Thank you Gratis X minutes now past 11. And good morning. Welcome to mid-day on Minnesota Public Radio. I'm Gary eichten. Glad you could join us. Well, somebody somebody about a month ago looked at their Investments and decided it was time to sell sell it all they said sell it all and all somebody's are probably feeling pretty smug these days one month later because the booming stock market is stop booming the Dow Jones 30 Industrial Averages you heard is up a little bit today, but overall in the past month. It's lost over 9% of its value US economic growth has slowed to a walk and analyst estimate that the drop in stock values has cost investors 1.3 trillion dollars in wealth, 1.3 trillion dollars and wealth now that's obviously has a direct impact and all those somebody who didn't sell back on July 17th, but it could also affect everybody in the form of Leo. Best jobs projected government surplus is that are supposed to finance federal and state tax cuts help save Social Security and fun many of those new programs that we've been hearing about joining us this hour to discuss what actually is happening on Wall Street. And what could happen on Main Street is Chris Farrell, Minnesota Public Radio senior business and economics editor, and we also invite you to join our conversation. Give us a call or Twin City area number is 227-6002 276 thousand. I'll try the Twin Cities 1 800 to +422-828-227-6004. 1 802-4228 to a Chris nice coming in this morning. Thanks for having me. You know, I looked around before we started the program here checking The Ledges in downtown st. Paul that went a lot of people out there after they listen to your introduction. There be a couple more out there. Obviously. This is as a fact that some people there's no question about if he ate the stock market drop, but is it really something? Everybody ought to be concerned about one a lot more of US own stocks than ever before because of 401k 403 bees Ira Roth IRA is all these retirement Savings Plan there has been an extension of stock show ownership in parts of the economy. That was not true before and when you hear the stories about 1929 and people on the subway Zion stock, what was only 15% of the population owned stocks, but half the population now on stock so dude or exposure to it is a lot greater. The other thing is out. The stock market is a wonderful signaling mechanism and part of what's Happening Here is a lot of uncertainty about corporate profits are the stock market's kind of trying to guess or investors are trying to guess six months a year from now. What's the outlook for corporate profits will corporate profits, you know that so, you know, if you had healthy corporate profits you out and hire a lot of people if you don't have healthy corporate profits, you don't go out and hire a lot of people. Good healthy corporate profits. You say well, this will give you a pay raise this time around if you don't use your turn around you say you're lucky. I got a job. So that's why we care what's happened to stock market with one little caveat Paul Samuelson. Our first Nobel Laureate in economics. Always say I did that time. He said the stock market is successfully forecast 5 at alast 9 recession is now probably stock market forecast about seven of the past is a little bit worse. It's record since then, but so you have to be can't get too caught up in the moment in the gyrations of the market certainly not a one-to-one relationship between the health in the stock market in the health of the economy. So what is going on? What what's what's the cause of this significant to drop here in the last month or so we're taking this drop in the stock market more seriously than some previous props and we've had some pretty Disney moments in the in the stock market for more seriously because there's a lot of things that are happening at the same time. 1 trigger event that you can either take very seriously or just dismiss it as they looked as we're going to pass over this now a GM strike for example is equivalent of an earthquake. It hurts the economy it show has been showing up in the economic numbers. But GM workers are back at work and they're starting to produce cars. And so you'll see you'll make up those losses. There's something more serious going on here large part of it is Japan. Once again, Japan is the epicenter of Asia's troubles and Asia's problems cannot be contained and we gave to the new Prime Minister of Japan the benefit of the doubt already came up to the liberal Democratic party. I sent up Archer cheek, but maybe he might be able to do something both well investors last just said forget it. He's not going to do anything bold. The unemployment rate continues to rise in Japan. They're not taking strong action in the value of the the Japanese currency fell that puts more pressure on China to do. It's currency Russia the Russian stock market fell by 9.1% yesterday. So Rush is being caught up in Asia struggles. Latin America is getting caught up in a sea of troubles. So it's just a spreading of the Asian contagion and it's wearing people the endgame on Monica gate is happening is not much of an influence, but still, you know, it's a little bit of bothersome the stock market itself has huge Divergence. It would see I was noticing small company stocks. We're not doing very well haven't done anything since April and then the cut stocks that were doing. Well you'd mentioned was a Mitchel. I was Deepika. What's the smaller and smaller group of stocks? Where was getting a little bit nervous, but the most important thing is the outlook for corporate profits. That's what's driving the stock market and we have the biggest company in this area. They announce look our earnings are under pressure