Cautious Optimism in Today’s New Normal

by Mike Lester

Aug 10, 2020


Kristen (00:02):

Welcome to the Retirement Wealth Podcast. Our goal is to help those retired or soon-to-be-retired investors make more informed financial decisions and live an enjoyable retirement. Our host, Mike Lester is the founder and CEO of Talon Wealth Management. Mike is an investment advisor representative of Retirement Wealth Advisors, Inc., an SEC-registered investment advisor. Thanks for joining us today and let’s get started.

Kristen (00:34):

Thank you so much for joining us this weekend. So many ways you could be spending your time right now. Well, okay, they’re a little limited these days, but still, you could be watching Netflix, getting things done around the house outdoors. We’re happy that you are spending time with us here on the radio. Stay with us as we pay tribute to the 50th anniversary of the first time we all heard this phrase:

Jack Swigert (00:58):

Houston, we’ve had a problem.

Kristen (00:59):

A tribute to that and what we can learn from that experience as everyday people coming up in just a few minutes. Gosh, Mike, the big question right now: How long is the slowdown going to last? Number one, can you answer that?

Mike Lester (01:13):

First of all, I don’t think anybody can answer that because, I mean, we’re sitting here waiting for governments around the world to make decisions that we have no control over, right? I mean…

Kristen (01:24):

As a control freak, it bothers me that everything’s so out of control. For real, it really does. I mean, like you said, nobody knows for sure, but White House economic advisor Larry Kudlow tells Fox Business it could be another month or two before the economic turnaround begins.

Larry Kudlow (01:40):

I do not think it’s going to get any better in the weeks immediately ahead. I do think, however, that this will prove to be temporary, this is not going to last throughout the year, and I do think that we will see a very strong economic recovery when this has played itself out.

Kristen (01:59):

So, Mike, one thing I want to mention is I think that the silver lining to this, because obviously, there are some really horrible things happening with folks listening and their loved ones and the health crisis of this, but I think that this sheltering in place or physically-distant life is humbling all of us. It’s making us take advantage of family time and realize what we’ve been prioritizing wrong in our lives, so there’s that, but this guy is cautiously optimistic here about when things will be better financially, so what should we be doing now to make sure that we’re positioned to take advantage of that economic recovery when it does come around?

Mike Lester (02:37):

Well, first let’s start with cautiously optimistic. I think that’s pretty easy to say, but also accurate. I mean, we’re cautiously optimistic. I think that at this point, we can see the light at the end of the tunnel. There was a lot of uncertainty, we didn’t know much about coronavirus. You go back six, eight weeks, nobody thought, I mean, there was no financial model, or in financial services, we use algorithms to predict future results. There wasn’t anything for a pandemic like this. There wasn’t anything that said, “Okay, hey, what if all of the world’s governments just shut themselves down, basically within a couple of weeks because of a virus?”

Kristen (03:16):

Yeah, what would that look like?

Mike Lester (03:16):

It’s never happened, and so it went from “Gee, whiz,” well, not a few people, a lot of people in China have it, and then a few people out on the West Coast in Washington state have it and then suddenly, it’s a pandemic very, very quickly, so within a few weeks, we got into a situation and people were looking at their portfolios and going, “Gee, whiz. What’s going on?” Well, what your portfolios were doing is their markets are related to your portfolios and so what your portfolio is doing is looking three months, six months out, it’s always forward-looking, and so markets got very, very scared about what was likely to happen in the future, and now we’re at a point where we’re, I believe, more than halfway through and again, we’ve got a lot more information about corona. Numbers in New York, they’re severe, but a lot less severe than they thought they were going to be.

Kristen (04:09):

Thank goodness.

Mike Lester (04:09):

Thank goodness, right? And we have some remedies, or potential remedies along the way. We’re not going to have a vaccine for a while because it doesn’t happen that fast. But when Larry Kudlow comes out and says, “Hey, listen, yeah, the next few weeks are going to be bad,” I agree. What does that mean for markets? It means volatility.

