November 7: Midterms, AI Stocks and Retirement Income

 Elizabeth

Welcome to the financial hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us are James Dupree, Michael Dawahare, Mike Johnson, and here’s our host, Tom Dupree

Tom

This is a song, uh, sung by Glen Campbell, written by Brian Wilson of The Beach Boys.

Tom

And, uh, I think it was probably done in the early ’60s. Um, at that time, believe it or not, Glen Campbell played the guitar with The Beach Boys and, uh, Brian Wilson said he was the best musician he’s ever known. He said he could have a complicated thing going on that he… Brian Wilson would have brain freezes ’cause his father had…

Tom

He had suffered a very abusive childhood and, uh, he sometimes would, couldn’t talk, and he would present it to Glen, and Glen could figure it out. You know? He, he said that he had that ability as a musician. Um, and, you know, certainly incredibly versatile, uh, musician. Could play country, uh, pop, rock and roll, rhyt- rhythm and blues.

Tom

I mean, he, he was, uh, an incredible guitarist, Michael. I mean, you, you gotta put him in the top five, I mean, I would think. Uh…

Michael

Uh, he is in top five, and h- he’s the studio guitarist, not just with The Wrecking Crew, but Merle Haggard’s Mama Tried.

Tom

Yeah.

Michael

That’s Glen Campbell’s acoustic intro, not the lead. That’s R- that’s, uh, James Burton.

Michael

That’s Glen Campbell on acoustic guitar on John Denver’s Take Me Home, Country

James

Roads. Yes.

Michael

And his other subtle claim to fame, without wearing everybody out, is he brought fellow Arkansan, Louie Shelton, to California, who became the most prolific studio guitarist of all time.

Tom

Really?

Michael

Teenage Louie Shelton shows up in Southern California because Glen was with The Beach Boys, couldn’t handle all The Wrecking Crew and other work, and Louie’s brought in to do The Monkees’ first studio album, and that’s him on Last Train to Clarksville.

Michael

That’s his Tele, and a star was born. Gosh. Everybody wanted that guitarist. He went on to create Seals and Crofts. That’s him doing all- Really? … the guitar work. And then 1,000 other recordings from Diana Ross to Lionel Richie. You… That’s him on the Jackson 5, I Want You Back.

Tom

Now, he was LA Wrecking Crew, not Muscle Shoals, right?

Michael

Uh, neither of them were Muscle S- Muscle Shoals.

Tom

Yeah.

Michael

So Glen goes to California and hits it big, hooks up with his friend, Louie Shelton, from Arkansas, who was on the Louisiana Hayride, and said, “You gotta get out here. I can’t handle all the work.” And genius was born twice.

Tom

I, I would guess, despite the reputation of Muscle Shoals, that- Los Angeles did three times the recording, uh, I mean, would be my guess

Michael

Probably only because Muscle Shoals was booked 24/7.

Tom

Yeah, all

Michael

the time. There was just two rivals right down the street from each other.

Tom

Yeah. Fame-

Michael

But they had their own similar story with Duane Allman, who was the studio guitarist along with one other guy. That’s Duane on a lot of Aretha stuff and on Wilson Pickett stuff at Muscle Shoals.

Tom

Yeah, I saw a s- a s- said that…

Tom

A, a, a story about it. The guy said, “Dad, there’s a hippie hanging out in the-” “… parking lot.” And, you know, these guys were very straight-laced, and he let the hippie come in and, uh, they started talking, and they realized they had a lot of things in common. The hippie was Duane Allman. Anyway. Well,

Michael

last funny story.

Michael

Aretha hears the Wilson Pickett stuff, and her manager calls and says, “We wanna come down to Muscle Shoals and record.” They do. They show up in the studio, and they’re watching the band warm up, except they’re all Caucasians. And Aretha’s manager says- Well, where’s her brothers? … says, “Where’s the band?”

Michael

And the guy says, “That’s the band.” Yeah. He says, “No, can’t be. I want the band.” But that, they just, he couldn’t believe

Tom

that was the band. They didn’t realize how, how funky those white guys could be So, uh, we need to talk about election results. I, I made my opinions known last week and, um, uh, it was obviously different than, than what I had thought was gonna happen.

