Ep 32: Q&A | Answering All YOUR Questions (keep 'em coming)

Jess: You're listening to Market MakeHer, the self-directed investing education podcast on a mission to demystify the stock market from her perspective.

Jessie: We're your hosts.

Jess: I'm Jessie DeNuit, here to ask all the questions, even the ones that you lovely listeners have submitted to us.

Jessie: Your voice is so soothing today, Jessie.

Jess: I'm Jess Inskip, the long-term experienced, formally licensed finance industry professional here to answer all those questions.

Jessie: Give me a big head, Jessie.

Jess: Yeah, that was nice.

Jessie: Like, wow.

Jess: It just flew out of my fingers.

Jessie: I was like, she can just say this.

Jess: And today we've gathered a bunch of questions from our Spotify, TikTok, and YouTube channels and other places on the internet that we noticed folks' questions weren't really getting answered.

Jessie: And we're going to answer all of them today for everyone.

Jess: But first, a quick market update from you, Jess.

Jessie: Yes.

Jess: So we've had a crazy week, and I thought I would share some insight.

Jessie: So yesterday we had a CPI print, which is the Consumer Price Index, which is a measure of inflation from the consumer perspective.

Jess: We're the consumers.

Jessie: And that came in hot, hotter than expected.

Jess: And it was the third month of hotter than anticipated CPI.

Jessie: The third month of hot.

Jess: The third month of hot.

Jessie: Hot CPI coming in.

Jess: It's coming in hot.

Jessie: The markets were down about 600 points as a result.

Jess: But this is what was interesting.

Jessie: A lot of it had to do with rising energy.

Jess: I think it was up about 1.6%.

Jessie: And that's something you can see.

Jess: Oil is a commodity, which is another market.

Jessie: And you can see oil prices going up.

Jess: You can see the prices of those things.

Jessie: So totally expected.

Jess: There were other components of it that were also up, like the brokerage fees and advisory fees.

Jessie: Because sometimes that's a percentage.

Jess: And if the market goes up, that also goes up too.

Jessie: So also kind of expected.

Jess: And women's apparel was up, which was odd.

Jessie: Guys, stop shopping.

Jess: Apparel time.

Jessie: Y'all.

Jess: Yes.

Jessie: I love spring.

Jess: Y'all high-sums love your spring apparel.

Jessie: I do.

Jess: It's my favorite.

Jessie: It really is.

Jess: I am a spring.

Jessie: But today we got PPI, which is the producer perspective.

Jess: So think like supply chain, wholesalers, things like that.

Jessie: So you'd think that the producer perspective would be before the consumer, because the producers supply the products and then the consumer buys the products.

Jess: Producer, that was today.

Jessie: So the day after came in below expectations.

Jess: PPI was down because of energy.

Jessie: I'm so puzzled.

Jess: I really am.

Jessie: Because of energy.

Jess: But energy was up in CPI, but it was down in PPI.

Jessie: Hmm.

Jess: Does that mean you have a question? I do.

Jessie: Does this answer your question? I have a question.

Jess: Why? Why? I do.

Jessie: Yes.

Jess: Someone out there know? I mean, I'll do some digging.

Jessie: But so in the market, it just found its support.

Jess: And that's when I think technicals come in.

Jessie: But nonetheless, bank earnings kick off tomorrow.

Jess: So I would love our listeners to be prepared for all that is earnings season.

Jessie: And then for my preparation for market updates, I like to look at the big days.

Jess: And April 25th that week, we have Google, Microsoft, Meta, and Amazon all reporting within a three-day period.

Jessie: And then following that three-day period, we're going to get something called PCE, which is the Fed's preferred gauge for inflation.

Jess: I know I'm using a lot of jargon right now.

Jessie: But there's going to be tech earnings followed by an inflation measure.

Jess: And then directly after that, there's a decision for interest rates, which is insane.

Jessie: So I just want to prepare our viewers for a crazy month in the stock market.

Jess: It's going to be a roller coaster.

Jessie: Yeah.

Jess: I'm set for the ride.

Jessie: I'm trying to think about all those things and what that will mean.

Jess: But I guess we'll just find out.

Jessie: Be prepared, everyone.

Jess: We will.

