Intelligent Investing with Glenn Leest

Intelligent Investing, Glenn Leest, Understanding Supply and Demand and Their Impact on Daily Life

• Glenn Leest

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Ever wondered why the latest must-have toy can send parents into a frenzy, or why the price of your groceries seems to keep climbing? We promise you'll gain a deep understanding of these economic mysteries in our latest episode featuring Glenn Least of WT Wealth Management. Together, we unravel how the simple laws of supply and demand have shaped unforgettable phenomena like the Tickle Me Elmo and Beanie Babies crazes. Plus, we'll explore the pandemic-induced supply chain disruptions, and why learning practical trades might just be your best bet in a world increasingly dominated by automation and AI.

But that's not all—strap in for a journey through the convoluted world of interest rates and inflation, and discover how these unseen forces dictate your borrowing costs and investment choices. With our engaging comparisons, from ancient Rome's coin clipping to modern quantitative easing, we'll shine a light on the Federal Reserve's pivotal role in managing economic stability. Finally, we break down the cautionary tales of Zimbabwe's hyperinflation and Japan's zombie economy to underscore the importance of understanding economic policies and indicators. Get ready to see the economy through a whole new lens!

Thanks for joining us on Intelligent Investing with Glenn Leest! Your go-to source for navigating the complex world of finance and becoming an intelligent investor. We appreciate your trust in us and your commitment to your own financial future.

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WT Wealth Management
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Speaker 1:

You're listening to a market update brought to you by Glenn Least of WT Wealth Management. Glenn Least is here with me with WT Wealth Management and I wanted to follow up with something that we were talking about recently, glenn, because we have a lot of economic concepts and terms here that relate to investing, and you know this stuff, but supply and demand I don't think they're teaching these concepts. Just to start off with that one, I don't think they're teaching this in school anymore, and I think we were talking the other day about oil and I think you had mentioned that hey, we need to drill baby and get kind of oil production ramped up.

Speaker 2:

That's a simple supply.

Speaker 1:

I mean, I guess, explain supply and demand. You can use that as an example or anything else, because I think people are missing this.

Speaker 2:

So I have two of them that.

Speaker 2:

I remember from my childhood I think it was like had to be like 1996, 97. They came out with the tickle me, elmo, and it was just. They didn't think it was going to be as big of a success as it was and everyone wanted it. And I remember the price went from like $20 to like people were paying $150. And I was like Mom, mom, mom, we just need to go to Toys R Us, we'll buy it for $20. We'll sell it for $150. And well, I didn't realize that Toys R Us didn't have it because they had less and less available and the demand was there. People still wanted to buy it. Or remember, in the back of the day, the Beanie Baby craze. It was like the value of the item didn't go up.

Speaker 2:

That much but the demand for it did, and the supply didn't change. And so supply and demand is that basic relationship of when you have more supply than you have demand, you'll have the prices come down, and if you have more demand than you have supply, usually the prices go up. And so we've seen a lot of that with just over the last couple of years of prices go up because the you know they so they've done a lot of this with our monetary policy is they print a lot of money that wasn't in existence before, during the pandemic. And I'll use an easy example. So say, there's $10 trillion in circulation, um in the United States, and then in 2020, they print $4 trillion. Well, now there's a total of $14 trillion in circulation.

Speaker 2:

Well, guess what? There's still the same amount of goods you know that are available. We didn't all of a sudden boost our goods by 40% overnight and boost our goods by 40% overnight. And so now you have people like going, hey, I still want that item, and the other person says, well, I wanted to, and we've got 40% more money each. So let's you know, the prices are going to be driven up too. So that's an unfortunate side effect.

Speaker 1:

But to make that matter worse, during, um, during the COVID craze, uh, people were staying at home and production was down. So actually the uh, so actually we had the supply chain issues. So the amount of products and goods and services that were out there actually was shrinking, while the money supply was actually the amount of money out there, the STEMI checks and all that while that was increasing, we had less goods and services. So, voila, here we are. What, four years later, Big surprise, Everything costs a heck of a lot more.

