SKEPTIC’S GUIDE TO INVESTING

Local Meets Global: Wisdom from Marcus Sturdivant

• Steve Davenport, Clement Miller

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Financial literacy isn't just about knowing investment terms—it's about transforming your relationship with money. Marcus Sturdivant, founder of ABC Squared in Charlotte, shares his journey from a loving household where money wasn't discussed to becoming a financial advisor passionate about educating others.

"We didn't grow up rich, but we didn't realize we weren't rich," Marcus explains, highlighting how his entrepreneurial spirit emerged early—selling candy from a gumball machine at five and working jobs from fourteen—but understanding investment opportunities came much later. This personal experience fuels his mission to bridge the financial literacy gap he sees in communities like his own.

The conversation reveals three critical mistakes most people make with money: not tracking where it actually goes, poor cash flow management, and not realizing help exists for people at all income levels. Marcus points out the irony of individuals spending hundreds on lottery tickets while claiming the stock market is "fixed"—a misconception that prevents meaningful wealth accumulation.

One particularly valuable insight centers around tax diversification. Many focus exclusively on pre-tax retirement accounts and cash, neglecting tax-diversified options like Roth accounts. This oversight often results in retirees facing unexpectedly large tax bills when they begin withdrawals. "Most people only see two buckets," Marcus explains, "their savings and retirement accounts. They don't have those allocated out of pre-tax."

Most intriguing is Marcus's concept of a "Carolina Portfolio"—investments focused on companies based in or with significant operations in North and South Carolina. This approach connects investors to visible growth in their communities while creating surprisingly diverse exposure across industries from banking (Bank of America, Truist) to manufacturing (Boeing, BMW), retail (Lowe's), and technology.

Whether you're just starting your financial journey or looking to refine your investment strategy, this episode offers practical wisdom for navigating today's complex markets. As Marcus advises, "Don't try to jump into fancy, complicated investment strategies or just go with the fastest thing going on the internet." Instead, understand your cash flow, learn from reliable sources, and develop strategies to remove emotion from investment decisions.

https://theabcsquared.com/about

Straight Talk for All - Nonsense for None

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Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Steve Davenport:

Hello everyone and welcome to Skeptic's Guide to Investing.

Steve Davenport:

I'm here with my partner, clem Miller, and we've got a special guest today, marcus Sturtevant, who is an investment advisor here in Charlotte for a firm called ABC Squared.

Steve Davenport:

I've met Marcus at a Titan Investors Group meeting, and Marcus and I both had the good taste to both be wearing Air Jordans I was wearing green lows and he was wearing highs and so we were the only people in the group who seemed to understand that we should be in sneakers now and that the age of wingtips and fancy leather shoes has passed us by.

Steve Davenport:

But I really enjoy talking to Marcus because I think he brings a different perspective and I like the fact that you know he's an RIA starting out, and I think that when we look at people, we want to understand where they came from, but we also want to understand where they're going. We want to understand where they came from, but we also want to understand where they're going, and I think it's important to welcome people and cooperate because, believe me, with these markets and everything that's going on in terms of our country, I think it's good to have some other voices and some other inputs to try to make sense of it, and I've always believed that you are the strength of your network and if you have a strong network, your ability to handle some of these things and get good advice and go to good places for your clients improves. So, marcus, will you tell us a little bit about yourself and how you got into the financial advising or into this space?

Marcus Sturdivant:

Yeah, hey, first off let me say thanks to you two skeptics, clem and Steve, for having me on. I'm very excited to come on and just talk a little bit. Yeah, like you said earlier, I'm from Charlotte, so I'm a local guy down here in North Carolina. These heat waves that we're experiencing I'm used to them I guess as used to them as you can get. But I grew up down here in the South, grew up just, you know, just, my parents got divorced when I was young, so I grew up in a single parent home but with a lot of family, so community type environment, grew up together. We grew up. We didn't grow up rich but we didn't realize we weren't rich. We had gaps filling other things. We were so loved, we were so involved one another. We just didn't know what we didn't have, what we didn't have. But what was missing was financial literacy. Now, those were conversations we didn't have at the dinner table and we had a lot of dinners together, massive group stands, we sit down and eat, but we never really talked about financial literacy. I first got inclined to business and financial literacy in school. I took a course in ninth grade, an intro to business class, and it just kind of sparked my interest. As far as business goes, I've always been entrepreneurial-minded. I started selling. I went and bought a gumball machine when I was five. Five and sell the candy to the kids, like my cousins. Like, put coins in there, you get the money back from it. So I always have my thinking that type of way, like I will pull their teeth for like quarters, like when they were really loose, just always just had a mind and I started working. I was like 14. So, as I said, my mom was. She supported me. So I've always been earning money, thinking about the next day. But when I look in those, I should have been investing that money at that time. Life will look a lot different by now, right? So as far as financial literacy, that's a gap I've been looking to fill. Right.