because of Asia widespread. Is this the agricultural sectors being hit very hard mayonnaise. Just having a definite. So there's a question about corporate profits. So hairy over at st. Paul Tool & Die. He's getting hammered now because of stuff that's going on in in Asia, but it's more than just Asia. He's getting hammered partially because H's become Global. He's also getting hammered for another reason which is in the United States the driving force behind the market one of the driving force in the market of the last decade has been this trend toward disinflation lower inflation rates, and we're not talking about 9 10% inflation anymore. We're talkin about if inflation picks up from its current rate of around one and a half percent of the go to three well, When you have prices that type of price stability, how does a business make money? It's not that easy to make money cuz it's very with us telling it's very difficult to raise your price. Now, let's say some of your competitors are from Asia from Latin America and their Wonder Wheel pressure. So they're cutting their prices now all of a sudden Harry he may not realize it but the prices are being set elsewhere in the world, but he's got to compete he's got a match that price now Harry probably has a small export business that's been a trend small business has been spending more and more in here in Minnesota. You could really see the effect of exports of small business now and Harry had to cut his prices last year or the year before then he could make it up with more self make it up with volume who sells of the agents when I can't sell the oceans and all his stuff anymore, but he still under pressure to lower his price that hits your profits. So it's much more widespread today. Then just say it like a 3M which has a you know, really a large steak in a George. Direct exposure Deja wear a talking this hour about what's been going on on Wall Street and how it might affect everybody Chris Ferrell is our guest this our Minnesota Public Radio senior economics and business editor, and would love to have you join our conversation to 276 thousand is our Twin City area number to 276 thousand outside the Twin Cities 1 800 to +422-828-227-6000 or one 800-242-2828. And please don't call us from one of those business Ledges come in come in and call us from inside Brewers. Go ahead place. Bruce Willis watch them grow to anywhere from 8 to 20% a year the last crash a couple of my Holdings went up a lighter to our basic companies runs a retail Drug Company in a couple of drug manufacturing companies. Can you comment on this type of stocking with you? See for that kind of stock does not heavily overloaded and high Tekken so far then I'll turn off my phone listen to you a couple points when the market goes down. Some socks are always going up means like anything else. He knows some stocks are going up. Even when the overall Market is going down. It is difficult. However for any company to resist a downward Trend in the market for tickling a moment when we just weren't sure so if you have good company stocks, that's wonderful and you should hold on to them. All right, there's no reason to sell them you have good companies, but they'll be caught up in the General market sentiment until some time passes. So more calmness little more certainty about the economy and direction of corporate profits in the people. Go ahead. You know, that's not a bad stock might be undervalued and you might see some movement in that band that particular stock is not get caught up in in these gyrations and markets fluctuate men. Always have they always will you can't no one can really expect to get the double-digit returns out infinitum that we've had for years. We've had a wonderful once-in-a-lifetime performance, you know, we may be moving back to a more normal time, but that doesn't mean he's not good companies in these aren't good Investments, the you mentioned earlier that one of the reasons that people should pay attention to this is because so many people are now have some money involved in it personally do they How are we expecting people to react to all these gyrations in the market experts think that we will all Panic ignore it, So they disagree to school supply another one school of thought says, he's a jargon terms call the wealth effect their 401k to 403b. They've increased in value over the past 10 years or so, you started participating 10 years ago and you can put it in the stock market. Well, you've had a nice chunk of change. So you're feeling good and you go out and you go to the Mall of America and you go shopping more because the value of your stocks are higher that showing up in your pocket. You can't draw down but you feel better spending your money because your savings are increasing. That's one Theory that's out there. There's another theory that says, yeah, that's kind of true. But your stock Holdings to kind of unreal it's funny money and you can't get access to it. So you feel better but not that much better. It doesn't affect your spending that much on our the upside or more importantly on the downside the way say your home does you know anybody who couple years ago bought a home in St. Paul? And you know, what a nice neighborhood $400,000. I don't know to be worth now, but it's probably worth 150000 or 40,000 is a nice increases over the past couple years. Do you go to your home every day? So your neighbor selling you see the prices in the newspaper? You read this article has more direct impact on people spending than the stock ownership. I lean toward it has a bigger impact on the wealthy is a wealthier much more dependent on that income too much more we are what is happening to the stock market will pull back