Speaker 2:

There's this South Park movie that just came out and it's, uh, based in the future, where, basically, um, all the adults don't know how to do basic handyman skills like you know plumbing and you know sink fixing, and so they have to call this handyman. And the handyman is getting called by everyone because no one knows how to do anything, and so they're like I'll give you 200. He, well, this guy's giving me a thousand dollars to go fix his shower, and so the the handyman's become like these wealthy you know gold chains, you know big cars because the demand was so high, um, and there's almost no supply because no one knew how to do any of those uh, life skills.

Speaker 1:

But that's a future thing. That's that's like I've been telling people for a long time learn how to do the physical skills, because you probably aren't getting outsourced by a robot. You know I've talked about AI and automation and all that for a long time, glenn, but if those hands-on skills that's probably a secure thing to get into that may be, that is the people that are making the money. I mean, you can do very well being a plumber, an electrician or what have you.

Speaker 2:

And the interesting thing is that we have we live in the information age and so you can look up almost anything on YouTube, like in go hey, this is the appliance or whatever. I have model number, here's what I need and someone's made there's been 10 videos made about how to disassemble it and fix it. So YouTube can sometimes be your best friend for learning some of those skills and for me, I've learned a lot over the last couple of years. Oh man, especially owning homes. Owning a home, yeah, I did a subpanel last year.

Speaker 1:

I had some help from my dad who's gotten really good with electrical work over the years. But there was a lot that I looked up on YouTube multiple videos to see if it was consistent. Like, am I going to burn the place down? And I actually did a sub panel. It took me a while but I saved a lot of money and I really wanted to learn that skill. Glenn, I did look up Tickle Me Elmo because there was the craze you said. I don't know what the prices went up to, but on Etsy you can get a used 1995 Tickle Me Elmo for $15. So you know, it probably went up to hundreds of dollars when I went crazy, imagine if that was your investment, one of these uh, you know, fad, trendy items. Right, and now it's, it's $15 all these years later.

Speaker 2:

You're going to laugh because this is totally Glenn style, but like I have, I bought a bunch of beanie babies when I must've been in sixth or seventh grade, didn't play with any of them, put in these like plastic cases and like wrapped them up and sealed them off and my mom was like what are you doing? I was like I'll open them up in like 20 years and it'll be like my retirement fund.

Speaker 2:

And I still have them to this day and they haven't gone up in value. But it was just like. That was like my mindset.

Speaker 1:

Like, uh, these things are going to be more valuable because there's on etsy. I just typed in beanie babies for super rare retired beanie babies for seventeen thousand seven hundred dollars. So I here, let me put up the picture for you. Glenn, I don't know if you have these, yeah, okay, I gotta go look at this you might want to go home, but then I might say there are also other ones that are three dollars and sixty cents.

Speaker 2:

So there's like 500. It's just like a big pile. It it's a big file.

Speaker 1:

You can pick one for three just take it off. I don't want to be negative here, glenn, but I bet you you have a three, 61, but you may have that. Let me know if I don't hear from you. I know you're going to have the $17,000,. Uh, beanie baby, that's a. That's a rare one though, yeah, yeah, but it's yeah. Choose your investments. Well, do you want to just go through this list here? I mean, you have interest rates. I think everybody knows that one. Um, maybe now Okay, well, go ahead, hit it.

Speaker 2:

So, um, a good way to understand interest rates is um. Robert Kiyosaki had this question one time. He asked he says um, if you could borrow money from me as 0%, how much money would you borrow? And the answer is well, as much as you'd give me right Just load up the truck man yeah.

Speaker 2:

Cause, then cause you know, as 0%. Hey, I can go take that and invest it or do something and make half a percent or 1% with like zero risk and so but what if he said, okay, that money is going to be 15%, you go. Well, the cost of money has gone up, so I've got to make a pretty good return on those beanie babies or whatever it is to cover that interest. So the Federal Reserve is what controls our interest rates. So they have a dual mandate, which is full unemployment or low unemployment.