Marcus Sturdivant:

Went to school, went to college, played a little football, had a son at a young age. So I stopped going to school, went back into the workforce, got your you know your standard 401k target date fund I didn't know any better invest into it, just filled out the form. It was paper batman, so just filled out paper form or whatnot. But it was a small business. So I learned a lot working there as well, like small business, and the people who owned it were great. They taught everyone. So I went there from in high school literally like sweeping the floors, clean up tables to eventually being general manager of several different locations.

Marcus Sturdivant:

So 12-ish years ago, I decided you know, it's time to like, really look at what my money's in. You know these target date funds, start to pay more attention to what's actually invested in. Just like, really fell in love with the markets, just the. You know these target date funds, starting to pay more attention to what it's actually invested in just like, really fell in love with the markets. Just the way they work. It's a little bit before Donald Trump. President Trump really sparked a lot of people, I guess, into investing, for better or for worse, however it may be, but it definitely caught my attention just hearing how people are always speaking about business and investing, and I already had a spark for it.

Marcus Sturdivant:

I already spent some time in school. Oh, not to mention, during this time, I went back to school, got my associates, got my undergrad and got my master's. So all this time has been building, went into the investment world under a bigger firm. We were focused on financial planning, loved it. I absolutely loved it. Man, loved helping people. I loved seeing the changes. I love working with the folks and helping them become more educated and what we're doing, because you have to understand where your money's going, how your money works eventually um, that uh position was on site my sister-in-law, my life situation just kind of changed from sickness to life.

Marcus Sturdivant:

Life happens. I just needed to be here more often. Also, at the same time, I was starting to commit more time to the Chasm Foundation in North Carolina, a local nonprofit focused on financial literacy. So, as you know, steve, you know Clem, in the wire house type world you have to. There are certain things you have to do right To make it financially work for them, make it financially work for you. And I was at the age where it was just like I have knowledge, I have skills, I actually have a certain way. I want to work with people, I want to work with a certain kind of people that I want to work with, because that's the best way to make it work. And yeah, so earlier this year I launched my own firm, so primarily focused on financial literacy with clients, but obviously we do the investment, the planning. I like to take a look at the holistic financial planning. So launched the abc squared and we've been going ever since so marcus, uh, abc squared.

Clem Miller:

Where did you get that title from that name?

Marcus Sturdivant:

Right, right, gotcha, gotcha, so all right. So earlier the ABC Squared actually had. I actually launched another LLC a few years ago. It was called the ABC kind of like Square, because I'm like an analytical type guy, right, that's the way my brain works. So I just want to make sure I have, in the doing businesses, all bases covered. So I just want to make sure that we're checking everything more than twice and that we have all your bases covered. So that's kind of where the ABC come in and then it's square. Sometimes you'll even see a list as the ABC square, square it says the ABC square square.

Steve Davenport:

I like that, Marcus.

Steve Davenport:

I mean, what I think about this business is it's full of a lot of great people and a lot of those people have 10 clients, 50 clients, 100 clients, whatever the number is, but they have a lot of people in their lives that they also impact besides their clients, and to me, that's taking what you have, your skill set, and using it for good, and ultimately, that's what you know. I think we all you know we want our clients to be happy, we want them to be comfortable, we want them to be doing and saving money for the things that are important to them and for every person. Geez, is that the three young kids? Is that the school I went to and I feel very proud that they supported me and I got a degree and they helped my life immensely. Or is it the local church?

Steve Davenport:

As long as you can help people to see their dreams and realities, I think that you know that's a great place for us to be, and I think finances is a part of your life. Or you know something that everybody has to eventually deal with. I mean, when I look at you, I wonder, like, do you have, like, your top three mistakes that people make? And then you know, how do they, how do the, how do you see people and say, boy, if I could change these three things, what would you know? What would it be?

