or exports. We're talking about imports here. The company that imports the good, they're the ones that are on the hook.

[Mark T. McGowan]

For the extra charge, okay?

[Unknown]

They can eat it, make less money, right? See reduced profitability, or they can pass it along to consumers. Chances are they're going to pass it along to consumers. That's why we're concerned that the inflation.

[Mark T. McGowan]

Rate could start to rise.

[Unknown]

Now, without going into massive details, I don't want people freaking out about market movements up or down. I don't want people to get so in their heads about this. I want people to understand that this is a unfolding story and we're all going to get through it and cackle it together. We do have a great blog [e-mail] with a lot of the information that you may be thinking about. So let's do that and kind of make that the focus. If you want to educate yourself, go to jillonmoney.com, click the blog section. You'll see I wrote something called Trump tariffs 2.0. And you know, I've got some stats there. I've got even more stats in my little pea brain that I'm thinking about right now. But in general, tariffs tend to lead to more inflation. They can be bad for growth.

[Mark T. McGowan]

You could see some job losses.

[Unknown]

Things are going to get more expensive in selected categories, and it's not good. But we will soldier on and we will continue to give you the information you need. So Again, go to jillonmoney.com, the blog section. You'll see Trump tariffs 2.0.

[Jill Schlesinger]

While you're on the website, you'll see.

[Unknown]

All the other information and the Contact Us button. If you're really freaked out about this, click the Contact Us button.

[Mark T. McGowan]

We, we are always here for you.

[Unknown]

Jillonmoney.com, click the contact Us button.

[Mark T. McGowan]

Okay, let's do some emails. They are pouring in, so let's do it. I'm gonna start with this one because we actually got a note last week when you might have noticed that there was that first day of trading last week, Monday, when Nvidia, the big chip maker, the one that's really the company that's the sort of the backbone of the AI developing world, Nvidia tumbled by 17% last Monday. And you know, it's been a. It was a funny sort of developing story, actually, because funny meaning not haha, but it was a story because there is a company called Deepseek, which is a Chinese company. They released their recent AI model that really did seem to perform pretty perfectly with OpenAI. And the thing is that they were able to create this competition for a lot less money and computing power.

[Jill Schlesinger]

And so then the thought was, oh.

[Mark T. McGowan]

My God, maybe people are not going to need these expensive Nvidia chips. The stock tumbled. They raised $600 billion of market cap, got everyone's hair on fire and all that. Now, that is to say that Chris wrote us a note. I own about 2500 shares of Nvidia, which has appreciated 3 to 400% from my purchase price. This is just an investment. I don't need the money. By the way, it's like a $300,000 position. So, you know, frankly, when there's price fluctuations of, you know, 20 or 30 bucks, the gain loss swings around. So here's what Chris writes. When it goes up, of course I'm happy. When it goes down, I always think I should have sold before. I check four to five times every day what the price of Nvidia is. Is this typical? Please let me know. You know, listen, if it is money that you don't need and it is really in the less than 10% of your overall investments, then you already made.

[Jill Schlesinger]

Your bet with the devil.

[Mark T. McGowan]

I think that what's funny about this is people who own stocks that are on moonshots or even crypto that's been on a moonsh, you're just reluctant to sell. So I don't know what to say. I don't really own stocks, not to get out of them. And, you know, it's different than saying, I own the index and I'm just gonna stay in it. But if this is just your fun money, maybe you should be thinking about every time it goes up by a certain percentage that you'll sell a little bit. And you can always keep some money on the sidelines. But I just find it odd that the discipline of selling is so much more difficult. So that is the behavioral part of, of what you mentioned, Chris. I think it's much better that if you are going to own individual holdings that you should say to yourself, oh, okay, well, you know, on the day after that, let's say Nvidia tumbled.

[Jill Schlesinger]

So this is a stock that reached.

[Mark T. McGowan]

I don't know, almost 150 bucks a share. So the question is, at $150 a share, is that a stock you want to buy again? That's a really good way to test whether or not you should be selling or even if it went from, you know, went from 150 down to 120. Do you say at 120? Yeah. This is a compelling stock. At some point you've got to ask yourself, what is it that would keep.

[Unknown]

Me in this position?

Or why am I checking this four.

[Mark T. McGowan]

Or five times a day? That seems maybe that you have too much in this one holding.

[Unknown]

Just my two cents.

[Mark T. McGowan]

All right, this is from Patty. Hello, Jill. My husband lost his job at the end of January. He's 62 years old. Our health insurance was $300 a month, and now it's 1200. Oof. What a big. That's a big one. Okay, Patty's retired. She's 64, and she just filed for her own Social Security benefits so that they could cover their health insurance costs. I don't know about that decision, but she's done it already, so I don't know if you can undo it.

[Unknown]

I think she can.

