The unique NetWorth Radio broadcast provides meaning to investors by delving deep into the most important headlines. By popular demand, Spencer McGowan now broadcasts his weekly Advance Report Radio shows in video format. Check back each week for the latest financial news and insights!

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Y’all Street: The Texas Stock Exchange!

Q: Where will the newly announced Texas Stock Exchange be located? Who is backing this venture & why is the exchange being founded in the first place?

A: Stayed tuned to this week’s show as Spencer McGowan & Alex Tollen dig into the important answers!

Q: What are some of the top Financial Surprises for investors in the first half of 2024?

A: The Dow Jones Industrial Index recently topped 40,000 for the first time. Federal interest rate cuts have been delayed. Price to Earnings multiples for companies have expanded and artificial intelligence (AI) mania accelerates the data center boom to name a few.

Smackdown?

Q: At this week’s lows the Dow Jones Industrial Average (Dow Jones) had dropped about 2,000 points or 5% below its recent peak of over 40,000 two weeks ago. What are some of the key factors contributing to this decline?

A: Salesforce, Inc. reported as much as 8% revenue gain for the period ending this July, but lowered forward guidance resulting in a near 20% single day drop. Also, CNBC reported that preparation for the core Personal Consumption Expenditures Price Index (PCE) inflation announcement corresponded to additional selling motivation before Friday’s report. Lastly, recent spikes in long U.S. Treasury bonds have created additional pressures that have had a negative effect on the Dow Jones.

Here Comes the Tricky Part!

Q: Should investors buy Bitcoin Exchange Traded Funds (ETFs)?
A: So far, the premise of massive money flows into Bitcoin driven by the launch of ETFs has not come to fruition. The charts below for Fidelity and BlackRock ETFs illustrate that point for now.

Q: Why are the equity markets “smooshy” year to date?
A: The McGowanGroup sees three factors at play. 1. The December celebration rally corresponded to the likely Federal Reserve’s reversal to lower interest rates has not yet occurred. 2. Current Earnings Reports have been mixed. 3. The 10 Year U.S. Treasury yield has spiked to over 4.13% at the highs this week. Stay tuned to this week’s program as Spencer McGowan and Alex Tollen breakdown insights for investors.

CryptoMania, Artificial Intelligence Mania & Weight Loss Mania?

Q: What was this week’s news regarding the major Bitcoin Drama?
A: Monday Bitcoin spiked to near $48k per coin when a seemingly authentic tweet from the SEC’s X account announced approval of Spot Bitcoin Exchange Traded Funds (ETFs). A short time later, the SEC tweeted that their X account had been hacked & the previous message was unauthorized. At the end of the week the SEC did approve Bitcoin ETFs setting the stage for another speculative frenzy over what we like to call “Digital Beanie Babies”.

Q: Should investors trade the approval of the Spot Bitcoin ETFs?
A: McGowanGroup clients currently have great assets with impressive gain potential in their portfolios. After a very impressive two years of outperforming the indexes in our model portfolios, The McGowanGroup will not be adding Bitcoin ETFs to our managed portfolios at this time. The McGowanGroup is focused on real assets with more predictable outcomes, but we will work with clients interested in personalized customizations.

Q: What is the Artificial Intelligence (AI) Supercycle?
A: According to inGen Dynamics: “The AI Supercycle refers to the period of unprecedented growth and innovation in artificial intelligence technology that we are currently witnessing”.

As January Goes So Goes the Rest of the Year?

2 Years in the Desert
The large equity gains in the financial markets of 2023 essentially returned the major indexes to the same levels as the close of 2021, no progress for 2 years. Overall, our managed accounts performed above the indexes with great resiliency during the declines.

A 2024 Magic Carpet Ride?
One of the primary factors over the past 2 years, of course, was the Federal Reserve interest rate tightening cycle, which corresponded to the bear market of 2022. Future cash flows are worth less when cash rates are relatively high. The Federal Reserve’s most recent projections show a return to a more normal 2.5% over the next 3 years for the Federal Funds Rate and corresponding rates on Treasury Bills. For high cash flow assets, a lower discount rate increases the net present value of future cash flows.

Recession?
The Federal Reserve economic growth projections are 1.4% for 2024. Goldman Sachs forecasted growth over 2% in their 2023 year-end update.