Jessie: But it's interesting that you said the stock market is down 600 points.

Jess: It was.

Jessie: And then it came back up today.

Jess: Oh, it did.

Jessie: Today it did.

Jess: Oh, OK.

Jessie: Yeah.

Jess: It's literally a roller coaster.

Jessie: Don't panic sell.

Jess: It's our lesson for the week.

Jessie: Right.

Jess: Stay on the roller coaster.

Jessie: Buckle up.

Jess: Don't be emotional.

Jessie: You've got to have good EQ skills.

Jess: Don't be emotional.

Jessie: Well, that actually leads into our first question.

Jess: So I guess we can get on to Q&A time.

Jessie: All right.

Jess: Yeah.

Jessie: Because our first question, and this was actually from quite a while back when we first started this podcast.

Jess: And like I said, we saved them all.

Jessie: So always submit them.

Jess: We'll get to them eventually.

Jessie: But this question is from Luko Dayen.

Jess: It's about the points that we were talking about.

Jessie: So it says, can you please do an episode explaining Dow points, S&P 500 points, and how they are calculated.

Jess: Now let's talk about hitting record highs and what that really means.

Jessie: Or like when it's down 500 points, up 500 points.

Jess: What does that all mean and how it's calculated? Yeah.

Jessie: I would love to do a full episode on this where we literally break down the math.

Jess: Yeah.

Jessie: But you know how we talk about market cap weighting and price weighting? Mm-hmm.

Jess: So these indices all have, they're the elite clubs.

Jessie: And there's certain methodology to be in that club.

Jess: So it's just a list of stocks.

Jessie: But the list of stocks that are there, it's not, oh, one share of Apple, one share of Microsoft, one share of Google.

Jess: It's percentage of Apple, percentage of Google, percentage of whatever, security.

Jessie: Percentage of the ones that are being bought or traded or just in general? That are in the indice.

Jess: Oh, wait.

Jessie: Does the indice, it's only showing a percentage of each stock? What? Yeah.

Jess: It has a weight.

Jessie: So you can pull it up.

Jess: So remember when we did the ETF episode and we looked at the percentage of certain securities? Oh, right.

Jessie: Yes.

Jess: Because we were looking at ETFs that mirror indices.

Jessie: Yes.

Jess: Identical to that.

Jessie: So yes, it is a percentage.

Jess: And that's why it's a point system.

Jessie: So it's basically, all right, you are admitted to the club, but only this part of you.

Jess: So you only get like this much buy-in into the club or whatever.

Jessie: Yeah.

Jess: Only this much of your pie can be accepted into the club today.

Jessie: Exactly.

Jess: And then together, that makes the pie.

Jessie: And so when it moves, it's a collective movement then.

Jess: Because then those individual securities are traded.

Jessie: And so collectively, the index is up this much points, which is actually dollars.

Jess: But we call it points because it's a percentage.

Jessie: See, that's what I was wondering.

Jess: Because when you first said that the points are dollars, I was like, okay, why are we just calling it dollars? But yeah, it's not like a complete apples-to-apples type of comparison because of the percentages of each security that's in that index.

Jessie: Yeah, exactly.

Jess: And there's different methodology for them.

Jessie: So the Dow is price-weighted.

Jess: The more expensive you are, the more control you have.

Jessie: Then the S&P 500 is market cap-weighted, which is the more shares you have times the price, the bigger one.

Jess: Bigger company, bigger piece of the pie.

Jessie: And when it has a new highs, it has a higher number it's never made before.

Jess: So that's the record highs thing that the listener was talking about.

Jessie: What does that mean? Literally higher number.

Jess: That's it.

Jessie: We hit new highs.

Jess: We hit a new higher number that the market's never hit before.

Jessie: And that's how when you look at it over time, you can see that it does grow over time.

Jess: If you look at just a year span, it's going to be up and down.

Jessie: But if you look at the decades long span of time and data, then you can see how it goes up and down but still goes up over time.

Jess: And that's how your money grows.

Jessie: Exactly.

Jess: And you have to remember when you're looking at the indices, stocks move in and out of them.

Jessie: Right.

Jess: So it's also to keep that criteria, meet that criteria to be that elite club so that can change things, right? That's right.

