Investment Planning

Faith Over Fear

This week, Angela discusses the current financial market volatility in April 2025, emphasizing the theme 'Faith Over Fear.' She explores how investors can navigate uncertainty by understanding the nature of investing, the composition of financial markets, and the importance of having a solid financial plan.
Key Takeaways 💡
The current financial markets are experiencing significant volatility due to factors like tariffs, interest rates, and political noise, which understandably creates fear among investors. However, such turbulence is part of the economic cycle, and historically, crises have presented investment opportunities rather than just risks. Angela cautions against simply hiding from the market and encourages looking for opportunities amid the chaos.
Investing is fundamentally about the future—whether five, ten, or thirty years ahead—and requires a belief that the world will continue to advance with new technologies, efficiencies, and comforts. Without faith in a stable and growing future, investing loses its purpose. Angela urges listeners to consider their long-term outlook on the world and economy as a foundational step in overcoming fear.
The financial markets are not just abstract numbers or symbols on Wall Street; they represent real companies producing everyday goods and services that people rely on, such as toothpaste, clothing, and transportation. These businesses operate under supply and demand principles similar to local businesses, and their success depends on meeting consumer needs despite market noise or political disruptions. Understanding this can help investors see beyond market volatility to the underlying economic realities.
Much of the fear in the markets stems from uncertainty about whether investments will meet current and future financial needs, often due to a lack of a clear financial plan or insufficient cash reserves. Angela stresses the importance of 'cash confidence'—having enough liquid assets to weather market downturns without panic. She advises listeners to develop a plan that buckets cash appropriately to maintain stability and take advantage of market opportunities when they arise.
Emotions, especially fear, can undermine even the best investment strategies and analytics. While data and expert management are critical, they are insufficient if fear causes poor decision-making. Angela encourages investors to have faith in their future outlook, understand the business sense behind investments, and maintain a comprehensive plan that aligns with market opportunities. This mindset allows investors to act confidently rather than react fearfully during market volatility.

This Week in the Market - Episode 74 (4/11/25)

About the Podcast 🎙
This episode discusses recent market volatility, interest rate changes, and their implications on investments and global markets. The KFS Team analyzes historical market patterns, the role of the Federal Reserve, and the impact of political and economic factors on market behavior.
Key Takeaways 💡
The 10-year Treasury yield has risen to 4.5%, marking a significant increase and causing ripple effects across other asset classes. Such large percentage moves in interest rates are uncommon and have led to shifts in the bond market and investor behavior.
During COVID, the Federal Reserve intervened by purchasing bonds to stabilize prices and lower yields. In contrast, the current rise in yields is driven by significant selling, highlighting a shift in market dynamics.
The unwinding of the basis trade, where hedge funds buy treasuries and sell futures, has caused massive financial movements, raising concerns about further market instability.
China's potential selling of treasuries could destabilize its currency and have broader implications for global markets, adding to the uncertainty.
Historical data shows that significant declines in the S&P 500, such as the recent 12.1% drop, often lead to substantial gains in the following year, with an average return of 32.5%. This pattern suggests potential for recovery despite current volatility.
The volatility index (VIX) is a key measure of market uncertainty, with spikes often followed by market recoveries. Trading during volatile periods becomes more expensive due to wider spreads and increased costs.
Retail investors tend to react emotionally during market downturns, while institutional investors adopt more strategic approaches. This difference in behavior influences market dynamics.
Interest rates play a critical role in market behavior, with lower rates encouraging investment and leveraging. However, the Federal Reserve has indicated it does not plan to lower rates despite global trends.
The Bloomberg Financial Conditions Index has shifted from expansion to contraction, reflecting tighter financial conditions. The Federal Reserve's delayed response to these changes has raised concerns about potential liquidity crises.
Despite recent market volatility, there is optimism about future recovery and significant investment opportunities. Patience and a proactive approach are encouraged, as upcoming earnings reports may provide positive signals.

This Week in the Market - Episode 73 (4/4/25)

Got a few minutes? This week Aaron, Sam, Brent, and Henry talk about what's going on in the market, tariffs, interest rates, and more.