more but for the average worker With a person has a 401k plan and that's their retirement plan. He will have a minor effect. It won't you won't feel as good but it's not money. You're spending as that money you have access to so you pull back a little bit more. But again, it's likely that those wealthier people who do pay closer attention to this are the same people who own the companies for whom you work right. Now. Here comes down to that. We get to the more serious do they continue to invest and we had a situation in when Asia collapse last October 4th at stock market. We're just just went right down all the way maximum could go and this happened the same time that labor cost for going up and many Economist felt that this was a really going to be a bad situation. We're going to have a lot of inflation that was going to the net result and You Know by Cee some layoffs because business was going to be as Goodwill. What happened. Is it business increase its spending on information technology on those computers and that telecom gear I also laid off a lot more workers, but unemployment went down and what they did was this drive for efficiency. They had to lower their costs. That was their their reaction. The reaction was not to give up. It was lower our cause what can we do and so we saw if you know unemployment stay low and corporate profits stayed up and we ended up with a lot more high-tech investment. Will how do they respond this time around see my guess is that they continue to invest in high-tech here and they're not going to just simply accept lower profit margins are going to fight the struggle to keep those profit margins. The real issue is can we get growth in the rest of world because we need those export markets. That's really the issue, but I don't see it yet the wealthy there more impacted. They're not going to buy as much Louis Vuitton Furniture, maybe instead of going to you know, the sax you go to Target to buy some stuff and I had a real impact on high-end retailers, but we're still a long way from having much of an impact on the rest of the economy to 276 thousand. If you'd like to join our conversation with Chris Farrell, we're talking this out more about what's been going on in Wall Street and how it affects the broader economy that we all live in 2276 thousand outside the Twin City area. You can reach his toll free at 1 800 to +422-828-227-6000 or one 800-242-2828 and a Pennies on the line from Clearlake morning. Good morning. I am a young Widow of 56 and packed today and my husband passed away this spring and I have money in Putnam funds profiteering. And at this time I have three quarters of the amount under a protected fund and a quarter of the amount under the balanced fund which is fluctuates with the stock market and I'm just wondering at this time because I am making some withdrawals as of right now as we had them for his retirement cuz he was 12 years older than myself. Would it be wise to put more of that money in a protected fund? I can put it all in protected through what would be the best circumstances? How do you protect yourself a couple things you're still young and you're going to want to continue to have an exposure to the stock market at 56. You know Penny. She said you're a young Widow and we do know that the stock market provides a better Edge against inflation than a lot of other Investments. And so you're you're a quarter exposed to that. That's not a big Closure sew that's my reaction is you actually reasonably conservative and it's a reasonable portfolio considering your circumstances. However, I would very strongly recommend taking some numbers taking your portfolio to a fee-only financial planner and not just going what I say on the radio because there's all kinds of things you have to factor that aren't in there. You know, I don't know any of you have a you know, some mortgage obligations or you have some other obligations at me maybe coming or perhaps we haven't had a chance to talk about are you and you not able to sleep at night going to stock markets going down. Some people can't at which point forget the baby expert advice forget the you know, what you should be doing if you can't sleep at night you need to sleep. So you said famous quit by JP Morgan asleep, you know sell down to the sleeping point and that's what you wanted to sell to sleeping point. So I would really recommend finding fee a good fee. Only financial planner deals with people in your circumstances and have him run. Her run a bunch of numbers for you bunch of scenarios for you and just make sure you're comfortable Carol your next. How you think this is going to affect the mortgage Market the cost of mortgages and the consumer credit today, but the end of the through your treasuries down to 5.6% and the mortgage Market is priced off of what's happening in the treasury market. So are the treasury market your benchmark for over mortgage is going so it's basically good news for the for anybody who's out there looking for mortgage mortgage rates. Definitely don't star not going up to probably go down a little bit mortgage rates are hovering around 7% of the laundry 7% So it's a very good environment for mortgages in the housing market is strong real incomes incomes adjusting for inflation. Rising the unemployment rate is at 4.5% is a lot of good things happening in this economy is a lot of innovation that's coming down down the pike in many Industries. We are being a we dominate many Leading Edge Cutting Edge Industries. There's a lot of strength in this economy. And at the same time we have very low interest rates and all indications are interest rates will stay where they are fairly safe forecast, but there's even downward pressure on interest