Jessie: Yes, it can.

Jess: Hmm.

Jessie: Next question.

Jess: Yes.

Jessie: So the next one's from Beza who has submitted several questions to us.

Jess: But we love your questions.

Jessie: We do, Beza.

Jess: Keep them coming.

Jessie: They're great questions.

Jess: So from the CD ladder episode, we were talking about CD ladders, obviously.

Jessie: So we're talking about the yield rates for those.

Jess: So when you say the rates are annual, looking at a 5.35% rate for a three-month period, does that mean I will be getting 5.35% at the end of that period or will it actually be less? Oh, I love these questions.

Jessie: Let's get a calculator.

Jess: Yes.

Jessie: Is it just some math? I think we just talked about a little bit in that episode that 5.35% is an annual interest rate, right? Yeah, exactly.

Jess: If it's a three-month period that you're locked in a CD for, it's three months, not 12 months.

Jessie: So you have to do that math, right? Stay with us.

Jess: We'll be right back.

Jessie: Ready to plug into the future? Join myself, Sean Leahy.

Jess: And me, Andrew Maynard.

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Jess: We bring the experts, the insights, and a whole lot of curiosity to every episode of Modem Futura as we boldly go where no one else has gone.

Jessie: So join us as we navigate the intersection of innovation and humanity, uncovering the stories that will define our collective futures.

Jess: Subscribe to Modem Futura wherever you get your podcasts.

Jessie: We'll see you there.

Jess: See you then.

Jessie: Exactly.

Jess: Yeah.

Jessie: So if you add $1,000 into a three-month CD, that's 5.35%.

Jess: So if you add $1,000 into a three-month CD, that's 5.35%.

Jessie: So we'll say times 0.0535 equals $53.05.

Jess: If we divide that by 4, because 3 times 4 is 12, you'll get $13.40.

Jessie: You brought this up, Jessie.

Jess: Same thing happens in your high-yield savings account.

Jessie: You say, oh, I get 5%.

Jess: No, you get 5% annually per year, and you might get paid out monthly.

Jessie: Yeah.

Jess: Yeah, because at my age, I would say it shows my monthly interest earned.

Jessie: But you're looking at just a month or three months or whatever.

Jess: Yeah.

Jessie: It's a little bit less.

Jess: But if you think about the stock market on average gives you 10% a year.

Jessie: If you were making 5.35% annually on cash, it's a very good comparison.

Jess: It is.

Jessie: Especially if you're not sure where you want to put your money at.

Jess: Yeah.

Jessie: And back to the stock market update, if the Fed keeps rates where they are, the Fed's the short end, so they'll stay higher.

Jess: Yeah.

Jessie: OK, cool.

Jess: So next question is from QDizzle84 from the investment thesis episode.

Jessie: And they're asking, what's the Merrill tool that we were using for that episode? Yes.

Jess: I was wondering how you were going to say QDizzle.

Jessie: And I wanted to hear you say QDizzle.

Jess: It was fun.

Jessie: That's my favorite tool for finding ideas because it's built off of the Bank of America Global Research, which is a gold mine.

Jess: And it has a lot of thematic investing ideas, but it's called Idea Builder.

Jessie: You have to have a self-directed Merrill account, and then you hit Research, and then it's Idea Builder.

Jess: And you could type in clean energy or aging population, artificial intelligence, and then it will populate all of those ideas.

Jessie: And it's just a different version of a stock screener.

Jess: Every brokerage firm has a stock screener.

Jessie: This one is a little more user-friendly, in my personal opinion.

Jess: Not sponsored.

Jessie: People who made that are my friends.

Jess: I felt like I had to say that.

Jessie: I was definitely involved with it.

Jess: Yeah.

Jessie: It's so cool.

Jess: Yes.

Jessie: OK.

Jess: All right.

Jessie: So Tina Remlinger from about four months ago asked, I would like to know how I go about gifting stocks or buying stocks for my children.

Jess: Thank you.

Jessie: All right.

Jess: Tina, we have to have a whole episode on this.

Jessie: There are lots of advantages for having accounts for your children.

Jess: And you can set up an account for your child or anyone else's child.

Jessie: You just have to have their social security number.