Tom

Um, let me just say that, uh, having been in this investment business for, I don’t know 47, 48 years. I’ve been through a lot of changes politically, um, some of which I thought were the end of the world. Um, and, uh, we figured out how to get through it. We’ll get through this. Um, those of you who, you know, voted…

Tom

H- here’s kinda what I think is that, uh, I think Trump actually thought he had more time, like businessmen do sometimes, to implement the, the sort of things that, that he was doing, and he tried to do, uh, things that he thought were right, like the Iran war, like tariffs, and, uh, it turned out to cause a lot of pain that people simply did not have the patience for.

Tom

In a way, I can’t blame them. Uh, did they have a let-them-eat-cake attitude to some degree? Yes. And in a way, I cannot blame the electorate. But the electorate is a fickle thing. It’s like the mob. And w- if you look at, uh, the, the, uh, biblical, uh, story of Jesus’ entry into Jerusalem, uh, when he, when he first comes in, uh, they’re throwing palm fronds in his way.

Tom

They’re, they’re wanting to make him the king, and they’re all… And in, within a matter of weeks or days even, they’re ready to crucify him. And this is the mob. And if you, uh, are someone that is essentially part of the mob, um, I hate to say this, but the joke is on you. You may think, “Oh, you know, I’m safe in numbers,” but everybody has to ultimately be accountable for their loyalties and the things that they support.

Tom

So, um, just because you voted with the crowd does not mean you necessarily did the right thing. I’m not saying you did the wrong thing either. Uh, I’m, I’m, I’m simply saying that if you think you’re right because you won, you should reconsider that, because I’ve been on the winning side before, and actually I was wrong.

Tom

So, um- I- it, uh, you, you just have to congratulate the Democrats on a, a good campaign that they ran, but they had a lot of opportunities. They had a lot of room to run in order to do it. And will it affect the investment business? Of course it will. That’s what we’re gonna talk about today, and we’ll, we’ll have to make adjustments and continue to do that.

Tom

Um, but, uh, it’s only politics. It will change, and what we do remains the same, so we’ll stick with it. That’s all I got for right now. What do y’all wanna talk about?

Michael

Well, I actually have a pretty sanguine view of this. Um-

Tom

There you go …

Michael

You and I have talked about this quite a bit, and if anyone was listening to the show this summer, we foreshadowed this.

Michael

Yep. Multiple times we said Trump is tone deaf on, let’s use data centers, for example. The data on those communities that have opened them is overwhelmingly positive, and he’s looking at that data. Electricity prices tend not to go up, employment goes up, a lot of good things happen. But the perception of the public is not that, and a good leader listens to the electorate, listens to the constituents, and reflects back to them what their concerns are, and engages in dialogue.

Michael

Right. He did not do that.

Tom

I agree.

Michael

The CEO billionaires of these tech companies who benefit from the data centers were even more tone-deaf. And they can pivot, and they’re going to, and they’re going to take a- the approach that states take to recruit commerce and business by offering incentives. It’s really a lot of low-hanging fruit: college scholarships or vocational scholarships to every high school graduate in a community that approves the data center.

Michael

We’re gonna fund all of our electricity, and whatever we don’t use, we’re gonna give back to the city so your rate’s lower. That is happening. It goes on and on, the things they can do. So a tone-deaf president. We also discussed on the show multiple times; he’s whipping around the cost structure of business.

Tom

Yeah, I think that’s one of the most damaging things-

Michael

Absolutely …

Tom

is- that, that he did was with the

Michael

tariffs. So you’re right that if the other country has relentlessly tariffed and barriered us, that the diplomatic and political class didn’t have the guts to take it on. He did, but there’s an optimal way to do that, and if the answer is to cure the cancer by killing the patient, that’s not a good solution.

Michael

Nope. And he kept changing the cost structure of corporate America. I talk to CEOs all the time. I read these transcripts. It was too much. Uh, Howard Lutnick in an interview, this is where I told you he had a let-them-eat-cake attitude, said, “Yeah, if you import goods, sorry.” Well, that’s 200,000 businesses.

Michael

That was the tone-deaf message, and then I’ll end it with this. The only two entities that had worse public re- relations than those, than Trump recently and tech bros, were the country of Israel, which has … It’s an area I know quite a bit about historically. They have a lot of valid points about why they do what they do.