rates should people dough be concerned that they might end up getting laid off. If in fact that the economy is doesn't start back up again. Now that their job could be in Jeopardy by the one that changes in our in our economy is that people should always be worried about being laid off but that should be part of their financial planning cuz we see me again in The Gambia 4.5% unemployment, but the layoff rates are enormous. There are just all in the Lamprey has really picked up since April Smith a real surgeon last. Not hear well companies are much quicker to decide. This is a profitable activity and this is not a profitable activity and boom next thing, you know that not so profit activity the headcount has been reduced but they're adding and what they considered to be the profit activity. I was always struck a couple years ago looking at the numbers of the baby bells, you know telephone industry was the baby bells were laying off thousands and thousands of people on AT&T and made an announcement. They're going to be laying off 40,000 people. Would you look to the telephone industry employment was up and it was the wireless and a lot of the other services in the telephone industry were growing by Leaps and Bounds. That's where the employment is going. But for an individual that means an appliance at 4.5% you have to factor into your thinking I may be laid off cuz I may be at the wrong place at the wrong time does nothing to do about how hard I work how smart I am how diligent I am. It just simply has to do. Yeah Boy Marcus change and I was in the wrong place at the wrong time then you had this added caviar on there where the tougher economic environment suffer economic environment than we've been for the eight years is economic expansion I expect the economic expansion to continue I think the economy will continue to grow but it looks like for now is going to grow to slightly slowed right carry your question for Chris Ferrell plays fully invested in the stock market, where would Chris put his money particularly I'm wondering what he thinks of mid cap value funds Distressed wood mid cap value funds in your large capitalization companies your Coca-Cola's your IBM's your 3M. So is your large-cap companies? Is it in the star performers in in the mark of the Dow Jones Industrial Average any of your your small-capitalization companies? Which show me Harry's Tool & Die Co public and buy some of those shares and then the mid-cap and they come right in between. It's been a hot area. So we're trying to seek, you know, the smoke a position have been doing very well large cats been doing too. Well. Maybe there's some value in the mid-cap. So there's a lot of interest in there. Yeah, I go back to some old adages what she know for what it's worth diversification. And yeah, I think if that's where you're comfortable and I invest your money shirt go right ahead. There's a lot of good companies in that sector when this kind of Market were in you have to get play one or two games. Buy the whole thing and Index Fund or an equivalent of an index fund and say I'm writing this thing through and I'm reinvesting my dividend income and hey, that's what's going to happen or you really going to put on your Warren Buffett hat and you're going to pick stocks or companies and you want to own and you want to buy them cuz you think they're cheap and they're great companies. Chris Ferrell is our guest this hour Chris, of course, Minnesota Public Radio senior business and economics editor and he has stopped by and his first hour of our mid-day program talk a little bit about what's been going on on Wall Street or state market up a little bit today, but overall it said not been a pretty sight hear the last month starting with the Dow peaked on July 17th, and it's been it's been moving down since we thought it would be a great time to find out just what's been happening on Wall Street and more importantly really how this affects the rest of the US economy and we'll continue our conversation few minutes. I know I want to talk a little bit about social security. We got some Ballers on a line if you'd like to join our conversation to 276 thousand 2276 thousand outside the Twin City area. You can reach its toll free at 1-800 to +422-828-227-6802 for 22828. I'm John Raby and on the next All Things Considered Volunteers in Little Canada are searching for clues in the historic st. John's Cemetery close to where many graves are because time of the elements have eaten away at name or bury the markers. We know that there should be a grave here. We know where that were. The head should be in the front should be and then you just you know, it just start broke around is All Things Considered weekdays at 3, Minnesota Public Radio. By the way over the noon hour today second over midday program. We're going to be talking about the growing problem that that's developing here in Minnesota more and more minnesotans can't find a place to live that they can afford affordable housing has become a real issue here in Minnesota and we'll take a look at that issue over the noon hour today and we hope you'll be able to tune in the weather forecast for the state of Minnesota really very pleasant to cloudy to partly cloudy skies across the state this afternoon with maybe a shower or thunderstorm out in Western Minnesota, but basically cloudy to partly cloudy eyes mid-70s to the mid-eighties Twin City forecast Sunshine with a high temperature right around 80 degrees currently in the Twin Cities. We have a partly cloudy sky and 73°. We're talkin to shower with the Chris Farrell Minnesota Public Radio senior business and economics editor about the problems on Wall Street and how they might affect the large. Economy