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Saving with Steve, 13/04/2021

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Saving with Steve
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Guests, Brad Galbraith and Shawn Rowles

Saving with Steve with Steve Sexton

Guests, Brad Galbraith and Shawn Rowles

Saving with Steve

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The Save With Steve Show, hosted by Steve Sexton will help you with ins and outs of money. We talk about financial issues that that could be costing you thousands of dollars and keeping you up at night.

We talk about “money”… tax reduction, saving more, how to spending less and get more, 401k’s, risk management, retirement, and everything under the sun that relates to you having a healthier happier relationship with money.

Weekly Show
BBS Station 1
6:00 pm CT
6:55 pm CT
Show Transcript (automatic text 90% accurate)

everyone has their own unique views and needs when it comes to financial success if you'd like to leave your financial woes behind and live a life of Financial Freedom you've come to the right place Welcome To Die saving with Steve show hosted by Steve Sexton the show will help you with the ins and outs of money we talked about financial issues that could be costing you thousands of dollars and keeping you up at night we talked about money tax reduction saving more spending less 401K risk management retirement and everything under the sun that relates to you having a healthier happy relationship with money now here is your host of saving with Steve Steve Sexton welcome to saving with Steve where we talked about the ins-and-outs of money pretty much everything under the sun that relate to you having a healthier happier relationship with money my name is Steve sexy welcome to the show just want to say thank you for sharing this with your friends families and Associates we had wailmer 337,000.
listeners last month that were very excited with that last year over 663000 people moved out of the state of California many just because I wanted to go to a lower tax dates so they can save a lot of money and the same things happening with New York New Jersey Illinois because they want to go to a tax-free or a low-tax date now what is the states don't like losing your tax business and and they want to make you make sure that you're not doing anything wrong so they can keep that business so you know what you want to learn how to pass the state what is called domicile test that's why we have brought Galbraith here greater than change my domicile. Com he's going to help us help us help you good folks just walk you through it now while I'm talking about the seven Big Tex cans are in here tax season and how would you like a technology tool that can forecast risk for investors how would you like a tool enables you to help identify when your wrist is too high so you can get yourself out tomorrow
do you want to stick around we have Sean rolls at watchpoint analytics he's going to walk you through it now what am I to do is tell you a little bit about Brad Galbraith now he's an attorney he's a CPI he's a CPA he's the author States Pacific domicile plans now and like I said before people are looking at ways to reduce accident lot of times that's just moving from one state to another some people they you know what don't realize that their former State wants to keep their hands in their cookie jar from a tax perspective and if they ignore the rules on how to change your domicile properly and you could come up with a lot of stress like taxes audit it could be estate issues it could be lots of things so that's why we have Brad Brad welcome to the show so much looking forward to it got started when we were some listeners heard about you being on here this is our big poppa cuz taxes are going up all over from estate perspective and quite frankly many states become unaffordable so that one
the best ways is to move out of the state now help me understand how you got involved with the changing the domicile business so to speak many many years ago I guess maybe 20 years ago I was practicing law and Indianapolis my wealthiest clients retiring and moving to Florida and they kept saying to me what what can you do to help us and I would say well I'm not license to Florida so I can I really can I have to refer them to someone else and I realized pretty quickly that referring away my wealthiest clients who are tuned into this domicile issue probably wasn't the best long-term strategy so I took the Florida bar opening an office in Florida and ever since I've been helping people from higher tax states make that transition floor I just got this I talked to many of my advisor friends and I've had even some clients where they figure they can split a state or no one spouse is domiciled in one state and another and another and for some reason they're getting audited they're getting hit with penalty
and all that kind of stuff what determines somebody stay there domiciled in what determines that let's start their sure well for the most part when were using this term domicile it's it's good to to specify that a lot of people called that residence was space technically, but you can of course have a residence in more than one state but you should for tax purposes only have 1 domicile and so there's a there's a lot of your listeners certainly to pay state income tax in multiple States but there is one state that is their primary residence they may be paying state income tax for example in California because they own rental property in California in Illinois because I have rental property in Illinois but they happen to be domiciled in New York and so there worldwide income is subject to tax in New York minus some of those taxes that are paid another place so in general when we use the term domicile were talking about really kind of past residents know what determines your domicile is state-specific that's that's one of the things that we have talked
a little bit it's really not about the state you're moving to its state you're coming from because every state has their own laws that's that's just the way it works in in our United States is not a federal law that determines which state you are domiciled and it's just a lot so there are unfortunately all the way to the US Supreme Court about what state is Madonna's album the argument often times was that I've got more than one stay saying that I'm domiciled in their state federal government or federal courts you resolve this and and the answer has really been for the most hated states can have different laws if you aren't smart enough to make sure that you are only domiciled one state there may be more than one state that tries to claim taxes and so we have to look very specifically to the state that you were trying to change your dumb ass out from not just say that you're trying to change a domicile to another words whether your New York Illinois California
you really need to make sure if you're going to be living in Florida for in Texas or some other like Tennessee tax free state you really need to look at the end of like for example you probably do it while you're from Indiana to Indiana has what kind of like I'm just going to ask about Indiana what kind of rules for domicile test does Indiana have for sure so I can be a little bit more specific than that I would say in general about half of the states in our country have a two-pronged honest I'll pay the other states have a 1 prong domicile domicile test the first part of the test is typically a number of days till New York is probably the most famous of of those states where they say if you have a place of Abode if you have a place that you can live with a rented or owned and you are in New York a hundred and eighty three or more on days then you are statutory resident and there is no reason to move on to the second prong to test you are a resident