Energy Infrastructure
As of December, Recurrent Advisors estimated that energy infrastructure companies are trading at about 6 times cash flow. Of that estimated 16%, 8% roughly represents current dividends and direct share buybacks about 8%. The resulting increase in assets under control per share would equate to about 40% over a five year period in addition to the cash dividends.

Global High Yield
Our four primary high yield managers delivered an impressive 2023. The current yield, equally weighted is above 9%1. While that is an impressive cash dividend, the estimated discount to par value under control per share, is over 20%. The resulting appreciation potential during declining interest rates could be quite impressive assuming bonds drift back towards par values.

Blue Chip Additions
The McGowanGroup Wealth Management investment committee successfully added positions in nuclear, utility assets, pharmaceuticals, and AI related technology during 2023 dips.

Our Next Steps?
Equity market rallies provide the opportunity to raise tactical safety for future resilience especially as valuation targets are harvested.

A Cautionary Note
Election years provide equal opportunities for rejoicing and lamentations. The temptation to let politics drive portfolio decisions often leads to distraction and mistakes. Let not your heart be troubled as we are on the case and grateful to serve.

We wish you and your family a happy and prosperous new year!

SPIKE!

Q: What are some of the reasons the equity markets spiked this week?
A: The Federal Reserve (Fed) indicated in Wednesday’s projections the potential for three interest rate cuts in 2024. The equity markets anticipated lower financing costs over the longer term resulting in higher profits as well as increased net present values of future cash flows.

Q: What companies are some of the big winners in the financial markets, so far, in 2023?
A: Microsoft Corp., Novo Nordisk, Vistra Corp., BWX Technologies, Inc., Visa, Inc., and Energy Transfer.

Q: How can McGowanGroup Wealth Management help investors and their families?
A: The “Team That Cares” puts a Certified Investment Management Analyst, two Certified Private Wealth Advisors, two experienced Wealth Managers, Four highly experienced Financial Services professionals, and a long-tenured Compliance Manager on your side.

14 Trading Days Left in 2023

Q: What big Texas companies are doing great in the equity markets, so far, in 2023?
A: As of December 7, 2023, Tenet Healthcare Corp. is up 43%, DR Horton, Inc. is up 51%, Cinemark Holdings, Inc. is up 65%, Dell Technologies, Inc. is up 69%, Lennox International, Inc. is up 76%, and Builders FirstSource, Inc. is up 125%!

Q: When should investors consider Tax Loss selling to reduce taxes and why is it a good idea?
A: The McGowanGroup recommends, after major financial market rallies, that investors eliminate weaker positions in the second and third quarters of the year to avoid holding positions that may come under pressure as other investors harvest tax losses to reduce taxes during the fourth quarter. In fact, tax loss selling pressure on out of favor assets/asset classes may present an ideal entry point for investors savvy enough to realize bargains near year end.

Q: What are the new IRS tax brackets for 2024?
A: Stay Tuned to today’s broadcast and follow along as Spencer McGowan & Alex Tollen cover the new updates!

Santa Clause Rally?

Q: How do the Equity Indexes usually do in December before an election year?
A: According to The Stock Trader’s Almanac, Pre-election year December average returns since 1950 (or index inception)
• Dow Jones Industrial Average Index: third best of year, +2.7%
• S&P 500 Index: third best, +2.9%
• NASDAQ Index: second best, +4.2%
• Russell 2000 Index: second best, +3.0%

What is the Great News?

Q: What was the rate of U.S. inflation for October?
A: According to the Bureau of Labor Statistics, The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on seasonally adjusted basis or Zero.

Q: Has the outlook on U.S. interest rates changed significantly?
A: UBS believes the Federal Reserve will replace the current “Higher for Longer” rates with dramatic interest rate cuts in 2024. The Dow Jones Industrial Average topped 35,000 for the first time in 19 months.

Q: Who gets the first year-end McGowanGroup Bozo Award and the first Sir John Templeton Award for 2023?
A: James Paulsen, Chief Investment Strategist at Leuthold, Predicted the S&P 500 Index could rise to 5000 in 2023 which is now about 4500. Mike Wilson, Morgan Stanley’s Chief Equity Strategist, predicted large declines in the equity markets and a large drop in company earnings for 2023.