here in the United States. And again, if you'd like to join our conversation to 276 thousand or one 800-242-2828 Minnesota the state of Minnesota, like most States has enjoyed a budget windfall in recent years as the economy has been booming along but what if what happens if in fact is so he can imix slow down continues Arthur roll neck of a senior vice president and director of research at the 9th Federal Reserve Bank of Minneapolis says the state should still be able to balance its book. We were expecting the finances to to slow down a bit as well. Anyway, we've been running these surpluses. Some of them have been one time factors. We shouldn't we should never expected though surpluses to continue so weak we do expect him to slow a bit as the economy slows. There's nothing new in that net net news. Are we going to be in Minnesota that is going to be more affected or less affected most other states. If in fact we have some kind of prolonged slowdown conomy reflects the national economy and the national economy were talking about a slow down here. We're only talk. He may be going from a national 3% real growth to maybe two and a half. So we're not going to see a real significance slow down and my guess is Minnesota will again track the national economy to the extent that the state finances are affected are we likely to see more of an impact on reduced revenues that is to say tax collections or can we expect State spending to go up in terms of unemployment insurance and welfare payments on the rest be labor markets continue to be very tight in this market. We we expect this to continue for a number of years and we can we continue to hear from Any of the businesses, there's just a shortage of both skilled and unskilled workers. I don't think that's going to turn around. So I think it's more going to be on the revenue side. To the extent that till we do have some kind of a problem if there is going to be any kind of a problem with State finances is the budget Reserve big enough to to push it any kind of short-term problem in this economy. I think for sure it would be that's why we have the budget Reserve at significance and it's the it's there for problems that they should should surprise us. We don't see again. We don't see these The Slowdown is being that significant than again labor and labor markets are going to remain tight in this economy oil underneath. The underlying factors are still very strong. You only sound pretty sanguine about the situation and as a consequence, I suppose if the governor candidates for Governor were to call you up you would Suggest to them that they can go ahead with their their plans. So I guess they're all talking about cutting taxes and many of them talking about some new spending programs. No particular reason to back off their plans at this point as long as they continue to fund the reserve and as long as they look at the long-term in the cuts that they make are consistent with the to the long-term projections that we have on the regional economy in the National economy. I see no problems are the role Nicholas senior vice president and director of research at the 9th Federal Reserve Bank of Minneapolis. Chris Farrell sounds like things should be okay here in Minnesota at the federal level everything going to be hunky-dory to I think it would be consistent with what role neck is saying the underlying there's still a lot of underlying strength in the economy. If we're moving from a three three and a half percent growth rate to a to two and a half percent growth rate. You're still going to see a budget surplus probably not as big as we thought before certainly not the one that has been already spent at least in some of these projections are some of these ideas but still decelerate from 3 and 1/2 3 and 1/2 to 3 down to two and a half 2% That's for certain industries as can be a lot of turmoil why the pricing pressure but the underlying economy still remain strong what's going on on Wall Street and how might it to make those changes affect to the broader economy. Chris Farrell has joined us this hour to talk about those issues if you'd like to join our conversation to 276 thousand or one 800-242-2828 David your next. Hello. Hi. Yes. I'm I'm calling because I have about $15,000 in in a money market account for my daughter and she's just entering 7th grade right now and I'm wondering I thought I heard you talkin Chris last week about that now might be the time to get out and and put that into a money market or I am to a money market account. It's actually it's in a mutual fund account right now and I'm wondering what the next I won't need it before College which would be 6 years down the road here is now a good time to to change that or is that something that I should hang onto in the mutual fund account is stop. It's a yes I ask can I get names here and a couple of points? I tend not to like either or decisions 15. Antenna stock fund if take all of it and put into a money market David, I would think about what you might want to take a portion of it reap some games and if it turns out that you're wrong. Are the stock market is wrong turns around and heads towards 10,000. It's just going up there while you know, you didn't make it higher return if you could have but you bought yourself a little bit of insurance and I like insurance and it's a wonderful way to approach things. So that's one way to look at it. But there's also a more important thing. We need an expense like college and you had this fund $15,000 for amount of money that you've isolated out here to pay for college. You have to look at it in terms of your overall portfolio, you know dropped a distinction. That's my college have just rode into a big pool of money a