best state for their tax purposes and any of the other things you've ever heard of that you're supposed to do just simply won't matter about half of our states have a la like that wear the number of days can vary a little bit from state-to-state but most of them are in that six months and add a category they're Ohio is the one very unusual stay where where they don't have six months in a day that's seven months they actually are more liberal a surprisingly and I have said in order to hold on to as many people as they can who will continue to come back to Ohio and summer time or are they said you know we're going to be really liberal you could be in Ohio up to seven months and if you intend to be domiciled somewhere else we won't count that against so that they've gone the opposite direction of many states has that way the former residents can continue to come back to Ohio on second homes do their Banking and investing and go to the doctor there and give to Charities there and I've decided the best
but in general half of the states have this number of days to the second part of the task in those States and the second part and the only part of the test in most other states is an intent test and it is based upon your subjective intent and unfortunately there's no there's no MRI machine that we can run a person through that that lights up green if you intend to be domiciled in Florida and lights up red if you down about New York it it doesn't work that way so every state is come up with different factors that they may look to to objectively determine what your subjective intent might be and that's what really very very significantly in some states they say whether you have a safe deposit box in their state is extremely relevant in another States that's just not even mentioned in some states and only a few States they stay where you give to charitable organizations really shows where your heart is and if you still give in your former State that's very indicative of urine and yet other states say absolutely positively we will not consider
that because we don't want to harm the Charities it is very specific when it comes to down to those indicators vent so they see what you're saying is you can only have one domicile okay where your tax date is so you can't have two will certainly two states could argue about you do not ever want to have more than 1 domicile because that means two states are arguing over which one gets to taxi the most so that that would be a disaster so we want to be careful so that you you you should not ever have more than one sick. Can you live in one state and be a domicile resident of another and you just talked about that 183 and stuff like that is there any states that have issues with that as long as we're talking about a second residence okay then Most states recognize really all states recognize that you may have a residence in their stay and yet not be domiciled and their states now as you might imagine the people
being audited for the most part those are people who have a home and bust it also happened to be all of my clients might my clients don't typically live where I live in Naples Florida year-round it gets rather warm in August so most of my clients have a residence in more than one day and the fact that they have a residence in a Northern State doesn't mean that they are going to continue to be domiciled there but it does mean that we probably need to be even more careful in in making that change of domicile it. The eyes cross the t's do as many things as possible so that it will be very obvious that the intent is to be domiciled in Florida despite the fact that there is still a home up north and allergies that are really like to use that is kind of a visual that you can think of is an apothecary scale when looking to these and 10 test to the various factors what we want to do is we want to pile up as many factors in favor of your
no tax day is possible I love whatever still weighs in favor of your Northern stay and we want your low-tax new state to greatly outweigh the other state that doesn't mean that there is nothing in favor of the Northern State you may still have a residence there you may have children there you may still own a business there but what we want to do is we want to make sure that if a fact-finder is a quart or a taxing Authority whichever take a look and audit or even litigate we wanted to be very clear to them that this case just isn't worth pursuing because he done so many things too heavily weight that Apothecary scale in favor of your new state Galbraith more expert advice for having a happier relationship with money still to come on the saving with Steve show
don't let your financial woes keep you up at night and prevents you from living a life of Financial and personal freedom hi I'm Steve Sexton post of the saving with Steve show where did he talk about the in an ounce of money bills Financial issues that could be costing me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so sweet with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune into the saving with Steve show join me Steve section of the saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon
welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton oh I want to welcome you all back to the TV show I want to truly thank you for tuning and appreciate you letting your friends and family Associates know about the show all the replays are available at saving with Steve. Us again at saving with Steve. You as if you're enjoying the stories of helpful information inside on saving this team that I encourage you to subscribe to our YouTube channel so you never miss a show and check out a few Heartfilia to eat UK help radio DBS Radio talk radio New York City e360tv and Las Vegas TV network all these networks are dedicated to and parm you to solve problems in and lift your spirits as well as live a life of financial personal freedom faucet Facebook enjoying the shaving with Steve insiders Club at saving with Steve IUS you get all the replays exclusive gift from our guest and more so with that we have Brad back we're talking about
factors that people look at now what specifically are some of those factors that the you know the Franchise Tax Board here in California or wherever it is here and there in Florida would they be looking at is factors for somebody's domicile provide a bit of a list of those things that are somewhat universal precautions that didn't doing just those things that are General may not be everything you need to do for yourself some of those gentle things are the things that are really almost just obvious you get a driver's license and ID register a car in that you said you register to vote in that new state if there's a homestead exemption you would file for that homestead exemption in your you stay and one thing that may not be quite as obvious but is true in many of our state's is it your changing to a new state there may be a form available either through a county or the State Franchise Board