Getting Paid to Wait!

Q: What could “Getting Paid to Wait” mean for investors?
A: In an equity market without appreciation, positive cash flow creates a more sustainable portfolio that can gain long term advantages through reinvestment during market declines.

Q: What areas of the financial markets are paying the most dividends now?
A: Tune in to today’s broadcast and follow along as Spencer McGowan & Alex Tollen cover the changing financial landscape.

Q: How is the U.S. Economy doing right now?
A: According to the Atlanta Federal Reserve’s GDPNow 4th Quarter estimate, Gross Domestic Product (GDP) at 2.1%.

Four Years in the Desert?

Q: What is the average appreciation on the Dow since February of 2020?
A: The Dow Jones was near 29,500 on February 14, 2020 and hit slightly over 33,000 on October 26, 2023. This equates to roughly a 11% gain during that time, annualizing at approx. 3%.

Q: Will the U.S. Government shutdown November 17th?
A: Tune in to today’s broadcast and follow along as Alex Tollen, Chief Operating Officer, covers the topic in detail during the Profit Report!

What is Working in the Markets Now?

Q: What is The McGowanGroup’s year end trading package and what areas of the equity markets are current candidates?
A: Tax loss selling pressure at the end of the year can push out-of-favor companies to attractive bargain valuations. Tax loss selling pressure typically ends at the end of December creating potential appreciation in January and beyond. Technology companies were a good example after the NASDAQ fell over 30% in 2022. Stay tuned to find out what Spencer McGowan & Alex Tollen are currently excited about!

Q: How much is a battery replacement for an 11 year old Chevy Volt?
A: A recent Florida Chevy dealer gave a quote for a battery replacement near $30,000! The car was no longer under warranty & General Motors no longer makes the car’s battery. A third party supplier was the only way to get the battery and therein lies the rub!

Q: What currently attractive categories are included in a McGowanGroup model portfolio?
A: Global High Yield bonds, Medical Dividend companies, Energy Infrastructure, along with Growth and Innovation companies.

Geopolitical Escalation Risks?

Q: How is the Middle East different today than in 1967?
A: The Abraham Accords make escalation less likely. The accords normalized relations with Israel and some Middle Eastern countries. Iran’s support of Hamas and Hezbollah has been referred to as a Proxy War against Israel making war a possibility between Iran and Israel.

Q: How did the global financial markets react to the declaration of war between Israel & Hamas?
A: Oil spiked $4 per barrel at the futures opening Sunday night topping $87. The Dow futures fell 1% Sunday evening to 33,000 and rallied during the week to near 34,000 during the week.

Q: What is currently happening in the North Texas Real Estate Market?
A: Stay tuned and listen to the latest reports from Allie Beth Allman and The Wall Street Journal!

2024 Market Surprises?

Q: What could surprise the greatest number of investors, currently, in the equity markets?
A: Recently, corporate earnings have been forecasted to rise 20% over the next two years and interest rates are expected to begin falling.

Q: Why are investors now seeing a big shift from worries about inflation, due to economic strength, back to fears of a looming recession?
A: Tune in to today’s broadcast and follow along as Spencer McGowan & Alex Tollen cover the changing financial landscape.

Q: What economic changes would’ve corresponded to September’s approximate 2000 point drop in the Dow Jones Industrial Average from near 35,000 to 33,000?
A: The spike in long U.S. Treasury yields to a 16 year high, 4.8% on the 10-year Treasury Note.

Government Shutdown!

Q: What days of the year are statistically the worst for the equity markets annually?
A: According to The Stock Trader’s Almanac, the final 10 trading days of September contain the largest declines for equity values. Whew, aren’t we glad September is over!

Q: What is the “Dynamic Dashboard” that the McGowanGroup Wealth Management (MGWM) Investment Committee uses to enhance portfolio decisions?
A: The “dashboard” is a combination of institutional investment research including Daily Graphs, Bloomberg research, The Wall Street Journal, and outside research selected by committee members.

Cap Rates?