[Mark T. McGowan]

All right, let's put a pin in that. So my husband is doing some consulting, but it's certainly not the six figure job that just ended. We have a healthy $4.2 million in investments. Are you crazy? Why is she filing for Social Security? Since the 2024 market was so good, we actually made $800,000, but I believe stocks are going to fall this year. We.

[Unknown]

I listen to this.

[Mark T. McGowan]

Since we haven't seen this much growth since 97 and we're retired, we have to start withdrawing from our investments. I want to take $400,000 out of the gain and put into a high yield account with our financial firm so as not to lose it. We don't have 20 years to make up for a 40% loss or more. What are my thoughts? First of all, undo that Social Security filing. It's ridiculous. You've got $4.2 million. Okay. And you're worrying about an extra 12, $900 a month. I mean, this seems insane. This is a silly thing. Like that is not a reason to file for Social Security. So let's think about this. Of your $4.2 million, how much is in stocks? That's my question to you. If you're telling me that you've got like a 50, 50 portfolio and everything's balanced, that's fine. I wouldn't touch a thing. If your $4.2 million is all in stocks, then sure, I'd be thinking about whether or not you should Be rotating into a less risky asset class, maybe like bonds. But would I go to cash? No, I would have two years of your living expenses in cash somewhere. Whether it's the money market, a cd, outside of this, outside of this firm's management, you know, just a bank, whatever. But I mean, this is insanity.

[Unknown]

I think she, I think they actually probably are all stocks and she thinks they're going to lose the $800,000 gain. She thinks, thinks it's going to be wife off the table this year. I just, you know, I love these projections.

[Mark T. McGowan]

Oh my God. That is crazy.

[Unknown]

Unbelievable.

[Mark T. McGowan]

Okay, this next email, it's from Gary who writes, hi Jill, I enjoy your weekly email newsletter. Hey Mark, that's for you. So, hey Mark, that's all about the, the newsletter. Congratulations. Okay. He also enjoys our podcast. He says, I even purchased your last book, my most recent book, the Great Money Reset, and found it useful. I have a question. I think that could be simple, but maybe not. So Gary goes on and writes, I will be retiring from my full time job in May of this year. My wife and I are 66. She is already retired. I have worked out a deal with my current employer that I will be working for them starting on May 1st as a contractor. I love this idea, supporting a sales territory. I'm hoping to make about $30,000 per year for the foreseeable future. It's a conservative number and it could easily double if I were to sell a lot. Now we would like to have about $9,000 a month to live on. We have our portfolio professionally managed. It's in a mediumly conservative program that is rebalanced regularly. Okay. I asked my financial advisor to start to draw funds from my IRA at $4,000 a month starting at the beginning of this year until it is depleted and then move on to our other Iraq. I did this because I was planning on retiring in January. My employer asked me to stay on full time for a few months. So that's why retirement got pushed off to May. I don't need the $4,000 at this time, so I'm taking that money and fully funding our Roths for 2025. Once they're fully funded, I plan on reinvesting any excess money in my brokerage account.

[Unknown]

Is this a sensible strategy?

[Mark T. McGowan]

I am attempting to reduce the money in my 401 and traditional IRAs as much as possible now so that we'll have lower RMDs in the future and of course more money in the Roth accounts as long as I continue to have earned income and have excess cash flow.

[Unknown]

Should we continue to fully fund the Roth?

[Mark T. McGowan]

Yeah, why not? I love this plan, don't you, Mark? It seems like a great plan for Gary and his wife.

[Unknown]

Yeah. I mean, I would love some more information, such as the numbers, but. Yeah, from what he's. From what he tells us, sure. Why not?

[Mark T. McGowan]

Exactly. I mean, gang, what I want everyone to hear in all of this is that as you look ahead, if you are in a period of time where you know that your tax situation is going to be putting you in a lower bracket, why not take the money out? And, you know, I don't know the other aspects. We don't know how much taxable income his portfolio might have and this, that and the other thing. But you know, if you think about it, $4,000 a month, right? And you got so almost 50 grand a year and he's making the 30. And I mean, he could be in the 12% bracket. And the only thing, the only risk he has is just if he starts kicking butt on his income and he pops into the next tax bracket, what would that do? But I don't know. It could be fine. I think it'd be all right. We'll see. But if you need more on this, just get back in touch with us. Okay. This is from K, who says hi, Jill and Mark, big fan of the pod.

[Unknown]

Keep up the great work.