big pot of money cuz it may turn out that you already have a fair amount of money already in a money market account. So they may be no reason to add this into it. It could be that you only have a very small portion of your overall money exposed to stocks already in which case you might want to just stay exactly where you are. No matter what happens to the stock market. It could be that you are David are just incredibly exposed to the stock market in which case you may want to take that whole 15,000 out and put into a money market fund in order to balance out your overall portfolio. That's what you do is you put all the money in one pot. And then again, you put your crack categories back your 401k your college fund your emergency. I've got laid off finding all that type of stuff but for your initial look and trying to decide do I ship this money how much of a gain do I leave it alone? Put it all together and then make your decision that big picture big picture stuff. I like big picture stuff ride your question, please. Hoodies $1 5.75% the other 6% They are in our way of thinking fairly large at 90000 and 150000. What we're wondering is is this a good time for us to go into the prime rate funds where we could get 7% and locked in or since the stock market is presently in this kind of a situation. Should we since we are in our early 70s or just below should we try to sit tight and just take our retirement funds and leave this alone at this at this rate of the annuities you're making a decent rate of interest and there's really a good company is in the underlined. What makes up the annuity is do you know, it's good. I'm just a little bit of bouncing around between going from an annuity to prime rate funds was to pay a higher rate of interest but has a higher risk. So you never get a high rate of interest. Do you see one reason why you're getting a higher rate of interest and that is your taking greater risk, and you want to be taken creator. There still is no free lunch. There is no free lunch. I mean there is a situation where I mean my mom you don't manage to buy CDs at 15 16% and the other 15 years or whatever and I kept saying, you know, how did you manage to do that supposed to be higher risk for that it so every once in awhile you get this lucky moments where you just get a high interest rate and no risk, and she was well under the hundred thousand federal government the insurance investment. If you're going from five and a quarter to 7% or 8% you're taking greater Rift. Do you want to do that? You're going from an annuity to the stock market for you really have taken out a lot greater risk. So, you know, you're in a decent situation you got a fair amount of money. You may want to I'm doing your withdrawals, you know, diversify your portfolio a little bit at something into something that you like to put it into but I'm pretty uncomfortable with the kind of making any change. Without you really thinking through some more what might the ramifications of it. Well, let's talk some more about riskier that affects pretty much everyone. The market is down. What does that tell you Chris Farrell about the plans to a private eyes at least part of the social security system. Will that affect the debate at all? Will this change in the market? Yes, if effective are we there a couple of things going on the debate over Social Security in privatizing Social Security is a very important debate and it's because we do have an aging population and Social Securities are safety-net. What's the way to make it better? If that's part of that to be turning it into the equivalent of a 401k plan forget it. It's just never going to happen in my opinion mean that it just doesn't in partly why won't happen is exactly what's happening right now. Market fluctuates. So what many interesting question is? What does it mean for the economy? What does it mean for wealth creation does it mean that that work that that we're slowing down before a lot of people it means can't deal with this and they may be in the stock market for the wrong reason. So you don't want to be messing around with Social Security in the stock market and putting that kind of risk and I think that dialogue will continue. There's been some problems with Britain was privatized part of it so security system and there's some real problems there that story is going to become more common here get more understood here. So I don't think that we're going to move very much went on on privatizing Social Security. We may eventually create an option for people that they can put some money into the stock market through their social security accounts, but it will be an add-on to the existing system not a substitution to 276 thousand if you'd like to join our conversation with Chris Farrell were talking this hour about What's going on on Wall Street and how it affects the rest of the economy market by the way is up a little bit today. The Dow was up about 72 points last time anybody luck NASDAQ up about 30 and 1/2 in the S&P 500 up 12 points, but overall, it's not been a pretty sight since mid-july to 276 thousand or one 800-242-2828 Jane glad place. care industry in my employer has been to Anyway at my benefits for a while, one of those things that they started to an act is to charge a management fee on my 401k and they're charging half a percent but it's not clear if it's the total amount of all employee employees invested or if it's my amount and I wonder at what point should I do my own retirement investing even with the management fee in their point five is if you went out and do your own retirement vesting .5 is a pretty decent management fee. You still get a lot of benefits from the 401K plan and I still would recommend put