Michael

Some not, but mostly are valid. But their PR and their approach have been similarly tone-deaf. We play the next play. Why am I optimistic? Well, Rahm Emanuel, Andy Beshear, many other Democrat leaders are on record, roll tape, the border must be secure. Great. I don’t think they’re gonna reopen the border. Just as importantly, they don’t want high gasoline prices, which means Joe Biden’s catastrophic comment in the October 2020 debate that he was going to shutter the fossil fuel industry by the year 2030; that doesn’t mean high gas prices; that means no gasoline, because he said he’s going to shutter the fossil fuel industry.

Michael

It was such an absurd … You’d send your kid to your room for making such an inane, stupid comment, but he said it, and he was running for president as the standard-bearer of the party. Now you have the standard-bearers of the party saying $4 gasoline is too high, which means they’re not going to try and shutter the fossil fuel industry.

Michael

So why am I optimistic? The border, in theory, remains relatively secure, and we can b- bring in the optimal amount of legal immigrants who are allegiant to our country and can really help. We need millions of those. Yeah. It’s unlikely that they’re going to try to shutter the fossil fuel industry like previous administrations have said they’re going to do.

Michael

Those are two enormous things. If they go crazy with the EPA and regulations, the public and the constituents will note it, just as they did in the summer of ’24 when the lawfare against Trump turned off the public, and Trump was reelected, in large part ’cause they didn’t like the lawfare. So where are we are today?

Michael

We’ve got the new leadership on record. We’re not gonna flood the border, but we are going to come up with, hopefully, comprehensive immigration reform. If that results in mass amnesty, then we’ll drive off that bridge when we get to it, because that would be a significant issue. Last thing I’ll say: Why am I philosophical and feel fine about this?

Michael

The Sun Belt did what we thought they would do, which was to recruit industry, and industry would migrate south. By definition, the leadership, the employee base of a white-collar or even a factory, those are workers in their 20s, 30s, and 40s, and they tend to be more progressive in their views. Which means by definition, Georgia’s now blue, Texas went blue, and Tennessee’s next.

Michael

So I don’t fear that. I think we’re going to have policies that are more, maybe more, slightly more progressive than some would like. But I don’t fear the radical extremes. I don’t. They’ll probably wind up fighting with each other. And lastly, I’m already sensing it a little bit as I talk to kind of the zeitgeist of the country vibe.

Michael

There’s a certain relief out there. There may have been Trump fatigue. He may have just gone too far. So I’m actually optimistic. The Democratic leadership that’s emerging is saying lots of sensible things. So let’s see what happens.

Mike

Well, and two of those things, what you led off with, with energy prices and immigration, labor, what does that help?

Mike

Inflation numbers.

Michael

Great point.

Mike

Right there- fantastic… both of those key points, because what’s been the biggest cause of inflation, and this is where the, the Fed is a little bit out of whack, you know, raising rates to bring down inflation-

Tom

They’re not gonna raise rates in December, I don’t think.

Michael

Well, you had a fantastic- the jobs-… jobs report today …

Mike

Yeah, the jobs report

Michael

was great … but that’s a high-grade problem. Wa- Walsh is on record. Employment, improving employment does not drive inflation; therefore, I will not raise rates just because our fellow citizens are getting jobs.

Mike

Yeah. But z- energy and labor, if you can get those two things in line, that helps with inflation, and that was one of the biggest problems.

Mike

You look at interest rates, what’s happened with, with, in the bond market and the stock market because of interest rates, because of inflation, f- fears of what the Fed’s gonna do. If those two things, if you get some resolution, that’s a, that’s a positive.

Michael

So keep in mind, we might have a perfect storm of really good things, which is Trump’s policies, for the most part, were rooted in sound economics, which was anchored by lower energy prices.

Michael

Absolutely. And then he did what he thought he had to do with Iran. Personally, I agreed with the decision. Uh, the messaging and the derivative decisions I don’t agree with, and the public spoke on that. So today’s jobs report, we’ve talked many times on the show, was really strong, and all through late summer, early fall, we said, “Watch the revisions.”

Mike

Mm-hmm.

Michael

The revisions to the two previous months this morning were up another 30 or 40,000.

Mike

Yeah.

Michael

So this is kind of a stream-of-consciousness discussion, so I hope the listener has a little patience. The Biden administration didn’t touch one tariff that Trump levied on China. They didn’t roll back one of them.

Michael

What’s the point? I don’t think the Democratic leadership is going to tinker too much with policies that are leading to higher employment. Mm-hmm.