Q: What potential deflationary crisis is unfolding that is likely to change the Federal Reserve’s focus?
A: According to Bloomberg, [Capitalization Rates] or “Cap Rates” on commercial real estate have moved from 6% to 8% decreasing values potentially by 25%. If Cap Rates moved to 10%, the decrease in value would be 40%. Bank solvency is endangered by loans that cannot be refinanced, potentially forcing discounted sales to private investors.

Q: Currently, what sectors of the equity markets have strong estimated returns based upon cash flows, earnings and growth potential?
A: At this time, those areas include discounted Global High Yield, Energy Infrastructure, and Dividend Companies to name a few.

Q: What is the process for consolidating with McGowanGroup Wealth Management (MGWM) and our review process?
A: Tune in to today’s broadcast and follow along as Alex Tollen, Chief Operating Officer, outlines the MGWM process!

Stupid Things Investors Do With Their Money?

Q: What are some of the best and worst performing stocks of the last three years?
A: Marathon Oil, Corp., Targa Resources, Corp., Devon Energy Corp. and Occidental Petroleum Corp. are up over 400% each over the past three years. PayPal Holdings, Inc. is down by 2/3rds. Match Group, Inc. and Warner Brothers Discovery, Inc. have both declined by over 50% in the same three year period.

Q: What could investors look to for the cause of the inflation spike in August?
A: Higher fuel costs have kept inflation elevated.

Q: What has been historically a great inflation hedge for investors?
A: The Energy Infrastructure Sector.

Building Investment Portfolios for 2026

Q: What companies made all time new highs this past week?
A: Those companies include Dell Computer, Eli Lilly, and Walmart!

Q: How high have the estimates in the price of crude oil gotten in recent years?
A: The range of price predictions have included $90 a barrel recently to up to $380 a barrel after the invasion of Ukraine.

Q: Who are some of the strongest healthcare performers in the equity markets this year?
A: They include Dallas based Tenet Healthcare up approx. 51% Year to Date, Eli Lilly up approx. 57% Year to Date, & Novo Nordisk up approx. 45% Year to Date.

Q: What type of Fixed Income allocation could perform the best over the next 3 years?
A: Currently, deeply discounted Global High Yield bond funds provide yields above or near 10% and are priced near 75% of estimated par value.

Are We Running Out of Worries?

Q: What was some of the good news for investors this week?
A: Wage push inflation is expected to decline with the Job Openings & Labor Turnover Survey (JOLTS) declining to 8.8 million down from a peak of 11.8 million and the lowest since March 2021. Positive money flows could indicate that the Federal Reserve will not raise interest rates in September and potentially lower rates sooner.

Q: What happens to the Net Present Value of Future Cash Flows when cash interest rates drop?
A: The calculation of Net Present Value of Future Cash Flows is divided by a lower time value of money which results in a higher valuation.

Q: At what point during the year is it possibly best for investors to harvest tax losses from taxable accounts?
A: Generally, Mid-year or after a major rally are ideal times to upgrade losing positions for stronger positions based upon Year to Date performances. The potential advantage for investors comes in Q4 when tax loss selling usually reaches its apex & allows for the addition of bargains instead of selling at a low point for tax planning.

Q: Is Tax Harvesting automatically done in The McGowanGroup’s managed accounts for investors?
A: The McGowanGroup prides itself on working with investor’s specific tax situations to maximize advantageous outcomes. In other words, YES!

Hot Summer Gets Hotter

Q: Why should investors use McGowanGroup Wealth Management (MGWM) to update their investment plan?

A: At the McGowanGroup “The Team That Cares” provides investors with a clear and realistic investment plan that includes designing and managing a tailored portfolio of great assets with growth potential.

The Miracle of Compounding

Q: What did Janet Yellen do during her visit to China?

A: At an arranged dinner she was unknowingly served a dish featuring mushrooms known for their psychedelic effects.

Q: What is a likely explanation for the 55 basis point spike in long US Treasury yields in less than a month?

A: Atlanta Fed estimated current economic growth this week at a whopping 5.8%.

Q: Is China destined to collapse?

A: Real estate collapse, demographic aging, exports plummet, and recent economic news paint a picture underscored by Alex in his Japan example of lost decades after the 1989 peak.

Melt Up?

Q: Who were the Top 10 Blue Chip performers over the last 90 Days?
A: Tune in to today’s broadcast and follow along as Alex Tollen, Chief Operating Officer, guides investors through the research below.