the maximum amount into your 401k plan, especially if the employer doesn't match being a boy that really dry that because that's the one legal investment where you can make a hundred percent on your money right away you put in a dollar the employer puts in a dollar or the employer puts in 50 Cent's whatever the the relationship is, so I would Can you do to 401k plan no matter what what's happening with those those retirement programs are most of the people who are putting money into a 401k do they spend a lot of attention to it in terms of moving money around or is it more do people treat those more as like a Social Security deal where it just goes out of your paycheck. You never really know where it goes and you hope that it's going to be there when you get to the end to the end of the road. I think it's more the latter than the former. What about the 401K plans is it was a recent study about the 401K plans that 47% of the money is allocated into the stock market broadly been in the broad stock market funds and then it actually the stock market portion grows because a lot of companies in order to get the matches in stock. If you had a publicly traded company instead of giving you a dollar to give you dollars worth of stock. So that increases that portfolio Some people who just cannot resist trading this is what they want to beat that market and so they're doing a lot of and you know the pressure in the industry. The trend has been for 24 hours trading. The phone lines are there you can do it. Most people tend to be however more they make some sort of decision may not be may be very well informed may be very naive and then the money goes in and there may be some event and I don't think we've had the event yet and maybe some trigger event that causes people to reduce their exposure to the stock market increase it to the bond, but it definitely has not happened yet. So the Traders, you know, if you think about it, there's a group of people that are very active Traders and then love doing it and whether it's in their 401k plan or whether they're managing to do it to their brokerage account at this is what they do. They can't help themselves. Most people seem to you know, life goes on there too busy and You know, sometimes I paperwork and pile up and it just goes to the bottom of your list of things to do. What is the current speculation if the if the market we're really dope to start dropping like a rock big big-time drop is the expectation that all these are people have been putting money away in the retirement funds will start using those 24-hour phone lines and run for the hills. Love to say these little guys are going to run for the hills to guys not going to run for their it's the big guys going to run for the hill. It's the guy who's running the big mutual fund that we have to worry about not the individual investor. I think they'll be there will be selling they'll be shifts and you know more money will go into bonds and into stocks, but he'll be reasonable and I'll be what we call fairly orderly. Let me know panic, but when you're the big guy, you know, when you're running one of these big funds and your name is in the paper as the guy who are the woman who managed to do to two. Demarcus down 9% Hagar down 50% Let's put your picture right up here. And by the way, your bonus is just disappeared though. It's where we have two more worried about the Institutional Investor. The Institutional Investor is not as sophisticated as the individual investor. And the reason is the time Horizons are different the Institutional Investor has a much more immediate time Horizon where many of individuals they have a longer-term Time Horizon and this is part of their saving they actually is the stock market the way it was meant to be used absolutely as opposed to the casino mentality in the casino and they'd be better if they went to Las Vegas, but you got to pay for the airplane and everything else like that. So they do with their 401k plan, but it's the same mentality was just not that big a part of the market but the big guys are the guys who are more inclined to do that then because that's very over at Toulon done. It's because that's the pressure pressure is to beat the market while the Market's going down and you can't beat the market. You want to be the first one out. So you see you hand your problem off to somebody else. You don't want the problem. That's where that's the dynamic that I'd watch much more closely. We have not seen that has been fairly consistent and it's not a conspiracy or a manipulation the cell off the tap has been fairly orderly and there has been a lot of buying going on at the same time. There's a disagreement in this market and what we're seeing today and what some people are saying lucky and I'll mark it down 10% and we can put up by these companies have been in my list and I'm not too bad little exaggeration about corporate profits. Asia's really not quite so bad to Japanese prime minister is going to get his act together and I tried is going to hold it infected China devalue. So what? There's a very reasonable debate out. There are on your question for Chris Ferrell plays some it's like point-to-point 6.9 and I'm only 20 years old and I want to know if I hang on to him for 20 years or so. Is that how big of a difference is that management fee going to have if you can make a big difference / 2030 your time Horizon. It's it's another form of compounding others, you know Einstein called compounding when the Great miracles of the world and we all talk about compounding, you know, if you invest in that stocking you reinvest those dividends and you know, you just keep going and neither. One of my favorite calculations is that if you take