Mike Lester (04:25):

But I do think we can see the light at the end of the tunnel and my big question is, if you look at where markets are today and where do you think they’re likely to be three months from now or six months from now, I do believe they’re going to be higher. It’s hard for them not to be. Coronavirus is not gone, but it’s not as some significant at that point in time. Hopefully, you have some remedies, people are going back to work. The big question is going to be, Kristen, how many people go back to work? Here’s something that I was looking at the other day and a consideration: What if they restrict how many people can actually fly in an airplane, what if every middle seat is empty, right, because of social distancing?

Kristen (05:04):

Well, number one, that’s glorious because who wants the middle seat?

Mike Lester (05:05):

Who wants the middle seat? Yeah.

Kristen (05:06):

But number two, economically, that’s going to hurt the airlines big time.

Mike Lester (05:10):

Right, so that’s not a great scenario, so yeah, it’d be great if everybody else is back working or they’ve opened it up, but if every middle seat is empty, that’s a problem for the airlines. What if you have to do social distancing at the movie theater and every other seat is empty? Well, that’s a problem for the movie theaters. What if you go to a restaurant and every other table is empty because …? And so there’s this question of getting back to work, but what does getting back to work look like? And so that’s my big concern right now, moving forward is, well, what level of getting back do we get back to?

Mike Lester (05:43):

I know that this is extremely serious, but we do have to look at the financial impact and as an investment advisor and advising our clients and our listeners, we do have to take that into consideration, so when we talk about things like economic recovery and cautiously optimistic, yes, we’re very optimistic, but cautiously. I think you need to take a very, very close look at your portfolio and how it’s invested now and you have to be asking yourself or your financial advisor needs to be communicating with you on this. If you don’t have a financial advisor, just take it into consideration on those 401(k)s and IRAs and 403(b)s and what have you. You need a plan for what’s likely to happen in the next six months. I think that’s a really, really big deal.

Mike Lester (06:25):

People keep talking about the new normal, this is a new normal, and the next six months aren’t going to look, I mean, I don’t think like things have looked historically. It’s going to be very different because we’re recovering off of a very different low in markets, I mean, we got into the mid-18,000s. Some people are, I think, almost trying to scare people. If you turn on the news media and the 24-hour news cycle, they’ve always got this man or a woman who’s optimistic and then another woman or a man who’s pessimistic, right, and they want them to battle it out on TV and just scare the crap out of everybody so that they can sell more advertising. That’s not helpful, right?

Mike Lester (07:04):

We just want to take a very serious, and certainly calculative, but optimistic look at our portfolio and figure out, “Okay, well over the next six months and this recovery based on the stimulus, based on…” I mean, Kristen, this past week, oil was down to like $15 bucks a barrel, right?

Kristen (07:22):


Mike Lester (07:23):

This hasn’t happen since 1999. That’s significant, right? Great, it happened. Not so great, I guess, it happened. It’s great at the gas pump, but financially, it’s not a great thing, but what are you going to do about it in your portfolio, right?

Kristen (07:34):

Mm-hmm (affirmative).

Mike Lester (07:34):

What are you going to do about stimulus packages? What are you going to do about the PPP program? What are you going to do about all of these things sitting down, and at this point, Kristen, it’s not sitting down, we’re having a phone conversations.

Kristen (07:44):

That’s right.

Mike Lester (07:45):

But historically, we would have been sitting down. Soon, we’ll be sitting down again. Right now, having a conversation about your portfolio, how you’re allocated and coming up with a plan, certainly longterm, but also short term, let’s look six months, 12 months, 18 months out, having that plan, I think, is going to be important and understanding your portfolio is going to be important.

Kristen (08:05):

You already knew that before this whole coronavirus, you could buy groceries from the comfort of home. Not a lot of us were doing it, but it was available, but did you know that you could buy a convertible the exact same way? Even car dealers have adapted this new social-distancing environment, and Mike, they’re executing the whole car buying transaction from start to finish online. In fact, it’s working so well that some car dealers out there are planning to continue it. I want to say I saw Carvana, Buick, GMC, it might’ve even been CarMax. I forget. It’s like all of them are doing this: “Hey, we get you still need a car and we’ll bring it to you socially distant.” And even after this coronavirus is over, they’re probably going to keep it up. What about you, though? Do you think you might want to make virtual appointments and financial plans a permanent option for your clients?