Speaker 1:

Yeah, or full employment is what I meant to say and then full unemployment would be a bad one.

Speaker 2:

Full unemployment.

Speaker 1:

I got them two mixed up, although sometimes you feel like they're making us head that way, and then stable prices through stable inflation, trying to keep those numbers down.

Speaker 2:

And they use monetary policy to do so, and one of them is interest rates. So if they lower the interest rates, cost of capital becomes very cheap. You're no longer incentivized to keep money at the bank. The bank's not paying you anything. You're able to be a little bit more risky with the funds because you're like, hey, you know, this money is super cheap. Maybe I do want to go put it in this risky venture. So it tends to have an effect of juicing the economy, if you will, because even businesses can borrow money dirt cheap and then reinvest and grow their business. But yeah, when you have lower interest rates, more money gets seen. You usually see money get pushed into the stock markets. That also cause the asset prices to go up, and the reverse is true. When they raise interest rates, everything gets very expensive. And the difference between a 3% mortgage and 8% mortgage is pretty astounding, because that was what we had during the pandemic was 3%. Right now we're 7.5%, 8%, and so that's almost half of the buying power that's cut in half.

Speaker 1:

And the prices run up too right To make it worse too.

Speaker 2:

So when they're trying to bring inflation back down, they usually raise interest rates, because then the theory is people are going to be spending less because everything is more expensive, debt-wise, and then there will be more supply that builds up to equal demand. So that's the theory.

Speaker 1:

It's not working this time, so far. Quasi-working, I guess inflation has come in fairness. What was the highest. Government number was like 9% or something, 9.1 at one point and we've been hovering in what? The 3.5% range and the Fed came out just what was it this week or so and said, hey, this ain't working, basically in Fed language. So we're not getting the inflate, we're just kind of stuck, glenn.

Speaker 2:

It seems like we're just stuck why don't you turn on and go down that road of printing more money than you have, which is really what they're doing. On and go down that that road of printing more money that you have, which is really what they're doing. They call it quantitative easing or whatever fancy term. They're basically creating money that didn't exist. And, um, I was actually watching a show the other day with my kiddo the total twins cartoon and they're talking exactly.

Speaker 2:

They called it an inflation monster and they're talking about in rome, um, when they wanted to create more gold coins, but they didn't have more gold gold, so they just shaved off a little bit off of each coin.

Speaker 2:

Clip them yeah, and so they're no longer 100% or whatever the number is Now, they're 90%, and so they can make more gold. That's when you had an asset-backed currency and Rome collapsed because they kept doing that. They call it debasing the currency, just ruined their country and their economy. But we do it and we don't even have an asset back to it. It's just Fiat, it's just a.

Speaker 2:

They click a button on the computer, more money gets printed, um, and then inflation goes up and then, like man, we really need to get out of these debts and these problems. Let's just print more money and it becomes this like really toxic cycle. Um, zimbabwe is a great example of just how bad it can get. Where they, the government officials maybe they didn't take that econ one-on-one class and then they don't realize that you can't just print your way out of you know economic trouble, um, and they had, like these, a hundred trillion dollar bills that were worthless and they would print up entire like truck fulls of dollars or currency, whatever they called them, and by the time they got to their destination they're worthless. They're better off using to start a fire.

Speaker 2:

So inflation can be very, very, it could be very. It's a silent tax on the middle class is really what it is, because most people don't think about it, you know, and they really should be thinking about. Well, if inflation went up 20% since the pandemic, that's the equivalent to me paying a 20% extra tax. You know, maybe I'm 12% for the income tax rate, but I'm paying 20% in increased costs. Well, I'm paying an extra 32%.

Speaker 1:

Yeah, it's a silent tax.

Speaker 2:

Yeah, and so that's um. Sometimes the politicians would rather, you know, print more money than raise taxes, because the average person maybe just doesn't understand it.