Marcus Sturdivant:

Gotcha. Yeah, great point, great question. Well, one of the first things that would definitely be is where people are actually spending their money. Like people I talk to people, everyone I talk to I don't work with. I have friends who I talk to who I don't work with, just in general conversation. I don't judge people. I don't. They know what I do, we know what to do. But I'll see people who will spend one hundred dollars on lottery tickets or playing parlay bets on online, but tell me the stock market is fixed. I'm just like, yeah, you know, like that's that's huge, right, like that's a big one, right? So just just, yeah, just going with that to start for more, right, so you have that.

Marcus Sturdivant:

Then you have people who don't really understand their cash flow at all. Right, they're getting the money. They're spending it before they got it. It's already accounted for. They're spending it before it's even in the bank, before they've even earned it, right? So cash flow, what you're actually spending your money on. And then people just, one of the other biggest mistakes is people not realizing that there is help for them with their money, regardless of their income level. There are resources that people can help you become more literate with your money. Some are free, some cost a fee, but there are resources.

Steve Davenport:

Yeah, I mean, I think those are great ideas and I always look at people and I think of them. As you know, they have to realize they're like a small corporation, right? They've got their human capital and it's going to be used in the next 40 years for some activity in the marketplace and it's going to create revenue, and then that revenue becomes you know where do you want to put it? Do you want to put it to take care of that body and take care of that mind and make sure it functions well so that you perform your best at work? Do they want to, you know, find some time for you know, stress reduction and do some meditation and prayer?

Steve Davenport:

I believe that we all are these internal like if you manage your business or your life. There's a lot of similarities to a small business, and I think one of the things is goodwill, and so that's why I believe that this whole effort to try to do good things for other people, I don't think of it as much as a burden as an opportunity, because if I can get goodwill from this person, this person and this person, and they share a post of mine online and they've got 30,000 followers, I couldn't pay for that marketing slash input in other people's lives. And so, to me, as long as you're enhancing like you've obviously invested in yourself high school, college, master's degree I think you might be also working on your CFP. It's a sign of a good person to me that they are continually trying to get better, and that's kind of one of the most important aspects of being an advisor is guess what Like when we booked this call, I thought we were going to talk about X.

Steve Davenport:

Now, three weeks later, we've got bombs flying in the Middle East and we've got questions about a tariff deadline coming and we got the big beautiful bill. The world changed. I mean three weeks. It's a different, you know, and I think that you know. I think it's important that you know. You try to continually make yourself better. What do you think, plunk?

Clem Miller:

Well, I was just yeah, I totally agree with everything you said. I was going to ask Marcus. You know, as you were talking, steve, I was going to ask Marcus what of the people you talk to clients or people you're trying to educate what do you think is the typical timeframe they're considering? Is it six months, right? Is it 25 years? I mean, what is the typical timeframe that these folks are thinking about?

Marcus Sturdivant:

That's a really that's a great question, right? So we have to even go like a step back further with that. Right, we have to start with all these conversations, even when we're doing so with Kaizen. We'll do classes where we teach people financial literacy. We outreach sources you got.

Marcus Sturdivant:

You have to start with mindset, right, so you figure out what your mindset is with these investments and then you can figure out your goals. Right, because all those goals, those timeframes, are going to be different. Right, if I'm sitting here and I'm talking to someone because the clients range in ages, right, Some clients may be the same age. I have a household, several households. One may be 60. They all may be 60, right, one has X amount of money in the bank on track to retire.

Marcus Sturdivant:

If you were just to think about the other person's, the same age and has nothing set up for retirement, right, so they're thinking totally different. Right, they're both thinking five years for retirement, but to get there is much different. The people who are playing parlays and lottery tickets, they're not thinking past the next bet, probably. So it's just the wide range. But mindset and having a time frame, right, you have to establish what short term when we talk about short term. Ok, we're going to say six to 12 months is short term. Then we're going to talk about the aggregate, you know 18 to 36 months, and then long-term, five years plus.

Clem Miller:

Do you find that a lot of the people you talk to take the bucket approach? You know they've got some cash, they've got some play money and then they've got some longer-term investment money. Do people think that way? Uh?

Marcus Sturdivant:

people. People are usually shocked when you show them the bucket method right, like when you show them like the actual pre-tax versus the tax always, I know it's not a bug, but just like the way that the taxes are broken down, you know, because you pull it inside the buckets that way as to how you break it out. Few people ever have roth right like, yeah, I think they just started requiring roth inside of 401ks in the last few years. So there are so many people with all this money pre-tax. Uh, my parents, for example they just retired a few years ago. My stepdad, we were talking about it.