Jess: The second someone has a social security number, they can have an account.

Jessie: If they're a child, they just have to have a custodial account.

Jess: You need to have someone overseeing them.

Jessie: There are different types of accounts that have different tax benefits.

Jess: But the way that you can buy children stocks is literally through different types of custodial accounts.

Jessie: And again, there are some that could be purely for college, that have other type of incentives.

Jess: But in general, it's considered an irrevocable gift when you put those into your children's account.

Jessie: My son has two different accounts.

Jess: He's got one at Fidelity.

Jessie: And we have another one on a Greenlight app.

Jess: And I think that's fun, even though I have to pay $5 a month for it.

Jessie: He literally just says, I want to buy Netflix.

Jess: And then I get a notification.

Jessie: And I hit yes or no.

Jess: And he's turning 13 this weekend.

Jessie: So he's old enough to do things like that.

Jess: I'm a teenager.

Jessie: I know.

Jess: It's crazy.

Jessie: He wanted to outsource his investing to me.

Jess: He said, why am I have to learn this from you? Oh, God.

Jessie: Like a true teenager.

Jess: Like, I don't want to do this.

Jessie: Can you just do it for me? Insane.

Jess: Insane.

Jessie: I mean, I like the way he's thinking, at least.

Jess: He's like, you seem like you're the expert here.

Jessie: Why am I learning this? And you can also give stocks.

Jess: That's up to the limit.

Jessie: That's a tax limit that you can do every year.

Jess: That's important to know.

Jessie: Oh, is it up to your own tax limit? No.

Jess: Just like you have a limit to contributing to your IRA, there is also a limit of how much you can give to human.

Jessie: Oh.

Jess: I do not know that.

Jessie: Yeah, it changes.

Jess: Last time I checked, it's $13,900.

Jessie: But it changes.

Jess: Oh, OK.

Jessie: Yeah.

Jess: Interesting.

Jessie: Jane Smith Carson asked about portfolio diversification.

Jess: Should I diversify by sector? And how do I add bonds in my brokerage account? And are bond ETFs a good idea? So this is a three-parter.

Jessie: And I see there's a follow-up, too, that you had to put in there.

Jess: But we'll get to that in a second.

Jessie: Yes, I did.

Jess: Of course you did.

Jessie: OK, so portfolio diversification.

Jess: First question, should I diversify by sector? So I love this.

Jessie: It depends on how active you want to be in your account.

Jess: We talked about the risk scale.

Jessie: You diversify by asset class, and you diversify by sector.

Jess: And you can always diversify with ETFs, because the function of ETFs are baskets full of securities.

Jessie: And they are on sectors.

Jess: They're in different products.

Jessie: There are so many things that ETFs can do, exchange-traded bonds.

Jess: So yes to all of it.

Jessie: It depends on how detailed you want to be.

Jess: If you just want to have the S&P 500, which is very common, so SPY, VOO, VTI, all of those, or anything growth-oriented, that is going to have different sectors, but concentrated in information technology, because it's the biggest piece of the pie.

Jessie: And that means you're a little bit more growth-oriented.

Jess: However, if you want to be a little more tactical with your asset allocation, for example, this is not financial advice in the slightest.

Jessie: Energy seems like it's ticking up.

Jess: Oil is going up.

Jessie: There is a war premium associated with that.

Jess: Energy might be a sector that's performing well all of a sudden, and you want more exposure to energy, then you can buy an ETF that has energy.

Jessie: You can diversify by adding more sectors that you think are going to perform well, but then that all goes in with the business cycle too.

Jess: This is one of those questions where, in order to properly diversify, you must listen to our podcast from start to finish.

Jessie: Yeah.

Jess: Are we talking about a retirement portfolio account or a non-retirement one? What are your long-term goals for it? Because if we're talking about sectors that are doing well now, are you going to be in there actively looking at things? Diversification in general, though, the whole point is not having all your little eggs in one Easter basket.

Jessie: There's different ways you could probably do it, right? There are.

Jess: Make sure you're hitting all the sectors in some way, or you could put more into some sector if you think that that has the longevity you're looking for or whatever, right? Yes, exactly.

Jessie: It depends on how hands-on you want to be.