Speaker 1:

Well, it's a slower thing. So like going back to COVID when they're printing all that money. Glenn and I've seen numbers of like $9 trillion was infused into the economy. Stimulus checks went out, and all these multi-trillion dollar packages infrastructure, you name it. We didn't have to. We've been kind of told this for a long time, I mean even going back to after, you know, 9-11 and George Bush and all that. It's like we can. We can do these wars, and we don't have to raise taxes. We can just, you know, borrow the money, and all of that is delayed, so, you see it a few years later through inflation, but people don't really equate it, because now there's kind of the attack. You see the politicians attacking the evil corporations Remember the famous Super Bowl commercial of Biden, where he's talking about the ice cream has gotten smaller, and, you know, these greedy corporations are raising the prices. Why are they raising the prices, though?

Speaker 2:

Because you printed a bunch of money. Yeah, you printed a bunch of money. What do you want, but?

Speaker 1:

it took a couple of years, but for the average person out there they're like, yeah, whoever ice cream maker just raised that price because they're greedy. But they don't look at the government that printed all this money with the promise of don't worry, you don't got to pay taxes on this. The taxes, the inflation, the stealth inflation tax that hits later on, which is it's later on.

Speaker 2:

Yeah, and and taxes are kind of an interesting thing because it's a very unpopular to raise taxes. Um, because the government really has three has three mechanisms to solve the debt issue. One is spend less, which is near impossible. Two is to tax more. Or three is just print more money and all of those paying off the debt and spending less would be the best option, but we've chosen to just print more money because raising taxes is also very unpopular too. We've chosen to monetize more money, because raising taxes is also very unpopular too.

Speaker 1:

We've chosen to monetize that over a long term. You're listening to a market update brought to you by Glenn Least of WT Wealth Management. Exuberance is back in the stock market. Jeff Orbitz, here in a frenzy over artificial intelligence technology, has stoked a monster run in NVIDIA shares. Major stock indexes are clinching repeated records and even Bitcoin is threatening to set a new high.

Speaker 1:

Don't let the fear of missing out drive your decision making. With over six decades combined experience, glenn Least and his investment committee at WT Wealth Management factor in your risk tolerance, time horizon and financial goals to create a balanced portfolio for superior risk-adjusted returns. Greatly mute the impact of down-market days while still enjoying the up days, and Glenn can show you how to refuse to go woke and be broke by avoiding companies that are more concerned with their wokeness than successful business policies. Don't let fear of missing out drive your decision-making. Call Glenn for a complimentary portfolio review at 928-225-2474. That's 928-225-2474. Glenn Least, making your portfolio great again. Call 928-225-2474. You're listening to a market update brought to you by Glenn Least of WT Wealth Management. All right, glenn Least is here from WT Wealth Management. Glenn, I looked this up Actually, I've been, you know, as you're saying things today, first the Tickle Me Elmo, then the Beanie Babies, these Zimbabwe notes I told you you can buy them on like eBay and stuff. These are kind of collector's items.

Speaker 1:

They're probably worth more than the note itself but like there's a $1 billion, a 2008 $1 billion banknote, a double, a series for $8 and 99 cents, so I assume that's in the US.

Speaker 2:

Did they stop putting their leader's face on there?

Speaker 1:

I think at some point you wouldn't want to put your face.

Speaker 2:

I kind of want to be on the back.

Speaker 1:

Yeah, it's like that's all of a sudden you know it's like a flower or something, or a wilting flower, probably right. So at that point, yeah, but I should get one of those and frame them up as you know. A reminder here.

Speaker 2:

Is that? Can you buy $100 trillion for $89?

Speaker 1:

Is it? Where is that At the far right yeah. Far right.

Speaker 2:

Oh, you're right so.