Marcus Sturdivant:

Their investment strategy was totally different. Growing up it was he started investing in the 80s and he just got cds and he was laddering when those interest rates were high. They were just running, just running, just running. They worked 40 years. He retired from the military, retired from a public job, so he did those things too and put into their investment retirement accounts. But it just goes to show you can take a different approach to it. But these people most people that I notice are getting hit with huge tax bills when it's time to convert because they aren't thinking about that third bucket. They only see the two buckets really. They see their savings, check-ins, maybe even brokerage accounts, and then they think about their retirement accounts. But they don't have those allocated out of pre-tax. So once they get into retirement yes, you want to establish that third bucket. You want to have it before retirement. Yes, you want to have it before retirement.

Steve Davenport:

Yeah, I think that's a great point, marcus, because I know personally I was busy helping other people with their money and I have a whole bunch of money that's 401k or re-tax money and I'm trying now to address it. But I think it's really easy for people to say I just want to know that I'm doing something. And I felt that way I got my match. I mean, the match is like is free money important to you? Okay, go get it. You know what I mean. Like to me.

Steve Davenport:

It was that simple If somebody is going to give me money, I'm going to try to get as much of it as I can. And then, you know it came to. I mean, what was my big money worry was college. My kids, you know, were doing well in school and I was sitting there saying, holy shit, I hope he doesn't get into, you know, this school because it's 90 grand now. You know it's like we all wish the best but we all don't really.

Steve Davenport:

I mean, when it comes down to it, in these college decisions or family decisions, or where do you live, what school system you go to, you always think you're going to make the right decision. But guess what, there is no right decision. There is only the path and you can. You're going to have obstacles, you're going to have things in your way, but you've got to address whatever it comes up and when it comes up. And I think that if I was to ask people to do one thing, it's be flexible. Be flexible, adjust, and you know. So we got a mailbag item that I thought of answering, but I thought maybe we could all try to answer it, and it says if you could do three things better to improve your financial wellness, what would they be? What do you think of that, marcus? I mean, we talked about mistakes, but what action would you like people to take tomorrow, after they listen to this podcast, to make their financial lives more whole or more complete?

Marcus Sturdivant:

The first thing that I like people to do is figure out exactly where their money is right. Log into that 401k. Take a look at it, if you have one. Log into your brokerageage accounts. Figure out where your money is right. Know what your money is. You need to figure out where those lazy dollars are. We all have them. If we don't address them, then figure out your expenses. Those two, I guess, can go in either order. Know where your money's coming in at. Know where your money's going out at. So I guess that, in general, would just be cash flow right, so back. So back to cash flow.

Marcus Sturdivant:

People have to understand their cash flow, where your money's going. I want people to just learn more. There's so many tools and resources out there where people can learn about financial literacy or just how their money works, how the economy works, how everything affects them, but you have to find the right sources for that. This world's so full of social media and TikTok and just full of places with bad information, disinformation, misinformation, so you have to make sure that the people that you are finding information from are giving you good, solid information. Check your sources and check those sources.

Marcus Sturdivant:

Also, I want people to realize and this is like against human nature because in general, people make decisions based on emotion. But you have to figure out a way to take emotions out of money. It has study where they blocked off a part of your brain that controlled emotions and people couldn't do simple things like figure out what they wanted to eat. Emotions play into all of your decisions. So you have to figure out what your plan is, why you're investing and when the times come and get bumpy and rough, as the economy will, interest rates will go up, interest rates will go down, tariffs dropping bombs. But if you were to have been dropped off, you know, if you went to space on April 8th and came back today and just looked at the markets, you wouldn't have known all this madness going on in between. So you got to look past that stuff, block out the noise and look past that.

Steve Davenport:

So I think that's great advice. I mean I, as I mentioned earlier, I think of human capital as a thing to invest and keep investing in yourself. But I think you're. I mean, glenn, I don't know how we we look at being skeptical about numbers and about firms and about ideas, but we really haven't focused as much on you. Know how do we take the three worst behaviors and try to how do we get the three best behaviors out of people? Because really, the money, it kind of comes along for the ride Once you decide, hey, I think retirement's important, I need to address it. I mean, once you get that behavior and say, and you can train people or help people to try to use less emotion, I mean, what do you think are the three things people should do better? Plum.

Clem Miller:

Well, I think my top three, and I think there's more than three for me, okay.