Jess: An ETF could offer you an advantage because you have a fund manager who will manage the investment objective.

Jessie: Then you could make your own objective for your portfolio.

Jess: You're the architect.

Jessie: Right.

Jess: Building your dream house.

Jessie: We're just here to give you blueprints.

Jess: Then you can customize it if you want.

Jessie: We made more with our analogy.

Jess: It's still going.

Jessie: Then, of course, the follow-up question is, what's your favorite Taylor Swift song and album? Thank you, Jane, for this question.

Jess: This is my favorite.

Jessie: We've got a new Taylor Swift album that's coming out next week.

Jess: Oh, do we? This might change.

Jessie: Yes.

Jess: I put that in our community.

Jessie: I don't know if you saw it.

Jess: I said, friendly reminder that you have until the Monday before the next Taylor Swift album release to contribute to your Roth by her name.

Jessie: I can't escape her.

Jess: This is how I'm laughing at my own joke.

Jessie: It's terrible.

Jess: You cannot.

Jessie: It's obviously Reputation.

Jess: I finally watched the Eros tour, and my wonderful husband almost burned down the house because he put sparklers behind me.

Jessie: That was cute.

Jess: He's normally not on board for Taylor Swift, but he got on board for you for that.

Jessie: He sure did.

Jess: He sent me the video, and I died.

Jessie: It was so good.

Jess: Sparklers in the house before the TV.

Jessie: He got the karaoke machine out, too.

Jess: I don't think I sent you that piece.

Jessie: It was amazing.

Jess: Anyways, definitely Reputation.

Jessie: My favorite song of all time is I Did Something Bad.

Jess: It's not your favorite song.

Jessie: It is.

Jess: I just love that album because everyone was like, oh, you're a snake.

Jessie: You're calculated.

Jess: And she's like, yes, I am.

Jessie: I'm going to capitalize on that now.

Jess: Beyonce did that, too.

Jessie: She did the Lemonade album.

Jess: She's like, oh, you cheated on me? Well, I'm going to make money off of it.

Jessie: Yeah.

Jess: It's one of those good for her moments.

Jessie: Good for her.

Jess: I love it.

Jessie: All right.

Jess: OK, that's enough Taylor Swift for today.

Jessie: Fine.

Jess: Let's go to Mag's question.

Jessie: This was another 10 months ago question, but we're answering it.

Jess: I've seen discourse about how BlackRock, Vanguard, State Street, all those have too much market share.

Jessie: I would love to hear your thoughts or best ways for young adults to build wealth.

Jess: AI investors, is Social Security debt? There is a lot here.

Jessie: Yeah.

Jess: So let's talk about the discourse about BlackRock, Vanguard, State Street, all of those big players having too much market share.

Jessie: And I've definitely seen a lot of those TikToks and things, too.

Jess: Yeah.

Jessie: So people always leave out Fidelity because they're in the top of that, too.

Jess: The reason why I think that there is discourse is because they're a very big player.

Jessie: But you have to remember that investing is a trend now, and everyone is buying SPY, VOO, VTI, iShares, which is owned by BlackRock.

Jess: If you buy VOO, for example, so the Vanguard S&P 500 fund, and a lot of people buy it, they have to create those shares.

Jessie: And in order to create those shares, they have to buy the stock.

Jess: And so that means that they end up owning a lot of that stock because it's within the requirements to create that ETF.

Jessie: And they have a lot of ETFs, which forces them to buy a lot of stock.

Jess: Therefore, they own a lot of the company.

Jessie: Wait.

Jess: So… That's a new concept to introduce.

Jessie: Yeah.

Jess: I don't know if I thought about that before because I kind of always wondered this as well.

Jessie: How are they allowed to own so much market share? It's because these bigger companies are actually the ones creating a lot of these ETFs and mutual funds and things.

Jess: And because they're creating them, they have to purchase them to then sell them to you or something? Is that what you're saying? No, not to sell them to you.

Jessie: So say we all collectively buy a bunch of VOO.

Jess: VOO shares have to be created.

Jessie: So there's a share creation process for exchange-traded funds that we can go really deep into a rabbit hole on.

Jess: Right, because you're buying a share of an exchange-traded fund.

Jessie: And within that share of that fund is a bunch of other securities.