Mike Lester (08:57):

I don’t know. I’m a people person, Kristen.

Kristen (08:59):

Yes, that’s very true.

Mike Lester (09:01):

I miss the, well, facetime, just sitting down one-on-one, having a conversation. I’m a pretty laid back guy and I’m not salesy. I do feel like there’s certain things you can’t understand about people without meeting them in person.

Mike Lester (09:14):

At the same time, we offer virtual meetings to anyone that we’re talking to and we’re doing quite a bit of that right now. Meeting virtually just means that people share information with us about their portfolios personally in an encrypted way so that we can do some analysis and then we can have a conversation on the Internet, either a video chat or just a phone call and a screen share, so I do see room for the virtual side of things, but it’s a huge decision for people.

Mike Lester (09:43):

I understand that younger people, millennials and other younger generations just pick up their cell phone and swipe here, swipe there on their financial services part, much less like dating or something like that, but I don’t know, even dating, Kristen. I mean, back when I was dating, I wanted to meet somebody personally before I knew whether or not I wanted to go further. Now, you can just swipe. I think of-

Kristen (10:07):

Oh, Mike, it’s more than that, there is a new dating service because we’re socially distant than I have seen advertised on TV. It’s crazy.

Mike Lester (10:16):

Well, how do they actually meet? I don’t know. Maybe it’s all virtual stuff. But here’s the thing: Maybe someday, Kristen, we’ll be kind of a dinosaur and everybody will be doing things virtually. We’re certainly doing more virtually now in these times, but the people that we work with, they appreciate the ability to come at some point, right, but to have a face-to-face, to get to know somebody personally, we’re working with people’s life savings here, Kristen. They literally spent a lifetime of work, they’ve built a nest egg. It is their nest egg, they need to make sure that it’s protected and growing. They have to maintain their current standard of living adjusted for inflation and taxes moving forward.

Mike Lester (10:53):

If you take a step away, again, that transition from working to retirement, it’s a big transition. Your paycheck goes away when you retire, your health insurance typically goes away when you retire, and now you have to find a way to get the money that you’ve set aside to work for you the rest of your life. Now, I don’t think that that’s on a longterm perspective, maybe short-term analysis and everything, but long term, I do think there should be some personal meetings and everything else.

Mike Lester (11:17):

Just going back to the original question: Virtual, yes, I understand it. Yes, we’re very good at it. Yes, we do it with existing clients who already know us very, very well to keep them from having to come into the office. Yes, we’re doing it now, so there’s some value there and it makes things easy, but there’s also a personal aspect that I don’t ever want to lose. We have it with our listeners, we have it with our clients, and at the end of the day, if you’re in a situation where you’re looking for a relationship, just give us a call and we’ll start there.

Kristen (11:42):

Stay with us as we celebrate the 50th anniversary of one of the most famous quotes in history and what we can learn from it with Mike Lester of Talon Wealth Management.

Kristen (12:03):


Kristen (12:03):

What a depressing song for those of us that are newly single, maybe divorced or always been single. Not really, though. Three Dog Night.

Mike Lester (12:14):

Some people, it doesn’t bother them. I’ve met clients that have been single for a long time and they’re pretty happy about it.

Kristen (12:18):

And you also have a radio cohost who’s been single for quite a while-

Mike Lester (12:21):

Well, I didn’t want to point that out in front of America.

Kristen (12:22):

… and she’s okay with it. Nah, it’s all good. I don’t have a problem with that. You have to be happy with yourself before you can be happy with anyone else.

Mike Lester (12:29):

There you go.

Kristen (12:29):

Unfortunately, I’ve been way too happy with myself for a long, long time here. Well, this year marks the 50th anniversary of one of the most famous quotes in history:

Jack Swigert (12:39):

Houston, we’ve had a problem.

Kristen (12:41):

“Houston, we have a problem,” something that we all quote now when something is going wrong. It’s kind of a pop culture thing to do. Jim Lovell, commander of the ill-fated Apollo 13 moon mission that we heard there.