This Week in the Market - Episode 72 (3/28/25)

This episode delves into financial topics such as market volatility, private investments, and portfolio diversification. Aaron, Sam, Brent, and Henry discuss current market conditions, inflation, private equity, and debt, offering insights into investment strategies and opportunities in private markets.
Key Takeaways 💡
The market has experienced significant volatility, with short-term interest rates fluctuating and inflation readings showing a month-over-month increase of 0.3%. Despite these numbers, everyday costs for essentials like food and fuel remain high, creating a disconnect between market reactions and public sentiment.
Volatility in the market can present buying opportunities, and hedge funds often benefit from such conditions by accessing diverse asset classes that perform well during turbulence.
Private companies vastly outnumber public ones, with the private market valued at $11 trillion compared to the $88 trillion public market cap. This disparity highlights the growth potential in private markets.
Private equity and debt offer companies alternatives to traditional bank loans, especially as post-2008 regulations have made banks less willing to lend to large companies. Investment firms have stepped in to fill this gap.
Private debt markets are described as less risky than equities, with lenders conducting thorough analyses to ensure loan security. Returns in private debt markets can range from 12-14%, with companies using these funds for growth rather than survival.
Private investments often require a higher level of sophistication or assets due to liquidity challenges and high barriers to entry. Investors must adhere to the company's schedule for accessing funds, aligning their interests with investment managers.
Diversification in portfolio construction is crucial, as different asset classes perform variably, smoothing out overall returns and reducing volatility. Private markets often offer higher yields compared to public markets, but at the cost of liquidity.
Investors should limit illiquid assets to around 5% of their portfolio, aligning investments with their liquidity needs and life planning goals. Longer-term investments can yield better compounding returns.

This Week in the Market - Episode 71 (3/21/25)

Aaron Kennedy is joined by Sam Barker, Brent Bible, and Henry Knowles this week to talk about interest rates, market performance, international investments, and investment strategies. The team provides insights into current market conditions, the importance of diversification, and lessons from past investment decisions.
Key Takeaways 💡
Interest rates are currently inverted, with shorter-term treasuries offering better returns than longer-term ones. Higher rates reduce the present value of future income, and a decrease in rates could improve mortgage payments and economic conditions.
International markets are outperforming US markets this year, with European indices like the FTSE and DAX showing significant gains. International markets also have lower price-to-earnings (PE) ratios, making them more attractive to investors compared to the US market.
The US market's concentration in top-performing stocks, such as Microsoft and Amazon, has led to challenges for diversified portfolios. The top 10 stocks in the S&P 500 are significantly overvalued compared to historical averages.
Fixed income investments, while less exciting than stocks, play a crucial role in portfolios, especially during market downturns. The team emphasizes the importance of recognizing buying opportunities during market dips and maintaining a forward-looking mindset.
Market downturns should be viewed as opportunities rather than threats. The team encourages proactive investment during dips, as these moments can provide a competitive edge and align with the human desire for progress and improvement.
The team reflects on past investment decisions, particularly with FICO, a company with strong financial performance but a high PE ratio. They highlight that high-quality companies can justify higher valuations and express regret for not investing earlier.
FICO's share buyback strategy has increased the value of remaining shares for existing shareholders. The team emphasizes the importance of management's confidence in their company's future, even at high valuations.
The team references Warren Buffett's investment philosophy, which evolved from focusing on undervalued companies to prioritizing quality companies at fair prices. They compare FICO's situation to Amazon's past, where high PE ratios were justified by consistent growth.

This Week in the Market - Episode 70 (3/14/25)

Aaron Kennedy is joined by Sam Barker, Brent Bible, and Henry Knowles this week to talk a little about the markets, interest rates, what they're looking at right now, and more. You don't want to miss this. Do you have questions or suggestions for future episodes? Feel free to reach out to us at: www.kennedy-financial.com.

This Week in the Market - Episode 69 (2/28/25)

Aaron Kennedy is joined by Sam Barker, Brent Bible, and Henry Knowles this week to talk a little about interest rates, international markets, and more. You don't want to miss this. Do you have questions or suggestions for future episodes? Feel free to reach out to us at: www.kennedy-financial.com.

This Week in the Market - Episode 68 (2/21/25)

Sam Barker and Aaron Kennedy join us this week to talk a little about what's going on in the world when it comes to currencies, interest rates, and more. You don't want to miss this. Do you have questions or suggestions for future episodes? Feel free to reach out to us at: www.kennedy-financial.com.

This Week in the Market - Episode 67 (12/13/24)

Sam Barker and Aaron Kennedy join us this week to talk a little about inflation, interest rates, and more. You don't want to miss this. Do you have questions or suggestions for future episodes? Feel free to reach out to us at: www.kennedy-financial.com.

MicroStrategy

Sam Barker joins Aaron Kennedy this week to talk a little bit about interest rates and some Bitcoin strategies. You don't want to miss this.

This Week in the Market - Episode 66 (11/15/24)

Sam Barker and Aaron Kennedy join us this week to bring us a post-election podcast. They touch on government spending, regulations, Bitcoin, oil & gas, and more. You don't want to miss this.

Family Support Checklist (Rebroadcast)

As a life planning firm, it is our mission to help you take the essential steps needed to face each of life’s stages with confidence and clarity. We were asked if we could compile a list of the things that need to be addressed on every level when you find it necessary to assume physical, emotional, and financial responsibility for your parents.