Tom

Well, I’m gonna tell you another thing: when you take a look at the rookies that they’ve put into various offices around the country, uh, they’re not gonna know what they’re doing.

Tom

I mean, it’s gonna be like what we have in Lexington on steroids, you know, in terms of incompetence.

Michael

Well,

Tom

Here’s the good news. I mean, y- you know, y- look at this governor of Texas. She’s never done anything in her life other than be a, a, a lawyer representing unions and people like that. Now she’s running the lar- one of the largest states in the- Okay

Tom

in the country. So you’ve

Michael

got the petroleum industry, whose GDP that’s in Texas is top 10 in the world, and most of the countries- That’s right … in the world aren’t larger than the t- … the petroleum industry in Texas. So

Tom

there’s-, And she’s gonna have to get up to speed on my job as the CEO of, of this- You’re

Michael

right.

Michael

But she’s got-

Tom

And I was a union lawyer in South Texas.

Michael

Yeah, okay. And she’s got considerable, both friend and foe right there with her on that. The good news about what you just laid out is the Democratic apparatus is pretty clear. You do what you’re told. So keep our eye on, on Rahm Emanuel certainly running for president.

Michael

His erstwhile friend and competition, Andy Beshear, is certainly running for president. These are normal people, successful people, and let’s see what kind of guardrails come up. I mean,

Tom

at least Andy has run something. Rahm Emanuel has run something. This guy that got elected as governor of, uh, of, uh, Iowa, I mean, he’s like, uh-

Michael

He’s a trust funder.

Tom

Yeah. He’s, he’s James’ age or Clark’s age or something, and they, it’s like all they had to do was insert these people with a blue thing by their name. Now that they’ve got them in office, who’s gonna show them how to run the thing that they’re in charge of?

Source label: Elizabeth (unverified)

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Source label: Elizabeth (unverified)

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Tom

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Tom

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Source label: Elizabeth (unverified)

Welcome back to the Financial Hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us, James Dupree, Michael Dawahare, Mike Johnson, and here’s our host, Tom Dupree.

Tom

Okay. So, you know, Chuck Berry threatened a lawsuit and was compensated, uh, because of the fact that Brian Wilson pretty much lifted this from a Chuck Berry song.

Tom

Did, did you know that, Michael?

Michael

Vaguely. Yeah. I knew there was a feud. I didn’t know what it was about.

Tom

Well, it was Chuck Berry’s… No, they, they, they straightened it out, ’cause, um, Brian Wilson said that Chuck Berry influenced him more than any, uh, body he ever listened to. You know who Bob Dylan said influenced him?

Tom

Who? Little Richard.

Speaker unclear

Really?

Tom

Yeah, which is amazing. But anyway, um-

Michael

You know who Little Richard’s guitar player was?

Tom

And you- Jimi Hendrix. That’s

Michael

Correct.

Tom

Uh, anyway.

Tom

Yeah, Bob Dylan, uh… I saw this thing on the internet last night. Bob Dylan, I don’t know if it’s AI or what, but it sounded like Bob Dylan’s voice.

Tom

Um- you know, he talked about the five, uh, people that affected him, uh, the most, and you know who number one was? Johnny Cash.

Mike

Hmm.

Michael

Oh, they were big buddies.

Tom

Yeah. He- Johnny Cash.

Mike

Yeah. Bob Dylan’s son, Jakob Dylan, actually had some success, too. He was with, uh, The Wallflowers. That was a good- Yeah … little band back in the ’90s.

Tom

He’s still around, isn’t he?

Mike

I think, I think he’s– they still perform. I, I don’t… You don’t, you don’t hear about them much- yeah… but I’m, I’m sure he’s still performing.

Tom

Okay, tech. What, what, what do we see here with tech?

James

Um, so you know, the, the Democratic sweep, obviously, they love talking about how bad AI is.

James

And actually, a congresswoman from Arizona, um, tweeted, “Top of the Democratic agenda on day one needs to be, uh, a pause on advanced AI development, regulation of this is out-of-control industry, and a ban on artificial super- intelligence.” And the funniest thing about this entire thing is their entire selling point for the election was, uh, affordability and gas prices, and on day one of getting elected they wanna talk about AI and essentially, uh, get revenge on Trump.