Steve Davenport:

Let's just say, people have short attention spans, but let's pretend they only can think about three items. I mean, maybe, maybe it's higher, but maybe it's four, but I'll give you three to four.

Clem Miller:

So the first thing you should do is make sure you don't have any unsecured debt, except beyond 30 days, I mean except under 30 days. So no unsecured debt. So if you got unsecured debt, man, pay it down. Right, pay it down. One of the problems with unsecured debt that a lot of people don't realize is if you miss a payment or you're late on a payment, that rate can zip right up really high. So do not take or you know, unsecured debt, pay it down.

Clem Miller:

I think the second mistake that people can make and this is a relatively recent, last 10 years, five years kind of mistake is to think that crypto is actually an investment and not a bet, and I know that some people might disagree with me on that, but I think that things like Bitcoin are a way to lose a lot of money and certainly they're highly volatile and, depending on where you invest it, uh subject to fraud and uh, you know, being uh ripped off criminally and so on. So avoid crypto. So that would be my second one. Uh, my third one would be to be very uh skeptical of uh, you know, themes. You know we all talk about themes, but I think we need to be sort of skeptical about themes and not kind of put all of our money into one thematic basket.

Clem Miller:

Thematic basket and obviously the way you avoid putting all your money in a thematic basket is to look at the underlying numbers and to make decisions based more on numbers than on themes. So you might have a really hot theme, but everything in that theme might be overvalued so you don't necessarily want to do that or highly overvalued. Plus, you know high beta, so it's subject to dramatic movement if the market goes down. So you know you want to be careful about themes and not be really misled by them. And that's where, by the way, steve, you and I often poke fun at or criticize CNBC and CNBC. They try to come up with things to talk about and they often talk about themes and they often talk about themes. And so I think you need to be very careful about being misled by themes. I'm not saying avoid stocks that fall under themes. I'm just saying don't allocate a large portion of your investment money to themes.

Steve Davenport:

Yeah, I mean, I think, balance, diversification. I mean I think that when I look at what Marcus is saying, what you're saying, there is a lot of similarities but there are unique. I think Marcus is taking a little more behavioral. You're thinking about allocation to a theme and saying, okay, I know I should have AI exposure, but should I have 20%, 30%, 50%? I think we're getting into some of the granularity that we need to help people, which is, I think, yes, you should think about. If you are in the software business and you are looking every day at different databases and you start to see certain companies dominate, then, yeah, you might want to take a certain amount and say, here's my software theme, here's my. You know, and I encourage people to invest in what they're comfortable with. Because if you invest in something and you say, hey, we keep using more and more of these databases, ultimately you know Oracle's going to make some money, Right? I think that's a helpful going to make some money, Right? I think that's a helpful way to get people comfortable with names.

Clem Miller:

And just to be very brief, I think a lot of people, you know, because of these themes, they want to be able to talk about particular stocks to their friends and at parties and whatnot. So they'll say I'm in NVIDIA and made so much money. Well, you know, nvidia is not necessarily the end. All to be all, there are some issues with that. So, just like people talk about crypto too, yeah, I mean everybody at a party.

Steve Davenport:

You know you own an index, you own NVIDIA, so it's kind of I think a lot of people the party talk and the you know they're kind of signals to me that this person you know wants to talk about. I'd rather talk you know what I mean to people and say have you talked to your kids about money? Have you talked to your nieces and nephews? Like cause, I look at the people that we can touch in this world. I'm married to a woman who has very strong opinions and she will tell me when she thinks this is a good idea or a bad idea good investment, bad investment and she's got very good reasons. So I think that the fact that we talk about things and address things, I think there's a big shroud around money and it's like you know, sex, politics, money are things that some people look at as not to be discussed because they're going to ask uncomfortable questions about well, what have you done dad, what have you done mom? And if they, for whatever reason, haven't had a great experience, you know you don't want that next generation to have a similar.

Steve Davenport:

So I think it's interesting how, as we go forward, marcus is a younger investment investor than we are. We're not going to get into how much younger, but he's, and I think it's, you know, and it's smart in my mind to be more values focused and try to be more personal, because I think that this is personal finance, it's not institutional. You're not going to have to own 22% in China in order to be balanced with the MSCI World Index. You should be invested in things with the MSCI World Index, you should be invested in things. And this kind of leads me to our looking at the future in investing. I mean, marcus, do you want to talk to me a little bit about your Carolina idea?