or the Department of Revenue the taxing Authority for the state that allows you to complete an affidavit that says as of this day I intend to be domiciled in my new state sewing in Florida every county has one of those it's called a declaration of domicile is completed in front of a notary and you just swear that's your intent even record that with the county putting everyone on notice that's your that's not going to be the determining Factor but it is very nice to have a very clear piece of paper that says it is my intent as of February 25th 2021 that I intend to be domiciled my new sticks and those are some of it at the universe all things but there's a few others that are certainly worthy of mention in some of these are a little bit less obvious I mentioned a safe-deposit box earlier that's not relevant in every state but I would say in at least half of the states that appears either in case law or regulatory material
first a publication that that may be very indicative of a person's a cat if you have a safe deposit box is still in your former state it sounds like that really is your intended long-term best the place where you intend to eventually return and and that could be a problem if you ever down out of it, but I'm a couple other things that are interesting but people don't always think about one of those might be professional licensing many of us and many of your listeners are are Professionals of one sort or another whether there an attorney or a doctor or nurse or a realtor or razor you name it if you think about it you register as a professional with your state that's a state that database if the state wants to determine whether they're going to audit you are not a very simple thing they can do is look and say this person is still at a licensed physician in the state of California yet he says that he's now domiciled in Idaho that doesn't really make much sense to us we better inquire
so if you're changing your state of domicile it doesn't necessarily mean you have to give up your professional licenses if you're ready to even better but in most instances people want to at least came from a resident license position as my example to a non-resident license position if there is no different differentiation between resident and non-resident at a minimum change your address do not continue to use your in State address for those purposes use your new State address for this purpose interesting though Most states will say that when trying to determine urine test again there is no MRI machine easy way of determining that and it's just a little bit too obvious to just asking. Do you have a driver's license and your new space so what many states will do is they'll look to some of these less obvious fact that they believed it if you were really intending to change your domicile you would probably find a
dentist and a primary care physician in your new state depending on the state they may ask about other professionals Insurance professionals Financial professionals accounting professionals tax lawyer do you have these Professionals in your new stay at a minimum do you have them in that new state and maybe still in your old stay with them coordinating but there should probably be some connection with the news that varies by state again interesting way I mentioned Ohio earlier Ohio when passing their laws made the the the intestinal decision to not count those things back what they wanted to do is have to have their state residents who are changing their domiciles still go back for medical care in Ohio still have the Ohio Banks as their Banks still have the Ohio investment professionals CPA exam lawyers position whether you have that in your new state or your old State can be indicative end up in Sac
like a social and religious organization if you're a lifelong member of the Methodist Church in your Northern State it would only make sense that if you were changing your domicile to a new state that you probably find a Methodist Church or some church at least two to attend in Florida if your lifelong member of the University of Michigan Alumni Association you probably join the University of Michigan Alumni Association of of Florida are you would likely do this also surround yourself with some if you've been active in charitable activities you probably find some of those charitable activities to do in your in your new stick analysis and make sure that it makes sense so one of the things that happens when you change your domicile if you give up your homestead exemption in your in your current state in order to get the homestead exemption in the new state almost every
state says you can't have a homestead exemption in Homestead exemption there are for the most part reserved for those people who are domiciled in that state and the homestead exemption is very significant just as an example in Michigan at the homestead exemption is very significant I've had I've done the analysis for clients before where we ended up deciding that their savings on income taxes were outweighed by the additional cost of giving up the homestead exemption so so it is important to to not just hear that the new state is better to do the financial analysis figure out whether it really makes sense to make that change and if you're going to do so when do those financial benefits kick in the beginning of people that we know that have got audited over this so how do you defend against an audit but a domicile state that really is a great question because at the end of the day that's what we're all concerned about you make the change and you get out of there. You know often times you've already lost because you hit it if you're making a change in your going into retirement
looking forward to spending some time with the kids and grandkids down the golf course and you end up in an audit that's just not what anybody wants so I would say it is very important when you make your change of domicile know the state that you're coming to know it inside and out and that is the idea behind change my domicile., making sure that you have a state-specific list to go through keep records of of everything if you're changing from a safe deposit box in your in your high tax state to a safe-deposit box in a low-tax states keep that information have the records as to when you change when you close the old box when you open the new one just gather information about the date that you registered to vote in your new state the date that you gave up your homestead exemption in the Farmer State keep all of those records and importantly because many states do have this number of days test track your number of days so that if if you're asked you know for sure that you're in good shape so that even if your audited on that number phase test that you're not going to run afoul
okay so now what I need to do cuz we have about a minute and a half left I'd like you to talk about change your domicile. Com how people can go and get involved with you how people get involved with that so they can change their domicile right so they don't get hit with the audit in the stress and all that so, what we have done is we have gone through the 25 and done a specific State analysis for each of the state's what we have done is we've outlined so that is easy to determine what is the financial benefit of changing from that state what is the income tax rate in that state how does the property tax exemption work in that state does that State have a gift tax and estate tax and inheritance tax so that you can actually go through quantify the difference between the Tuesday and then what we have done is we've gone through the state statute state regulations and case law for each state and we pulled out the information that is specific to that state.