James

So I just don’t think that’s very right. Um, but obviously when a congresswoman says something like that, it’s gonna affect, uh, AI infrastructure stocks. And, um, when some of the results started to come out on, uh… What was it? Was it Wednesday night, Michael?

Michael

Tuesday night.

James

Tuesday night. So when, whenever some of the results started to come out on Tuesday night, AMD, uh, had just reported fantastic earnings.

James

Stock was up about 9%, which also lifted the Nasdaq, uh, Composite index, um, probably about 1%, and then, uh, minutes after that it was down 2%. So that tells you the kind of effect that these people in office are gonna have on those kinds of, you know, stocks. But as Michael said earlier, it’s gonna get resolved.

James

AI is, is too important of a thing, and they’re gonna make negotiations for this to, you know, work out. But the market’s just digesting all that information right now. And, um- of course, the other

Tom

thing that’s happening is- You know, Anthropic’s comment, uh, that they may not be making the kind of money they had said they were.

Tom

You know, some people had said when it gets priced, could be up to two and a half trillion. Now they’re talking a trillion to two- to one and a half trillion, you know, that… And that had a big effect on the market yesterday, I think- Mm-hmm … um, outside of anything related to the election. So there was this– And I think that this was gonna happen regardless of who got elected.

Tom

You know, you were gonna see that people were gonna have to realize that, uh, th- there could be setbacks in terms of the earning potential of these companies. And, and the, the Anthropic and OpenAI, uh, uh, is it OpenAI, the other one? Yeah. Uh, uh, um, IPOs are, are weighing over the market, and they haven’t even taken place yet.

Mike

You started seeing it in October.

Tom

Yeah.

Mike

Um, because, I mean, what happened on Thursday, the… I mean, the NASDAQ was down five and a half percent on Thursday, the, the, the index. Um- that’s yesterday. Yeah, I know. So- just, just letting the listeners know which day.

James

So, so what ended… Sorry if I interrupted

Mike

No, go for it.

James

Okay. So what happened is the AI stocks were all in uptrends, and, um, this was before OpenAI released some of their financial statements. It was essentially, uh, I forget, th- they were, like, 12 billion under the revenue target, and it was all because of an accounting, uh, miscommunication. It wasn’t actually below, but the market took it and ran with it, and AI stocks were down 10% plus that day while they were in up channels.

James

And they are-

Tom

Is that from the S1?

James

Uh, not Anthropic’s S1. That was actually positive. But OpenAI, they’re not gonna IPO this year. They, they pushed it back. But they released some of their financial statements, um, and it crashed the AI stocks that day, which we know, we’ve discussed it before, when these momentum stocks break down technically, it’s hard for the market to, to go out and keep buying them.

James

Um, you know, that can change on a dime when you get a positive fundamental catalyst. Um, but that’s essentially what happened in, in a, a momentum meltdown. And then, then you get the Democrats in office saying they’re gonna ban it all, and that’s even worse. So there’s so much pessimism priced into these things.

James

Some of them are down 70% since that OpenAI press release came out. That was a month ago. Stocks don’t go down 70% in one month. That’s just not, uh, it’s- It’s not normal

Mike

But, but some of those, I mean, you look at some that have dropped 40% from their all-time highs.

James

Yeah.

Mike

They might still be up 100%-

James

That’s

Mike

right

Mike

year to date. That’s right. Um, y- y- you look at Amazon, um, coming out of the tech bubble. Amazon dropped 90% coming out of the tech bubble. Yeah. It survived. Yeah. And it thrived. Um, but even with a, a great… what ended up being-

Tom

Survo- it survived and thrived.

Mike

Um, what, what ended up being a great company and a great investment, you have to go through volatility to realize that over time.

Mike

Um- So

Tom

Mike’s… So volatility, he loves using that word. The, the… It’s, it’s… He uses it all the time. It’s code for goes down. Let’s just, let’s just, let’s just face it, volatility only goes one way when, when Mike uses it the way he’s using it. That means down. That’s when you get to find

James

out who the real investors are.

James

You know?

Tom

Yeah. But no, I mean- you, you, you, yes, a company can go down 70%, but it better be the real deal, or else it’s going down 100% at some point. And, uh, so those are the things that, uh, that we try to follow and th- the research hopefully has, you know, led us to companies that, that are gonna be all right.