with sir fancy canes to this calculation with Sir Francis Drake took and you brought back to Queen Elizabeth and that was basically the the net wealth of Britain at a time around 1920 or 1930 whenever you made that calculation using the compound. Adventurist well, you know fees and expenses compound the same way so I can make a big difference if it's point to Orvis Point 9/20 year timer ryzen. Now it maybe you want to pay .9 because this is the money manager you want but if they're too plain vanilla money managers and two plain vanilla funds and everything else being equal you want that lower fee Kathleen your question of Chris Farrell, you know, every time I hear you Chris, I never hear you talk about things that might be more sustainable there other species on this planet other animals of which we are one but not just them but other plants and other plant species that we just don't seem to consider in this global economy. That is just needs to grow and grow up. I'd like to have some space left and right also like to be able to have a quality of life that doesn't involve all the smog and the pollution. I remember hearing you talk a couple years ago on a program. And saying how great it was the transportation cost of just gone down and don't know I can tell you we don't pay nearly what we should be paying for petroleum and oil in this country for the kind of pollution it cost and all the other cost with building the highways that we have built. I I would really like to hear your response on this. Interns in thinking of the environment and doing a lot of good things for you for the environment and gross is one of the better things that's going on and I think one of the ways to look at it is if you look at the Soviet Union Eastern Europe in a lot of environmental problems there that emerged mean a lot of it has to do with the you know, for quality of life poor poor economy lack of economic growth. So economic growth has enormous spillovers were tempting and we should be attempting to do better to price it out. But my reaction is I still I don't think that there's some fun there is at some level of fundamental conflict there. But like many things you can go 90% of the way before you reach that an economic growth is an environment that allows people to feel better about spending more money on preserving what we have. Actually can be Good for preserving the resources. They even though you're chewing it up a lot of them. That's it. That's right. And then you get into the value judgments weather. Chewing it up is worth it or not, and they're people can really disagree and I was at this person does with me. Which is the market is down substantially in the last month, but not to worry too much. I think that this is something different though. This is not a buying opportunity where you just go. Hey, it's down it's time for me to buy know. There's something real going on here. Do I say a lot of uncertainty about corporate profits? There's a great deal of uncertainty about Asia and what's happening to inflation and there's even talk, you know about deflation the possibility that this if you're not making those sales and have all his pricing African-American start seeing some you know, some really lower prices. So this is what's happening. This Market is Real This what the market should be doing is reflecting and uncertainty about what is going to happen to the economy. And what's going to happen to the global economy. And we have the IMF which is behaving like the Federal Reserve Bank here in the US behaved in 1930s is essentially a time a week now pursuing policies that for the week in those economy. That is an attempt to change that so there are things out there to be worried about but one the Wellsprings of strengths are still there in the US economy. There's a lot of so now we're talkin about slowing growth at this point and some questions about the outlook for corporate profits into let's say we come up with a fairly disastrous scenario. Not a good scenario. Does that really mean you do anything with your with your Investments? For many people to answer is no you don't make any change. You don't make it doesn't make any difference. You don't want to be jerked around by the market. You want to be in control. You can't control the market but you control what you can do. So I wouldn't let myself be jerked around by the market. I wouldn't get over excited about what's happening now, but it would recognize that this is different than some of the previous Market down dress we've had because they fear that the economic expansion. There are some real fundamental economic questions about what are the prospects for corporate profits. Thank you, sir for coming in today. Really? Appreciate it. Thank you, Chris, Farrell, Minnesota Public Radio senior business and economics editor joining us this hour to talk about what's been going on on Wall Street and how it affects the larger economy. Now over the noon hour today. We're going to take a look at what appears to be a growing problem here in the state of Minnesota named Leo lack of housing people can't afford to find a place to live. Affordable housing. That's the issue at noon today. I'm Ray Suarez Saipan is a lush island in the Pacific Ocean. It's also a u.s. Territory yet. All is not well on this Tropical Paradise the Garment industry. The Island's largest employer is accused of tolerating Sweatshop conditions and violating us labor laws. Now Congress is re-examining how much Federal oversight the island needs join us for a look at the Saipan controversy on The Talk of the Nation from NPR news. Of a Nation begins at 1 today right after our conversation about affordable housing right now. It's time for The Writer's Almanac.