Q: Who were the worst Blue Chip performers over the last 90 Days?
A: Tune in to today’s broadcast and follow along as Alex Tollen, Chief Operating Officer, guides investors through the research below.

Q: What is the current U.S. Economic Growth estimate?
A: The Atlanta Federal Reserve’s GDPNow raised the Q3 estimate to 4.1%!

Banking Record Cash?

Q: What were some of the impacts on the global financial markets from the Fitch downgrade of U.S. Treasury bonds from AAA to AA+?

A: Large institutional selling of long U.S. Treasury bonds began immediately pushing yields up by nearly 25 basis points and the Dow Jones Industrial Average (Dow) fell over 300 points the day of the downgrade was announced.

Q: What terse reprimands did Fitch Ratings issue for The U.S.?

A: The Fitch Rating’s Action Commentary mentioned among other issues the “Repeated debt limit standoffs and last minute resolutions.”, the “Erosion of Governance ”, & the “government lacks a medium-term fiscal framework…” to name a few.

Q: What happened to the financial markets in August of 2011 when Standard & Poor’s downgraded U.S. Treasury bonds from AAA to AA+?

A: The Dow dropped about 10% that month. Afterwards, U.S. Treasury yields began to rise and continued through 2013 driven by the end of Quantitative Easing.

A Magic Carpet Ride?

Q: What was the equity market reaction to this week’s Federal Funds Rate increase?

A: The Dow Jones Industrial Average spiked 170 points as Federal Reserve Chairman, Jerome Powell, indicated the tightening cycle is likely over. “It’s possible that we would choose to hold steady . . .”

Q: What is a “Soft Landing?”
A: Investopedia.com: “A soft landing, in economics, is a cyclical slowdown in economic growth that avoids recession. A soft landing is the goal of a central bank when it seeks to raise interest rates just enough to stop an economy from overheating and experiencing high inflation, without causing a severe downturn. Soft landing may also refer to a gradual, relatively painless slowdown in a particular industry or economic sector.”

Q: What is an In-Service IRA Rollover?
A: Also defined as a pre-termination rollover, allowing participants, usually after 55, to roll a large portion of their 401k to an IRA in preparation for retirement. McGowanGroup has in depth logistics and planning experience to help investors explore this option.

Told Ya!

Q: What are some of the things McGowanGroup Wealth Management (MCGWM) got right about the current equity market cycle and what are some of the things we got wrong?

A: Last August, we began reporting dramatic decreases in the monthly inflation numbers being released. Alex Tollen recently pointed out in an earlier program the positive impact on the financial markets as inflation dropped. Lastly, we underestimated the peak of inflation and resulting magnitude.

Q: Who gets McGowanGroup Bozo awards for the first half of 2023 and who gets McGowanGroup Sir John Templeton awards?

A: Forecasters that were overly bearish at the beginning of the year will be presented initial Bozo awards. Jim Paulsen, Chief Investment Strategist at the Leuthold Group, earns a Sir John Templeton award for his 2023 optimism. Finally, Spencer receives a Bozo award for underestimating the magnitude of the Federal Reserve’s Interest Rate increase cycle.

Q: What are Total Return Units?

A: Total Return Units are McGowanGroup managed model portfolios tactically allocated to four investment categories:
Growth and Innovation
Growth with Income
High Cash Flow
Tactical Safety and Income

God Bless America!

Q: What are some of the top surprises of 2023 in the equity markets so far?

A: Disinflation, No Recession in Q1 or Q2 of 2023, Recent U.S. economic growth near 2%, An Artificial Intelligence (AI) driven tech rally, Crude oil prices stable near $70 per barrel, A banking crisis limited to four California venture capital focused banks, and Record vacation travel to name a few!

Q: What are Total Return Units?

A: Total Return Units are McGowanGroup managed model portfolios tactically allocated to four investment categories:
Growth and Innovation
Growth with Income
High Cash Flow
Tactical Safety and Income.

Q: What has happened to North Texas home prices in the past year?

A: Prices are down nearly 3% year over year, but up slightly in 2023.

Q: How discounted are traditional energy infrastructure stocks now?

A: Stay tuned for the interview with Recurrent Advisors.