decision so there's all in one place so that they are our clients can read through that and see what they should be doing and then we make it even easier and what we do is we have created a checklist for each state very state-specific then based upon California for example what are the things the California says they will look at so that you can go through that checklist one by one keeping records as to the date that you need each of those changes and so in doing that your chances about it your chances of a triggering and audit go way down and certainly if you were to be audited you at least now you. Of the eyes cross the t's and then you're going to be successful in that oughta if you've done the things on the checklist thank you Brad for being part of the show what's the best way to be it's it's changed my domicile. Com is the best way for people to get in contact with you get the information and someone correct absolutely
your specific States will probably have you back so we'll see your relationship with money still to come I'm the saving with Steve show
don't let your financial woes keep you up at night and prevents you from living a life of Financial and personal freedom hi I'm Steve Sexton post of the saving with Steve show where to be talked about the in an ounce of money bills Financial issues that could be costing me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so sweet with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune into the saving with Steve show join me Steve sex and out of saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon
welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton welcome to the show this is Steve Sexton that was Brad Galbraith talking about changing your domicile this is a big thing nowadays Hispanic people are moving from a high tax state to a low text Ape looking to save a significant amount of money if you'd like to do that you could obviously review the show but you can also go to change my domicile. Com to find out exactly what you need to do for your specific State Mount next one of the biggest thing is coming up is taxis and we're right in the middle of it oh my God but you have to be aware of the scams are occurring because there's 7 new one is receivers of all we have you know what the social security scan all right we're just going to go through all those and you know what there's certain scams were they evolve around the social security number but the new one is is there claiming that they'll suspend or cancel your Social Security
this is basically a scare tactic and to get you to answer or return a phone call to get your information need to know if this occurs you just need to hang up and block the number OK Iris personal email of impersonation email phishing scams are common tactic among cyber see in some of these I just got this last night so it might sound like I'm reading a little bit but here's what the deal is okay they're not limited to tasks related scams however one of the common text scams is to send a variety of legitimate-looking emails appearing from the IRS then they contain subject lines like automatic income tax reminder for electronic tax return reminder will provide links for a temporary password okay to access your files and get your refund now these files you have to understand her malicious and contain malware which means they can track all your steps on the computer all the little cheat codes and take your financial information I don't want to do this remember the IRS will never contact
can you email don't open up email from anyone claiming to be from the IRS and certainly don't click a link or download files for me okay next calls from What's called the taxpayers advocacy service hey guess what this is actually legitimate service or an organization inside the IRS but you know what the tax advocacy service will never call you you have to call them so if you get a call you'll be the scammers you know they demand payments or may claim you have a refund waiting but either way they're trying to get personal information or get you to send them money which means they're stealing from you so make sure you understand the next thing as ghosts tax return players you know what this is a big thing is happening all over the country and the basic what's happening as you have so-called preparers they typically don't have any sort of credentials for preparing taxes okay they may require payment in cash or not provide a receipt they also invent income or claim fake tax deductions to boost your refund demanding you paying the four
what percentage of your tax refund you know what you need to know that legitimate tax accountants CPA and an enrolled agent people with a prepares tax ID number and I know this because I used to have a prepares tax ID number will have the credentials that qualify for them to handle taxes they'll also Never Promised You a large refund they will offer you several payment option won't try to pass your return and will always sign the return including their prepares tax ID number so the big big big thing here is this if they don't sign your refund ask for cash and they don't have a tax payers ID number they're fake there a ghost tax preparer we have seen people come into our firm and say hey what's going on with this because they got an audit from the IRS and it was on the year that got the highest tax return if they had one of those ghosts prepares do it watch out for yourself and next one is unemployment benefits Oggi's because of the pandemic millions of Americans lost their job permanently or even temporary in
and received unemployment benefits issued by their state agency poke however in some cases criminals. Explain the situation filing fraudulent unemployment benefits using stolen identity text Wendy clear this is a 39 billion dollar problem in the state of California because of unemployment benefits are taxable income you're going to get a form 1099-g okay and I'm box one is going to show unemployment compensation but here is the issue if you didn't receive the money okay that means somebody stole your identity to file for unemployment and if they did that you're going to need to talk to the state agency that deals with unemployment to get the form correct it okay if you can't get your form corrected in before you file your taxes make sure you file your taxes on only what you actually receive right and make sure you put a notation that your 1099-g or that unemployment compensation is false or Roni it's okay next