Speaker 1:

Zimbabwe $50 trillion bank note from 2008 is $89.99. I'm sure they've redone their currency already and probably lopped some zeros off to make it seem less ridiculous, but I don't know if I'd spend it. I might pop $8.99 for a billion-dollar note, but I'll let you buy the trillion yeah you're a trillionaire in zimbabwe, right? Yeah?

Speaker 2:

it's like when those places call and like, oh, do you want to donate? And one time it was like a robo thing and I just was annoyed and like, yeah, I'll donate a million, like really, I was like a million pesos they're, like I said, like a million boliviar.

Speaker 1:

They're like seriously a million zimbabwe, whatever they dollars or whatever they call it. Okay, economic cycles Touch on that real quick.

Speaker 2:

Yeah, yeah, it's healthy for economies to go through cycles, and the Federal Reserve, in a lot of ways, my opinion, has hampered us from ever having to experience much pain, which is part of the economic cycle. There's, you know, it grows and expands, and then we have a little bit of contraction and then it recovers and then it does the same thing over and over, and so they wanted to get the growth and expansion. But when it retracts or recesses, they're like, oh, we don't want that at all. We can't have any negative years in the market, which, when you look at market stats, it's like out of every five years, usually one is negative. One will be flattened through your positive. So, um, we just know it's going to happen. So them trying to cause us from not having any economic you know difficulties is probably not the best.

Speaker 1:

No pain, no pain. Japan has done that since 1990 or so and they have zombie companies and zombie economy really, and you don't want to go down that road because the pain kind of cleans out the, the, the problems and the. You know bad comp. Don't prop up bad companies, don't keep them going, and without that you're not letting the cycle actually complete itself. Glenn, gross domestic product comes on a lot. I talk about that A lot of my show and you know GDP, which measures. I mean, how does it measure it? Because it's all the things within the country. I think that's produced in the country.

Speaker 2:

Yeah, the total value of all the goods and services that are produced and the the direction that the GDP is going is usually an indicator of how the economy is doing. So if the GDP is increasing, that would tell us we've got more goods and services than we did, say, six months ago. The GDP is kind of flat and then we know we've pretty much maintained and you know, and it hasn't grown, hasn't dropped. Now if it goes down, that indicates the economy is starting to retract, meaning they're not producing as much because there's maybe not as much demand, because maybe, for whatever reason, the economy slowed down or people have lost jobs or whatever. So GDP is. When you look at any kind of metric in the investing world, you always have to take it with a grain of salt because there's no perfect metric. You just have to understand what it measures and what it doesn't measure. Like unemployment is a good example. Like that doesn't measure people that have just stopped trying to apply for unemployment benefits, which they're technically unemployed. They just they're not being captured.

Speaker 1:

They're not measuring them anymore.

Speaker 2:

Yeah, yeah yeah, so um, and we've got some countries that have these artificially high gdps that just aren't believable. Like hit china for the longest time. They just were posting these crazy gdps every single year, year after year, and you're going yeah, I don't know that's, that's quite the feat.

Speaker 1:

Soviet union did that for a long time.

Speaker 2:

Yeah, they're big closed books, yeah, yeah you can't see the, you know the actual numbers. So, yeah, so gdp, like I said we, we use that, you know, from an economic standpoint just to measure the, the value, or to say the, the growth and the health of the, the um, the country as a whole and the economy yeah, the soviet union was a good one because they were just, they were thought to be such a powerhouse until they weren't, and then, all of a sudden, it collapsed within a year.

Speaker 1:

You know, the whole thing absolutely collapsed. All right, which we don't have a lot of time left here, but maybe we should hit on monetary. You want to hit monetary fiscal policy?

Speaker 2:

Let's go monetary.

Speaker 1:

OK, we probably hit both of those, but go ahead and go and start with monetary.

Speaker 2:

So the monetary policy is exactly what we're referring to with the Federal Reserve. That is how you know. It's the central bank. What are they doing to make changes or adjustments to our money system? Are they raising interest rates? Are they cutting interest rates? Are they buying up debt? Are they selling debt? So those are all monetary policies of how they're going to affect the value of that particular currency, and the organization that has the most influence on it is definitely going to be the Federal Reserve.