Mike

So you look at the short-term volatility-

Tom

Yeah …

Mike

that we’ve had here recently, and, um, you, you, you think about how people are just generally allocated nowadays. Um, and the bulk of it has exposure to these periods or these, these sectors that have experienced these downturns. Yep. Um-

Tom

Bad, better word.

Mike

Yeah, downturns.

Tom

Yeah.

Mike

Volatile downturns. Drawdowns.

Tom

Drawdowns.

Mike

Drawdowns. But, uh, wh- what, what

Tom

It- pulled, pulled back. It has pulled

Mike

back … what, what is it? Uh, roughly 50% of the earnings of the, the future earnings of the S&P 500 can be attributed to AI. Um, and- it’s crazy … some, some of what’s going on right now is the market digesting the election.

Mike

Some of it is just the market being efficient and being rational. Um, I was having a conversation with somebody yesterday. Y- you think back to leading up to the financial crisis, the market didn’t care. There was no critical eye on lending standards. I mean, there, there was nothing. Uh, they didn’t … 120% loan-to-value, trust the rating agencies.

Mike

There was no critical eye. There, the market is having a critical eye on debt, you know, CoreWeave’s debt. You look at where, what, where it’s priced in that. You look at what’s going on here recently in the sector. That’s a positive because what that indicates is that it’s letting air out of the balloon.

Mike

That’s a big difference from a bubble popping. So I mean, that, that, that should lead to, you know, uh, positive outlooks.

James

But I, I, I saw, um… Yeah, that’s a good point. I saw something that said this is one of the worst years ever for individual, like, individual stock volatility, and it was, um, I think this year 96% of technology stocks have experienced a drawdown of more than 20%.

Michael

That’s a market structure issue. Uh, you have these pod shops, which we’ve talked about many times, little teams who use tons of leverage. You have ODTE. For the listener, that means zero days to expiration. That’s a new product of the last couple of years. You buy it at 9:30, and it’s worthless at 4:00 PM.

Michael

That’s as speculative as you can get. You’re betting on a one-day move. You have the Korean market, which allows all sorts of leverage. They’re trying to weigh that in, and they only really invest in technology and AI in particular. So there are- yeah,

Tom

it’s a limited market. They only have so many things

Michael

they can- Yeah, so there’s a, there’s a market structure issue that’s getting a lot of attention this week as multiple pod shops and hedge funds get liquidated this week, post-election.

Michael

Eventually, market structure tends to figure things out. But you have a… It’s, it’s a rare moment in time where you’ve got, uh, these products and market participants who are… Look, they’re paid, uh, every quarter or every year, and they are not long-term, even midterm investors. And what that does is give firms like this tremendous opportunities.

Tom

Yeah. And, and so what does that mean for our clients? What we’re trying to do is invest your money in such a way as to produce decent, good long-term returns with dividends that will pay you over time. Now, we’ve just got some new ads that have come out where we talk about how we are a fiduciary, meaning that our role is to put you, the client, ahead of our needs.

Tom

The chief way we do that is by not charging commissions. Therefore, it changes our incentive, our financial incentive, to be aligned with yours. When your account goes up, our fees go up. We’re not buying and selling, earning commissions, uh, every time we buy and sell. We are incentivized and driven by the same thing you’re driven by.

Tom

That is an increase in the account value. The other thing is We assume that you are interested in the performance of your account, how it’s doing. So we meet with you on a regular basis and we present to you, um, a performance report that is highly specific to your account and shows you exactly how your account has performed over the time that you’ve been with us.

Tom

And so therefore, you don’t have to guess about, how am I doing? Now, it’s interesting. Some people are not even that interested in that, but we believe that they should be, and we assume that you are, and even if you aren’t, we are. So it’s something that, uh, I– when, when I set this firm up, I made absolutely certain that, uh, we were gonna be incentivized the same way you were and that we were going to have the best possible performance reporting, uh, apparatus f-for you.

Tom

And then we, uh, we set it up so that we meet with you on a regular basis. And, uh, therefore, you’re never in the dark. And, and that’s how we do it here at Dupree Financial Group.

Elizabeth 

One of the things that I think also sets us apart is, um, a lot of times you’ll meet with Mike and he goes through, for once you’re onboarded as a client, he goes through the portfolio and highlights what’s in your portfolio, why you own it, the philosophy of our investment committee, uh, how it fits in the portfolio, how it works inversely with other thir- it is compatible with other things in the portfolio, and it educates you about what you own and why you own it.