what neck one of the big things we want to take a look at it than natural disasters can now this is happening here in Texas in any state that actually got hit by that cold front door with all the snow Texas had no electricity they had no water or even seen parts of this with a pandemic it's just crazy but the IRS wants to remind people that criminals and scammers are trying to take advantage of the generosity of taxpayers who want to help victims of major disaster the frogs and sleep there is fraudulent scheme normally start with unsolicited contact by telephone email or in person using a Ridah tablets which means they're going to come and see you summer going to impersonate Charities to get to send money and get your financial information they're going to set up bogus websites using similar names to legitimate charity so you send in the money do you working on or before 4 for the IRS help victims found Cassie losses or get big refund
who's going to operate Bose has boogers Charities and Felicity money or financial information by telephone or email okay so it's important that you check the Charity's out check out your Better Business Bureau check out the FBI and also check out the IRS website next phone scam phone scam is charging taxpayers including recent immigrants that use video relay service is to try and scam deaf and hard-of-hearing individuals as well as people with limited English proficiency and they making the rounds through the country collars claiming to be IRS employees using fake names by Idina badge numbers be know a lot about their Target in when they call the caller ID says IRS victims are told that they owe money to the IRS and must be paid promptly threw a gift card or wire transfers victims may be friend with the recipe for Tatian suspension a business or driver's license in many cases the car becomes hostile and actually insulted business may be told that they have a refund due to try
take them to share their information hey the scammers are all obviously asking you leading urgent messages for you to return okay. Here's the thing I don't want anybody to get scam and I see this happened a couple times a year every single year with people so fearsome chips that you need to know in order to make sure you don't get scammed now here we go the IRS does not initiate contact via email text message or social media to correct request your personal and financial information they also do make phone calls they send letters Max they will not demand immediate payment using a specific payment method prepaid debit cards gift cards are wire transfers they always mail a bill first now it is your right as a taxpayer and you'll be given the opportunity to question or appeal the amount you owe they will not demand you pay taxes without offering you this opportunity because this is your right K in fact probably won't get too aggressive for you for a few years okay then we'll never threatened you with action from lawn
forcement they cannot revoke your driver's license your immigration status for your business license so that's important to note and the IRS recently started doing in-person visits for those who own taxes or a long time if you did not get if you do get someone at your door claiming to be from the IRS they should always provide you with two forms of ID a pocket commission and 1/8 SPD 12 gauge Harry Sam Paul David 12 they need they need to have that car you have the right to see these in to confirm their credentials if you asked to confirm those credentials they should be willing to give you a virus phone number to do so if you think you're involved with a phishing scam Ford at the fishing at if it's at Axiom and you're not sure all you need to do is go to the IRS website tax can go to the FBI website there's many different websites that you can go to to make sure you get to knit get the information that you're not getting scam so you know what I want to thank you for being part of the
you know what we had Brad Galbraith talk about how to properly damacai all your your state or you don't get hooked up if any of your former state taxes we just talked about tasks and next we have Sean roll so we'll be back there with just a couple more expert advice for having a happier relationship with money still to come on the saving with Steve show
don't let your financial woes keep you up at night and prevents you from living a life of Financial and personal freedom hi I'm Steve sex and post of the saving with Steve show where did he talk about the ins-and-outs of money those financial issues that could be costing me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so sweet with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune into the saving with Steve show join me Steve section of the saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon
welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton welcome back to the show we just had a wonderful segment with Brad Galbraith talking about domiciles here in the United States is a people a lot of money in taxes we talked about tax scam and now we have Shawn Rowles watch by analytics and you know what just to give you some background on Sean before we get into West Point analytics for nearly two decades he's been a wealth manager and an active portfolio manager from the some of the largest banks in world's largest wealth management companies use the author of multiple white papers on investments and get an upcoming book called spintech The Evolution of money from Billy into blockchain I see that you're a financial historian and your view of how our relationship with money has changed over time you know what Sean has lived and worked in countries like UK France Bulgaria China I mean we're just happy to have you here and I'm looking forward to time
you about how we can better identify risk using lucky utilizing your watchpoint analytics hope John welcome to the show. Steve thanks for having me and I appreciate your interest in our work well before we get going what the heck how did you get started on this so basically everything you just listed is essentially built out of necessity you know you like yourself I've been I've been an active asset manager for two decades now and what you know what's funny about my career is really I almost feel like I've had more crises been good years with respect to to Market came into the business during bubble collapse and then since then obviously we've had we had all of the the additional crises a lot of my work and research really started during the great financial crisis and and what it was is essentially as we went through that I realized we had to have better tools there had to be a better way to identify these risks before they they hit us and work you know cast headlong into