Bear Trap?

Q: When is good news for investors, bad news for the financial markets & when is bad news for investors, good news for the same markets?

A: The Sword of Damocles, The Federal Reserve’s interest rate tightening, hangs over the equity markets. Positive economic news brings fear the tightening sword will fall. Negative economic news celebrates the sword will not fall.

Q: How does the Damocles metaphor impact portfolio strategy for investors?

A: Disinflation combined with news of slowing growth can bring higher valuations especially for high cash flow paying assets.

Q: What happens July 12th that appears to be great news for the stock market?

A: The trailing 12 month Consumer Price Index (CPI), Inflation, appears poised to drop to near 3%.

Summer Planning Season

Q: What is summer planning season?
A: McGowanGroup clients are encouraged to schedule a 2023 planning call to update financial plans, schedule a preliminary 2023 tax planning call with their CPA’s, and update estate planning logistics.

Q: What events happen in July that could set off a large equity rally?
A: The trailing 12 month inflation rate, as of June 2023, drops by another 1% and company earnings announcements after the 4th of July Holiday can likely bring positive surprises especially related to economic growth.

Q: What are some of the impacts of the Securities & Exchange Commission’s (SEC) allegations against crypto exchanges so far?
A: The collective value of crypto currencies has fallen nearly $100 Billion since the SEC sued two of the largest crypto exchanges.

5 Year Possible Outcomes for Investors?

Q: Is the U.S. economy in a Recession?
A: Current economic growth estimate is at 2.2% according to Atlanta Federal Reserve Bank.

Q: What is happening to corporate earnings now and what is currently projected?
A: S&P 500 current quarter operating earnings are at $52.80 according to S&P. Estimates for the rest of 2023 vary from $46.50 to $57.50 per quarter. 2024 estimates top $63 per quarter.

Q: What could be an investor’s most important Estate Planning step with their wealth manager?
A: Reading your Estate Planning documents!

Q: What are some of the holdings in the world’s largest Hedge Fund?
A: Stay tuned for this week’s fast paced financial news and find out!

Strategy Insights

Q: How did the Treasury Market react this week during debt ceiling negotiations and what can it tell investors?

A: One interpretation is that the risk of default is subsiding as interest rates have recently dropped.

Q: What areas of the economy have seen the greatest demand increase for oil in 2023?

A: Global air travel is up 52% from March 2022 to March 2023.

Q: With the recent 10-year withdrawal requirement on IRA’s, how could heirs minimize taxes and preserve the legacy?

A: Stay tuned for the formula during today’s Profit Report.

Ideal Outcomes for Investors Now?

Q: What is the real story on the Federal budget squabble and the debt ceiling default debate?

A: Treasury Secretary Janet Yellen did not wind down discretionary spending back in January and has imposed a June default date. The House already passed the Default Prevention Act and a debt ceiling increase bill. The brinkmanship continues.

Q: Is Artificial Intelligence (AI) an oxymoron?

A: Would you like an artificial cheeseburger?

Q: What areas of the equity markets does the McGowanGroup Wealth Management (MGWM) Investment Committee believe to be the most compelling set of bargains for 2024 and beyond?

A: Discounted Global High Yield bonds, Energy Infrastructure, Solar Energy, Applied Technologies, and Medical companies paying dividends.

Stealth Recession

  • Has a stealth recession already arrived?
  • Have the financial markets factored in a real recession that may not actually happen?
  • What are the possible outcomes for the equity markets in 2022?
  • What are some of the economic forecasts for markets in 2023 and beyond?
  • Is the Energy sector presenting an attractive entry point in the financial markets?
  • Did the equity markets bottom out on June 17th?
  • How does pessimism signal potential opportunities with regards to the markets?
  • When could the technology sector bottom this year in the markets?
  • How can I possibly get a big pay raise with my investment portfolio?

Navigation Techniques

  • What types of actions can improve my investment portfolio’s reliability?
  • How can I get a pay raise with my stock portfolio?
  • What does 2018 teach us about the current Bear Market?
  • What are some of the real solutions to inflation based upon 1982?
  • How are current fiscal and regulatory policies potentially driving inflation?
  • How does reinvestment of dividends create compounded advantages?

Let’s get started.
Book an appointment today!