Speaker 2:

So it's very important you do, if you're in this industry, to watch the Fed, like what are they doing? What are they saying? You know what are they going to potentially, do you know down the road? And then you know fiscal policy is just, how do you spend that money? Um, you know, is it? Are you spending 99% of your budget on snow cones, or you know, or whatever else? It's, it's the, it's how you're allocating the money, and so, um, fiscal policy is also something that is very important too, because if you're constantly spending just I don't want to say frivolously, but maybe not as prudent as you can- that's a nice way to put it.

Speaker 1:

Nice way to put it, yeah.

Speaker 2:

If you have terrible fiscal policy, it's going to hurt the economy long term. And I mean, you think about if you had this. I'm trying to think of an example like maybe you're affiliated. You had a business partner and you guys are running a business together and you were just hustling, you were pinching pennies, just cutting the corners, trying to make this business profitable. And then your business partners over there just spending money out the wazoo, swiping the card, going to all sorts of places, and that their monetary policy was. Our fiscal policy is like let's just spend and have fun, you're going well, we need to turn a profit for this company. We can't continue to have bad fiscal policy and expect to see results or success.

Speaker 1:

Yeah, and my opinion is we've got bad fiscal and bad monetary policy, but not as bad as Zimbabwe. We don't have the notes like that as of yet. Let's hope we don't get there.

Speaker 2:

This is a cautionary tale because, if you don't understand this concept, um bad it can get very quickly. They're going to think, oh, we can just print more money. The government knows what's best always for us, and um, there's been time after time of countries that have tried to print money to to get themselves out of trouble, and it's never ended in success. Um, and so that's just something we need to? Um consider is that you know, our, our currency isn't is backed. It's not backed by any physical thing, it's just the full faith of the U? S government. So they call that a fiat currency. Um, and then it allows you to print more and create more than what actually existed.

Speaker 1:

So if we don't get to the other one, I could look up and probably buy as the um, uh, you know the Deutschmarks from the what 1920s late 20s in Germany to early 30s, the wheelbarrow full of money. And the old story is I don't know if it's true or not, but somebody robbed you know, left a wheelbarrow with the money out there to go in and they left the pile of money and stole the wheelbarrow.

Speaker 2:

It's more valuable yeah.

Speaker 1:

We don't want to get to that. I mean this has been done before.

Speaker 2:

Yeah, yeah. So those things are very important. So, especially from an investing standpoint, those can be applied to even companies. What's the company's fiscal policy? Are they just, you know? Are they the petscom, you know 1990s, where they're just basically lighting money on fire and not turning a profit at all and then surprise, surprise, they don't. They're not successful long term. Or are they trying to be wise and good stewards and reinvest their money into profitable ventures to grow the company?

Speaker 1:

Good stuff, Glenn. I mean it's good to go over these terms because people throw them around, I think a lot and maybe don't fully understand them. It's not a knock, it's just there's so many terms out there, there's so many things going on, so I think it's good to get those out there. All right, Glenn? Hey, if you guys want to talk with Glenn, let me throw out the number 928-225-2474. Give him a call and chat with him about all this stuff 928-225-2474. And then your email is gleast G-L-E-E-S-T. Gleast at WTWealthManagementcom. Well, good stuff. Appreciate it. Until next time. All right, Sounds good.

Speaker 1:

You've been listening to a market update from Glenn Least with WT Wealth Management. Remember to seek out professional help for any of your investments and any kind of decisions you make going forward. This is for informational purposes only. If you want to talk with Glenn Least of WT Wealth Management, give him a call at 928-225-2474. That's Glenn Least at WT Wealth Management at 928-225-2474. Or send Glenn an email at gleast, G-L-E-E-S E S T G least at WT wealth managementcom. Hope you all have a great rest of your day and we'll be you next time.