Elston and so that's really where it started and I kind of do Vin to macroeconomic research and over the past eight years I've been giving a lecture on applied macroeconomics how do we take all this information and then and use it to make better decisions with respect to putting money to work and in recent years I was really able to kind of refine that down into a digital product and so watch Point analytics is me releasing that information to to the general public the average investor it in my mind were kind of democratizing well because a lot of disinformation hedge funds and sophisticated players have had for years but the average investor was really kind of lacking this type of of analytical tool and so what we've done is we've created it were wrote we're rolling out systematically rolling out our tools and no be a substantial amount of the Matador the next six months and what we're trying to do is kind of level the playing field and give the average investor inability to read the economic environment a little bit better so that they can make better informed decisions with respect to risk
you know what I want and this is one of the questions I I'm in and I'm waiting to ask in a lot of viewers were asking you know what when I was looking at your website in the things that you talked about I noticed there is a notation to the fact that you saw that potential that drop it happened last March or the potential for that drop that was happening less smart so how does this software go about so actually get it registered for the US market it registered that we entered a high-risk environment on March 2nd and what you know what the software is telling you is when we enter a high-risk environment you need to lower your risk exposure and we offer a lot of different templates and and we give you a new base before decades worth of back back-testing to show you how those templates weather the overall Market if you can't follow that Guidance the key theme was Something Wicked This Way Comes Is essentially what the the software was telling us and if your if you were a user of the software we went into a moderate risk it kind of we went
from a low risk to a medium risk in 2019 and so you were able to kind of telegraph that something was coming we didn't know what it was going to be but as every rolled into January and then February 2020 clearly everybody was looking around and saying okay there's something starting in China and it may be coming this way and then the the software triggered on March 2nd so it is still got you out before you really had to experience that you know the depth of that initial panic in March and not like all the Cobra Kai and the way the software Works basically what we're doing is weave weave back tested all of this data to look at several different indicators in the macroeconomic environment and we've distilled all of that down to give us a centrally a ton of a crisis alert tool so it's not this isn't a eighth of a daily tool that you know help you get in and out of markets on a high-frequency basis what this is doing is it telling you when there's a very high likelihood of a of a large mackerel event and it just gives you enough heads
but you can you can bring your risk in if you're conservative or if you're in a position that You're vulnerable when or you just simply don't want to go down you know what the market and mine is a story from an article from Santa Clara University where they were analyzing what happened before 2007 and 8 and they notice that the market kept going but the institutional players were leaving it in the market was still going up because it was all the individual investors he thought this Market could never end this could never end and all of a sudden they're they're holding the back and this would be a tool that would enable somebody who's a not an Institutional Investor to understand how I hate you no risk his way into high I need to dial it back that's exactly right it's it's often the case that the smart money is able to get a heads up and get out early and it's usually the retail investor that kind of Left Behind or left holding the bag and and you know from the GameStop and Anna
is that we've had recently there's a lot of conversation about this and and you know what I'm trying to explain with Watson analytics is this isn't going to solve The World's problems but it is going to give you your going to be a more informed investor because I'm you're we're not asking every new entrance to the to the financial field to go get another NBA or or a PhD in economics if that's an unreasonable expectation to instead we need to systematically build a full set of people can use a strainer if you will so that they're not just riding blindly into high-risk situations and their part of part of where this came from is as a student Financial history I've studied some of the greatest and so one example is I look at Warren Buffett and we can easily track what his asset allocation is been over decades and obviously he has one of the you know the most Stellar records you out there and if you look at how he's actively managed the capital risk you'll notice that his asset allocation has swing wildly from over waiting in cash app
orange is over waiting in stock and pretty Extreme Measures and so what this really set me off on essentially a whole new theory of how to how to manage asset allocation most most products in the market place or Bill off of modern portfolio Theory which kind of helps you to find your risk tolerance as if that's a static thing in the units in time and then build an asset allocation and then you're supposed to just hold that and ride straight through the storm and in reality there's a lot of changes that happened in an individual's life but more importantly when Market start to change or especially when you move into a crisis mode suddenly anyone's risk tolerance goes way down and so it is it encourages them to start taking an active hand for making changes and moving stuff and that's that's how we end up kind of hurting ourselves so we're going to wear Our Own Worst Enemy if you will and so this is a tool that designed to help you manage risk relative to the situation you're in and and in a believe it or not we do have plenty of data that tells us this is an environment that historically is good for thee
things and bad for those things and so we just need to make those adjustments accordingly so another basically what we really saw going to throw me back the last Mark we really saw the global Supply change adjust from socially interactive businesses to non socially interact with businesses like Google and so on and that affected things worldwide also sexist things hear anything to do with travel tourism hotels are restaurants retail and all that stuff with adversely affected and you know what it would be telling somebody hate you look in a would it be tinted windows software be telling him you need to move into these Market sectors I move away from those help me understand that I really see the financial advisory business is having three components of the first is the advisor works with the client and you get to know what are there needs wants and wishes and all of us II is you actually start to look at okay how do we want to deploy the asset so that the asset allocation level of of information you know where do we want