[Mark T. McGowan]

Okay. My partner and I are feeling less and less enthusiastic about going to work these days. Our vices are travel. We'd like to do more of that while we're relatively fit and able to do so. We've got two kids. One launch, the other 85% launched. I'm 61, partner 62. We would love to call it quits next year when we're 62 and 63 respectively. Do we have enough to retire? We live in a high cost of living state. Okay, ready for. I'm going to first look at this. They. Right now they spend about $140,000 a year. Okay, this is interesting. So their income, they make 220 right now. And they got a lot of money. Let me just add this up quickly. So it's $1,100,000 in traditional retirement assets. 360 in a Roth, 420 in a brokerage account, 45 grand in an HSA, $67,000 in cash. There are two scenarios. You ready for the two scenarios, Mark? One is retire next year and claim Social Security. Why are we claiming at 65? Does she mean 67? I hope you mean 67, because I don't want you to claim at 65, we want you to claim at 67. So I'm going to just say that retire next year. Okay. And I think she means looking at 62 and 67. I think they will have income in retirement, Social Security of, let's call it about $5,000 a month that comes from Social Security. Okay. Now remember their pre tax expenses, they're pretty high. 140 grand, don't you think? I mean, not. I don't. I know that when you think about like what they have. But we got to create 12 grand a month in income, right? 5 is going to come from Social Security. Then the question is where does. I'm trying to figure out what's happening. Is she giving me two for. Is she giving me the income for.

[Unknown]

Both of them or each of them?

[Mark T. McGowan]

How do you read that, Mark? I think because one says 62 and one says 65.

[Unknown]

Yeah, I read it as it's both of them combined.

[Mark T. McGowan]

Oh, you do see, I'm not sure. Okay, so there's a. All right, let's just say this. There's at least five and maybe seven. Maybe it's five grand from Social Security than another two and a so in a pension. So the question is, if they had seven grand a month of income, could their one or let's call it let's their $1.8 million portfolio create the balance of that income? Yeah, yeah, sure.

[Unknown]

But they're going to have to spend for three or three years or so.

[Mark T. McGowan]

Exactly. So here's what I would say about this. First of all, I'm much more interested. My scenario that I'd love for you to send follow up with us is do not send us anything at 62. No one's claiming Social Security at 62 unless you tell me you're in terrible health. That's number one. So I want to see the numbers for 67 and 70 for each of you. Okay, so just say me and then say partner and then we can better assess this. But you know, remember, you're going to have to spend down some money. Every scenario is retirement friendly. It's just a question of what you choose to do. All right, that's what I would say. Don't stress too much. It's just we need a little bit more information. Mark, I have one last thing. And you don't know about this, but I wanted to just give you. I had a conversation with somebody recently and I just wanted to play this out for our last question of the day. And that is what would you say Mark, if somebody had a net worth of, let's say equity in real estate, one and a half million dollars and another million and a half dollars invested, $3 million total of net worth, but feeling very financially insecure because that equity is tied up in the house. 50 years old, single, are you somebody who would think about selling the house to free up the equity, even though they may even have to pay a little bit more in expenses in the near term just to kind of get resettled. But the lack of access to the equity for a 50 year old who's on his own, how do you think that plays into the decision making?

[Unknown]

I mean it's, you know, it always sounds easy peasy and you know, really appealing. Oh, I'm just going to sell and move into something cheaper. Can this person actually find something cheaper that will work?

[Mark T. McGowan]

I think they can find something that will be at least it will not be as cheap as just owning the house. Let's say that because the house has a tiny mortgage left. Okay, so if it's a $1.7 million house, it only has 200,000 in mortgage, but it's an interest only mortgage. It was purchased recently. It's going to pop on them. It's tough. I've been asked this question in a lot of different ways, just from people who are renters and they say I'm never going to be able to buy. Is it better to have the equity working for me, the money I would be sinking into a house or a house payment, am I better off having that as accessible money? I just think these are really personal questions and they often come down to, hey, are you willing to make a change in like just how you're living? And I think that's the other piece of it. So look, if you've got a question about housing, the housing market is, how shall we say? This is a, this is a Yiddish word mark, so don't have to bleep it. It's fakaakt, meaning it is really upside down and prices are up by almost 50% in five years. The affordability is a real deal. Mortgage rates are not going down anytime soon. So if you're somebody who is wrestling with should I sell my house, free up the equity, be a renter, Should I try to do that? Am I somebody who really needs to think about how to get more liquid? We'd love to hear from you. I think this is a fascinating question at this point in the cycle. So just shoot us a Note. Go to jillonmoney.com, click the contact Us button. Let us know if you'd like to join us on the Airline Live. Don't forget that you can actually sign up for the free weekly newsletter comes out every Friday. It's right on the front door of the website.

[Unknown]

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[Margo Gray]

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[Unknown]

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[Mark T. McGowan]

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[Margo Gray]

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[Unknown]

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[Margo Gray]

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[Unknown]

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[Margo Gray]

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[Mark T. McGowan]

Get your podcasts to us on the Odyssey app or wherever you find your favorite podcast. And don't forget to lift someone up. Change your work, Change your wealth, change your life. Thanks for listening. We'll talk to you tomorrow.