Kristen (12:55):

Mike, I can’t imagine how scary it must have been inside that spacecraft not knowing if they’d ever set foot on Earth again. Ron Howard, Tom Hanks did a great job with the Apollo 13 movie of helping us better understand what that could have been like, but oddly enough, Lovell recently told Chicago Magazine that he’s never considered himself to be a risk-taker, but there he was with a lot of risk and no control over what was going on. He said he doesn’t do anything without first knowing and weighing all the odds. There is absolutely a lesson there for those of us who are risking our financial future in the stock market right now. Has to be.

Mike Lester (13:35):

No, I agree, and I like the… We can’t get a clear understanding of exactly what the market’s going to do day-to-day, but we can be mathematical, we can be more scientific and we can calculate some odds or probabilities, right? And so-

Kristen (13:51):

Mm-hmm (affirmative), but it’s never going to be perfect.

Mike Lester (13:52):

… It’s never going to be perfect.

Kristen (13:53):

There’s going to be things that come up. Just like the Apollo 13 mission, they made a lot of plans, did a lot of worst-case scenarios, but they couldn’t have planned for what did happen, because there’s always that “What if?” event and, correct me if I’m wrong, I think I’ve learned a little something here, Mike.

Mike Lester (14:08):


Kristen (14:09):

In your industry, it’s called a “black swan event.”

Mike Lester (14:11):

Well, black swan, yeah, and it certainly has happened historically. I don’t know that corona is going to be looked at as a black swan event, but certainly, something that wasn’t on the horizon in any of the, what we call “algorithms” or any of the charts that anybody had put out there. You can be surprised in markets, but you also need to understand worst-case scenarios, and so that’s really, part of what he was getting at there is “Listen, I did the math ahead of time, I looked at the science at a time, I understood what my worst-case scenario was, best-case scenario was, and I decided to proceed regardless,” and they did proceed and obviously, it wasn’t ideal. In the long run, it worked out because he’s here to explain to us what happened and what they did, but it’s not the same, but in some ways, it is the same when it comes to analysis of portfolios and understanding portfolios.

Mike Lester (15:00):

That’s why I just keep beating that drum. I want people to understand their existing portfolios. I want to help people be more efficient. It’s not a question of, necessarily, the percentage that you have in stocks or the percentage that you have in fixed investments like bonds or CDs or something like that. It’s more, well, if you’re going to have a percentage in stocks, what types of stocks do you own? Are they the types of stocks that are likely to do well moving forward in this new reality that we have, or are they the types of stocks that maybe aren’t going to do so well? If you own bonds right now, well, what percentage of your portfolio is bonds? What types of bonds are they? How are they likely to do based on interest rates and markets?

Mike Lester (15:40):

Kristen, we get all these types of questions and so what I’m really focused on are a couple of different things, certainly this week and probably a few weeks ahead, which is, I want to help individuals understand their existing portfolios and I think moving forward, there’s going to be some big opportunities. I think of things like energy we talked about a little bit earlier, but oil being around $15 a barrel here recently, that’s just crazy. It hasn’t happened since 1999, so yes, coronavirus is terrible, yes, markets have been volatile, but I do think there’s an opportunity there and if you’re not talking to an advisor that’s trying to help you out with that kind of stuff, that’s a potential problem. Hanging in there on a portfolio that you just wrote down when there are probably opportunities to take advantage of is not a great idea.

Mike Lester (16:30):

At the same time, I’m thinking about individuals who are sitting in 401(k)s and they’re not getting a lot of help, but in particular, I’m thinking about individuals in 401(k)s that maybe have been laid off here recently, right? So, people anywhere from the age-

Kristen (16:43):

And sadly, there’s a lot of that.

Mike Lester (16:43):

… And there’s a lot of that and they’re anywhere from the age of 50 to 70, they’re a little bit down right now, right, because they’ve lost their job, but again, if you’re in that situation, one door that has opened up for you is the ability to have your 401(k), your 403(b), whatever that retirement account was that you have with that employer, you can now look at other options that are available to you because there’s no penalty to have it privately managed and that private management could bring you more investment options, it might be able to lower the fees that you’re paying, and if we could show you a way to increase the average rate of return net of fees, but also reduce the amount of risk you’re taking to get that and come up with a plan in this new normal, I think that is going to be beneficial, right?