take risks as you and I know there's no such thing as no risks while we're really doing is we're choosing which risk we're willing to accept it any given time and then the third component is the okay I've decided I am going to take this much Equity risk stocks okay what stocks am I going to own what companies what sectors and that's that bottom up analysis so as a portfolio manager my day job what we do is that bottom up analysis right so once we decide these are the risk we want how do we go and execute what what what analytics does it does that middle part and that middle part is okay if one needs to deploy Capital basically your wrist reading right now and it gives you asset allocation advice at the at the highest level right so conditions are favorable for you to take your normal Equity risk position or conditions are unfavorable you want to have as little Equity risk as possible that's really what what where it fits into the Beast the website itself is designed and is and we will continue to add
more tools it basically just give investors better Clarity before they start making cut a big Bets with what is it most likely they're their life savings that's what we're going to have to take a little commercial break right now sick with this we're getting back with more with Sean Rowles more expert advice for having a happier relationship with money still to come on the saving with Steve show
don't let your financial woes keep you up at night and prevents you from living a life of Financial and personal freedom hi I'm Steve sex and post of the saving with Steve show we're going to be talking about the ins-and-outs of money does Financial issues it could be cost me thousands of dollars causing stress keeping you up at night we're going to talk about money tax reduction saving more spending your investment risk management retirement and everything is so sweet with you having a healthier happy relationship with money soon as you've ever dreamed of living a life of Financial and personal freedom you owe it to yourself and your family to tune into the saving with Steve show join me Steve sex and out of saving with Steve show as we talked about everything under the sun when it comes to money to learn more about the show visit saving with Steve. Us that's saving with Steve. Us saving with Steve. Us will see you soon
welcome back to the show that is here to help you achieve your financial goals it's the saving with Steve show now here's your host Steve Sexton hello welcome back this is Steve sexy with the same thing with Steve show we have Sean rolls with his at watch Point analytic now I truly want to thank you for tuning in appreciate you letting your friends and family and Associates know about her show all the replays are available at saving whiskey. Us if you're enjoying the stories of pulpal him information and insights on saving the Steve I'm sure do to subscribe to your YouTube channel you never miss a show and check out a few of our Affiliates at UK help radio PBS radio talk radio New York City e360tv and lost Las Vegas TV network all these networks are dedicated to empowering you to solve problems uplift your spirit live a life of personal financial Freedom hey if you'd like to get more financial ship you can obviously go to her Facebook page at saving with Steve sex and showing the Insiders club or get replays of these shows at shaving with Steve. Us now here we are back to watchpoint analytics and Sean Rowe
we've been talking about how things are adaptive how I can help people move forward and reduce their risk what are the things that I'd like to talk about is this can help those we all have we all know the engine your mind you have the engineer mind I can tell that just by talking to you my family's open to engineers and finance people and I see there's a lot of do it yourself ways out there and when we go back to that 2008 or any big crisis where the stock market went up and everybody went out the 120 analytics can get somebody that that idea say hey look I'm looking at the wrong things but why is this saying to me that pay your taking on way too much risk for what's going on right now that makes sense yet it does in and I'll say I mean the entire reason why we create these tools is to is really for the person who's not going to dive in and spend all of their excess on trying to quickly
try to make it as simple as possible to just give you a rough screener to tell you when conditions are favorable kind of in-between or unfavorable so that's that's really kind of how to use part of it and you know what I what I tell people is what's interesting about this environment that were in right now we're in an era of extremes and what I mean by that is extreme low inflation extremely low interest rates as everybody knows you know even with this most recent move and interest rates over the past couple of weeks we still in an extremely low environment and then more importantly stress level would you how would be the easiest way for us to gauge valuations in the market so we have all these like really simple tool that people normally look at but in this environment those tools are almost worthless in that they're giving us extreme readings and so what do we do with that information because if it doesn't fit my historical data said so that's what we're busy doing is trying to refine those types of tools
the price to earnings ratio which is the easiest way to met to gauge whether or not a stock market is undervalued a fairly valued overvalued that metric extends when you are in periods of low inflation but nobody ever really bothers to tell you all that stuff right and so if you're just looking at the PE relative to its historical average you give you did well right now we have a very high reading so how much information is that to me right do I want to take risk and so what was what was systematically doing is bringing out tools to simplify and make it easier and put the stuff into perspective so that an investor can just login look at all these measures and make a more informed decision and so we start with what's currently on the website now is our bar model for the US Stock Market and we used the S&P 500 Hazard Hazard proxy for the stock market when we started this exercise we were really just trying to come up with something or Ortiz out is there something better than the traditional balance
portfolio the 60/40 60% stocks 40% Bonds on the traditional asset allocation model and what we found in doing the back test of of four decades worth of data is that not only does the model outperform the The Benchmark which we're again we're using the balanced fund is a benchmark but in a lot of conditions it outperforms the S&P 500 even if you had bought and he'll all the way through all the storms we still ended up with a significantly better return but more importantly a smoother ride and this is why it matters to investors especially the do-it-yourselfer is all of us know that if we just put the money in the stock market and we give it a whole bunch of time everything will work out with the problem is experiencing the ride along the way and we have those big emergency circumstances that's when everything had that's when you're most vulnerable for everything to go wrong in to make a big mistake this software is trying to do is just give you one additional tool to help you out maneuver that that ring