 Elizabeth 

And so when things do weird things in the market like they have been doing the past few days, it’s not on autopilot. It’s not in a mutual fund where you don’t understand why your account is going up and down. We have conviction about what’s in the portfolio, and it’s in there for a reason, and if there ceases to be a reason that it’s in there, we get out of it.

Mike

Mm-hmm.

 Elizabeth 

So that, that’s one of the things. Another thing I want to clarify is Tom said that when your account goes up, our fees go up. Our fees don’t go up. The fee stays the same. It’s just, uh, more money that comes to Dupree Financial Group because your account has increased in value.

Tom

So explain that. It’s a percent- you just stepped in it there.

Elizabeth 

No, I did not.

Tom

The fee does go up because the percentage of a higher amount of money is a higher fee. So it, it-

Elizabeth 

It sounded funny to me,

Tom

so I just- Well, what you said sounded even funnier.

 Elizabeth 

Okay, so let’s both laugh- … and call it a day.

Tom

Yeah. Uh, what, what it is is that the, the, the, the fee is a percentage of the assets under management.

Tom

Right. If the assets under management go up, the f- the percentage stays the same. It can even go down over time, but the amount of money that we earn is a higher amount. Obviously, it would be that way because that would be, that makes us financially, um, aligned with the clients.

Elizabeth

Perfect. Thank you for that clarification.

Mike

Well, and the- … the other piece that we’re, that we always stress to clients is, like, what we’ve been talking about all this show, uh, has to do with prices of stocks. Right. The price today, what has the price done yesterday, uh, with all these different things? But here’s, here’s the, the cornerstone of our portfolio is income.

Mike

Dividends, while the prices of the stocks have been fluctuating all over the place- volatile… they’ve been volatile. Yep.

Tom

Volatility.

Mike

The dividends are very consistent. Um, dividends, they have a, a more durable downside protection, if you will. Um, y- I mean, you think of, you know, the Various price crashes that you’ve had in the market, I mean, the most drastic being the financial crisis.

Mike

Um, you had a 54%, 55% drop in prices. Um, dividends, they went down some, but it was a fraction of that. Um, back in the, in ’87, when you had the big drop, uh, in 80- I believe it was ’87, um, dividends, as a whole in the market, didn’t change. Um, so the price action i- is important because, I mean, that’s half of the equation; that’s the total return.

Mike

But the cornerstone of the portfolio is income. And so when you have volatile periods like we’ve been in, um, it’s volatile, meaning up and down in this case, um, the price action, that’s what gives you an ability, uh, or an opportunity maybe to add, uh, to existing positions, buy new companies. Um, but the dividends, those are very consistent.

Mike

Dividends aren’t guaranteed. Nothing’s guaranteed in investing, but they tend to be much more stable, much more resilient.

 Elizabeth 

Especially when the stocks are researched the way that we research and watch and study them. Um, the only time I can remember the dividends got kind of wonky was in 2020, and it’s very rare that- Yep

Elizabeth 

businesses shutter.

Mike

The world was shut down.

 Elizabeth 

And other than that-

Mike

Mm-hmm …

 Elizabeth 

and even then, we were able to pivot and- that’s right … and work it out and still-

Mike

Well, and, and that’s the key. We’re not a mutual fund. Um, it’s an individually managed account, so we have the flexibility to pivot when that’s in our client’s best interest.

Elizabeth 

And that’s the key: staying focused on what’s in our client’s best interest. You’ve been listening to The Financial Hour of the Tom Dupree Show. Michael Dawahare, Mike Johnson, James Dupree, and Tom Dupree. Brought to you by Dupree Financial Group, where we make your money work for you. If you don’t know what you own in your portfolio, you need to.

Elizabeth 

We can help. Give us a call at 859-233-0400. You can also schedule an appointment directly on the homepage of our website at dupreefinancial.com. We appreciate you listening to The Financial Hour.

Recorded disclaimer

The information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy, and it should not be regarded as a complete analysis of the subjects discussed. Dupree Financial Group is a registered investment advisor, registered with the Securities and Exchange Commission. All information presented on this program is for educational purposes only and does not constitute investment advice, a solicitation, or a recommendation to buy or sell any security. Any references to securities or market performance are general in nature. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Please consult with a qualified financial advisor before making any investment decisions.