Jess: That's right.

Jessie: They're creating new shares of a fund or whatever in order for you to be able to buy that share.

Jess: They physically have to go buy that stock on the stock market.

Jessie: So just like even though I know we weren't going to talk about any crypto today, but Bitcoin was just approved by the SEC.

Jess: And now there's all these Bitcoin ETFs.

Jessie: There was a big rally in Bitcoin.

Jess: And people want to buy these ETFs because now it's accessible within their retirement accounts even.

Jessie: And in order to create those ETFs, they have to buy Bitcoin.

Jess: And its supply and demand is the stock market.

Jessie: So there's a lot of demand, little supply.

Jess: It makes it go up.

Jessie: That I did not realize.

Jess: I did not think all the way through to that part of the ETFs being created and by whom.

Jessie: And duh, it's obvious.

Jess: When you think about the big ones you're buying and it's like Vanguard or whatever it is.

Jessie: All these big names that were like, no.

Jess: And then you're like, oh, but wait a minute.

Jessie: That's what we're buying.

Jess: So how does it? It's got to be created somehow.

Jessie: That's interesting.

Jess: Yep.

Jessie: It's another ethical debate that people have.

Jess: But it's just good to understand how this is all created, how it all works.

Jessie: What you are buying when you're buying something.

Jess: It's just like when you buy food at a grocery store, you want to know where it's coming from.

Jessie: It's kind of nice to just understand the process of how all this stuff works.

Jess: You can just be informed, make informed decisions.

Jessie: Exactly.

Jess: Oh, you got my brainwave right there.

Jessie: Informed decisions.

Jess: It's what it is.

Jessie: That's what our whole podcast is all about.

Jess: Yeah.

Jessie: It's informed decisions.

Jess: It's just educating y'all so y'all know what's up and you can decide what you want to do with your money.

Jessie: Exactly.

Jess: You know? Make that money, make money.

Jessie: Well, thank you everyone for submitting your questions.

Jess: We'll continue to answer them as we keep on keep it on.

Jessie: Thank you for submitting your questions.

Jess: If you have more, please submit them.

Jessie: Send us a DM.

Jess: Give us a comment.

Jessie: Yeah, comment on our videos, our YouTube shorts, our YouTube videos, our Instagram, our TikTok, Facebook, wherever.

Jess: Wherever you want to do it, we'll see it.

Jessie: We'll find it and we'll put it in our asana and we'll get to it eventually.

Jess: We will.

Jessie: We make a list.

Jess: Don't forget to like, share, subscribe, all the things, review.

Jessie: However you would like to help us help you continue doing what we do.

Jess: Yes.

Jessie: And thank you for the nice comments and reviews.

Jess: And I also recently learned that you guys thought that we had a whole team.

Jessie: This is it.

Jess: Oh, who said that? Yeah.

Jessie: I feel like we always talk about how it's just the two of us.

Jess: And then I thought you had this whole team because we have so much content.

Jessie: So I'm like, nope.

Jess: No, yeah.

Jessie: We're just crazy.

Jess: Accurate.

Jessie: Yeah.

Jess: Yeah.

Jessie: You know, maybe one day we'll have a team.

Jess: Who knows? Oh, yes.

Jessie: And some housekeeping.

Jess: Next episode we drop, which will be next Friday.

Jessie: Taylor Swift will also be dropping an album.

Jess: So just wanted to see Jesse's face.

Jessie: I'm like breaking the fourth wall or whatever.

Jess: Like looking at the camera.

Jessie: I mean, I thought that's what you dressed up for today.

Jess: Because it's black and white.

Jessie: How does this keep up? Brings me joy.

Jess: I love you.

Jessie: All right.

Jess: Until next time.

Jessie: When you build knowledge, you break barriers.

Jess: You can say, I just break barriers.

Jessie: Bye-bye.

Jess: Bye.

Jessie: Remember, investing involves risk.

Jess: There is always potential to lose money when investing in securities.

Jessie: Market MakeHer provides educational content and resources for informational purposes only.

Jess: We are not registered financial advisors and do not provide personalized investment advice.

Jessie: Any information provided by Market MakeHer on our website or podcast is not intended to be a substitute for professional financial advice.

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