yourself right so it is trying to give you that tool to to make you just a little bit better Captain it at Sea especially when the waves get real choppy people between ages 55 75 or 80 and they all want you know we want returns to be certain then the reality it's not and you know what the markets going to do this but if you can get a tool that would do that a little bit as opposed to go on like this but maybe like this more of a wave than a big gift that would be much more significant or the longevity somebody's assets income in retirement to be able to handle health and other issues yeah that's wonderful yeah it means precisely that at the end of the day what we're not doing is beating the market what we're doing is outperforming a traditional buy-and-hold strategy or a traditional balanced fund by avoiding the worst parts of the market right so when we get signals that tell us we are very right for a crisis that's when we just want to take a few tips off the table with low
where are risks would be prudent and let's not expose ourselves to that. Massive concerning type of market now you know which was kind of fascinating about all of this is if you know we don't have prices that often right but when we have them they're fairly big and they're very concerning and they usually come on really fast and then what I mean by that going back to what you said about the great financial crisis we had a. Of time we were getting significantly bad information and yet the market kept charging higher until all the sudden It reversed and then it was on it was just like straight line down and what this software does is it picks up those conditions that are that are dangerous and it gives you a quick heads up and then it allows you to kind of make adjustments before that big drop down that's that's kind of the the key thing but here's what's really really important about it is over the 40-year. That we've been back testing this data what we find is periods of time after a crisis we usually see it when we see the right wrist condition so when it
is too favorable we noticed that the runway there is really long and there's usually a very nice healthy. Of positive economic growth and Market expansion and I I bring this up right now because January and February of this year we were really starting to sense a lot of fomo that fear of missing out right everybody clearly was scared of the market last year because we had a big batch of uncertainty dropped in our lap and we don't like uncertainty we don't know what to do with it but as the market just chugged higher we we flipped into this year and I'd like okay the vaccines Rolla now that you know there's light at the end of the tunnel there's a recovery trade then it was almost like hurry up I got to get on this train before it leaves the station without without me and so would our when our research is showing us is that we're still in a high-risk environment there and if you look around right now you'll see where markets are compared to the fundamental economic reality is we're not out of the economic woods yet but the markets are priced as if we are and so that puts us at risk of one or two
things happening either prices coming down to reality or we need to pass enough time for economic reality to catch up to prices but the point is it still a high-risk environment and so what this fool is is the other side of what is trying to do is help people understand you don't need to worry about fear of missing out because when the risk conditions lower you typically have years of good runway in front of you and so don't worry about the next couple of months if you're on the sideline because we're still in a high-risk environment but as soon as you see that briskin dishin change that's when you want to start moving in because you should have a fairly amount of a fairly good amount of time in front of you doesn't make the return that's wonderful that's wonderful tell us how people can get involved with your software where do they go and you know what symbol is it for them to use all that kind of good stuff so it's it's very easy so it's ww.w watchpoint if you go there
CVS ww.w. Watch point if you go to the website and just scroll to the bottom of the landing page you'll see my email so you can send questions direct to me you'll see all the Winx to social media where we're on all the social media on the web page is a subscriber based page now don't let that concern you it's free it's always going to be free as long as I can possibly make it free but we have it a subscriber base just so that it's it's harder for the Bots to come in and strip all the date out right now we have available to you there's another fresh commentary constantly coming so real quickly just give me example on the website we have the u.s. mark model currently up will be adding the China Great Britain Euro Zone in China in the next 6 months the China model went went bullish last fall and next up is the UK model so but we have articles that we put out and commentary that we get help, and then we'll be introducing a whole host of additional analytical tools that are
very easy to use for the user but extremely valuable and protecting your wrist thank you for joining us as you've been wonderful I'm just going to send a special know now to our UK European listeners and Pacific so everybody this is John Wall's watchpoint analytics I want to thank you for being here and providing the stool for everyday investors and I'll make a difference in our life and I appreciate it thank you so much it was a pleasure say thanks for being with this day be safe bye bye. Com you can get the information there if you're looking to move out of a high tax dates into a lower no tax day get the tax can you can see that on the website as well as we just talked to Sean rolls if you're an investor to do it yourself or if you want to check out watchpoint analytics next week we're looking forward to a wonderful show look forward to seeing you then be safe be healthy if I buy thank you for joining us for the saving with Steve show
by Steve Sexton to learn more about the show and how to become a guest or sponsor visit saving with Steve. Us that's saving with Steve. Us join us again next time as we continue to talk about everything under the sun that relates to you having a healthier happier relationship with money this has been the saving with Steve show hosted by Steve Sexton