Kristen (17:28):

Mm-hmm (affirmative).

Mike Lester (17:28):

So, it’s not that you’re not going to go back to work, but let’s take a close look at your portfolio and make sure that at least you can take advantage of some things going on there.

Kristen (17:37):

So, the coronavirus stimulus checks been going out and federal officials are already getting thousands of fraud complaints, so the folks at MarketWatch came up with some fraud warning signs and Mike, you and I were looking at this article before today’s show and you’ve also been very in touch with the financial community, gosh, for 20…

Mike Lester (17:59):


Kristen (17:59):

Yeah, years.

Mike Lester (18:00):

Yeah, I’m 46, so…

Kristen (18:02):

Been doing this a minute.

Mike Lester (18:03):

Yeah, all right.

Kristen (18:03):

So, what are a few that you think are worth mentioning to our listeners that they can make sure they avoid the scammers?

Mike Lester (18:10):

Well, first of all, I hate this, Kristen.

Kristen (18:12):

It’s awful.

Mike Lester (18:12):

People are down and there’s always some jerk or jerks out there just willing to kicking when you’re down and try to take advantage of this. When you’re a kid and the world and your parents are protecting you from reality and you don’t get to see it and then you grow up and you realize, “You know what?”

Kristen (18:28):

There’s people like this.

Mike Lester (18:29):

There’s people like this out there, so the best thing that we can do is just make people aware, so our version, I guess, of service message here, but yeah. Guess what? Stimulus checks are going out, but there is a tremendous amount of fraud out there, so a couple of things: Neither your bank, nor the IRS will ever contact you for personal information, so if you get that phone call and they’re asking you for personal information-

Kristen (18:53):

Yeah, they’ve already got it, why would they ask you for it?

Mike Lester (18:53):

… that’s bologna, okay? Also, you’ll never have to click through any links to get to your money. If you’re going through a process and they’re asking you to, “Well, click here, click there,” that’s a problem, all right, so be very, very cautious when it comes to that and some red flags should go up.

Mike Lester (19:09):

If you don’t have direct deposit set up, you’ll never need someone to set up your account, right, so you can see how that’s an issue. “Well, I don’t have direct deposit,” somebody starts offering to help you set one up, all right, that’s a problem there.

Mike Lester (19:20):

As well, you’ll never need to verify your check amount to anyone. They’ll already know what it is.

Kristen (19:25):

Yeah, they issued it.

Mike Lester (19:27):

Right. Yeah, that’s bogus. They issued, they’re going to know what it is. And lastly, they’ll never threaten you, okay, so “If you don’t do this, something bad is going to happen to you,” that’s completely bogus. And so, again, a lot of smart people out there, a lot of smart people listening, Kristen, but again, sometimes, I mean, Kristen, some of the smartest people I know have been scammed, right? Because-

Kristen (19:48):

Oh, yeah. There’s a good friend of ours we both have in St. George, Utah, that is part of the volunteer police force and he got scammed over an alleged warrant that he didn’t show up for jury duty. He was going through the process, ready to go pay, and he was like, “Whoa, whoa, whoa. What’s going …? Hold on.” It took three hours for him to figure out it was a scam. These people are good when they’re out scamming folks. It’s awful.

Mike Lester (20:08):

… They’re good and it’s awful and I mean, they should put them under the jail, just this whole thing, taking advantage of a situation like this is awful, but, hey, we know they’re out there and the least that we could do is just point this out, Kristen, because these warning signs are a big deal and we got to keep an eye on this stuff.

Kristen (20:27):

If you would like to have a comprehensive financial plan and an analysis of your current portfolio, go ahead and visit our website at and we can do that for you complimentary. Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast. Visit our website at for more free retirement planning and investment resources. Thanks for tuning into today’s show and we’ll see you next time on the Retirement Wealth Podcast.

Kristen (21:01):

Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals specializing in the fields of tax, legal, accounting, or investments regarding the applicability of this information to their situation. Past performance is not a guarantee of future results. Investments may fluctuate and when redeemed may be worth more or less than originally invested.

Mike Lester

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Cautious Optimism in Today’s New Normal