Marcus Sturdivant:

I do, yeah, sure, so yeah, and this is like early stages, just thoughts, but I think it could be a really good thing. I was talking to Steve about it a few months ago, a couple of weeks ago. I want to build a portfolio based on companies in North and South Carolina or with headquarters in North and South Carolina, large workforces in North and South Carolina. You can literally build out a balanced portfolio with probably 30 or 40 positions just based off of the companies that work in North Carolina or are based in North Carolina and have it pretty based in all the industries as well. I mean, we have, you know, we even have, like you know, we have trainings coming through with CFX type things. We have a lot of financials.

Marcus Sturdivant:

Obviously, you go across the border. You have Boeing, bmw right down there, we have Honeywell, lowe's, we have just all kinds of companies right around here, not to mention all the tech stuff is right up there. You got Microsoft offices up there, you have Apple offices up here. So that would be broad. But if you want to bring it down just to like straight North Carolina based companies, like, say, you have the Bank of America, you have Ally, you have not Ally. You have Truist, you have these banks that are just right here. So, yeah, pretty excited, I think I'm going to build that out. People will like investing. Well, I think people will like investing in things that they can see, places where they work, places they can go to in their own local home, local community. There are a lot of small cap, mid cap companies right around here. You got companies like smurf fit right across the border, so they're just like a lot of little value growth opportunities. I guess that's the oxymoron. But right inside opportunities for growth inside value, right inside North Carolina.

Steve Davenport:

So I think it's a great idea. I mean, I, I look at people and say, and they, their company, may offer them to buy shares and they may have a position in something. But it is a nice feeling to go over and say, hey, look at that, you know. Look at that warehouse, you know. Look at how many people are here. Look at the. You know, every time I come, the parking lot is full.

Steve Davenport:

I'm originally from Boston and Peter Lynch had a book about you know, one up on Wall Street, where he talked about you should figure out what things you're buying and what things you're interested in and therefore the things you're going to feel like you have some knowledge. I mean, I've started to kind of look at. I mean I'm a value investor and I'm looking at the gap and I'm like you know, these clothes are pretty good. This is, you know, like there is something here. And it's much more interesting when you can take a company and you can look at their materials and look at how they price things and look at how they're marketing and they're connecting via the web or via, you know, emails and texts and say this company has, you know, an upper end brand Banana Republic a lower-end brand Old Navy. There's somebody that you should think about and I love the idea that you try to combine them for people and have conversations about companies, because ultimately, people believe in people, believe in people and ultimately, if you can make it a personal you know knowledge and experience then you're not going to be scared off by.

Steve Davenport:

You know if what's his name Raging Kitty or Roaring Kitty.

Steve Davenport:

If Roaring Kitty says sell, you know your GameStop stock and you were just in the store, you might say, well, I don't know, I kind of believe I should just hold it.

Steve Davenport:

I have such a low price, it's done well, maybe it's going to go through a period, but I love the idea of us trying to make investing simpler and trying to make it more relevant to people's lives, because I think that when you say to people, just own the whole index of people's lives, because I think that when you say to people, just own the whole index, just own the whole. You know all 500 names, they're all good for you. And you kind of look at it and say I don't know if I like Smith and Wesson, I don't know if I, like you know, this drug company, I don't know if I, like you, know. I think that we're missing some of the human element when we just tell people buy the index, and I think that part of the human element could be a strength. If you get people to really adopt your ideas and thoughts, then I think you end up with a stronger portfolio.

Marcus Sturdivant:

Yeah, and just going back on one of the points that we made a little bit earlier, one of the things that I wish people would not do. So I wish people wouldn't invest based on their political beliefs. It's different, like you said. It's different than investing on a belief like you don't want to own guns or you don't want to own tobacco. You might own tobacco because your dad died of lung cancer. Right, it might be something personal like that. But to just like alienate half of the companies because you're red or blue, you're going to miss. That's not. You got to get that stuff out of your mind when you're investing.

Steve Davenport:

Yeah, cash flows and dividends make me excited. I'm not sure the political views of the leaders necessarily are as exciting as dividend rates and cash flows. What do you?

Clem Miller:

think, tom, well, you know, on that point about politics and I guess you could say ESG and sustainability and all that I mean, I got a you know not insignificant portion in Philip Morris which has been an outstanding stock over the last you know period of time. So that stock has done very well for me. And you know, on top of it they've diversified too. So you know you can look at it from that perspective as well, diversified from tobacco to some extent. So you know you can look at it from that perspective as well, diversified from tobacco to some extent.

Clem Miller:

I was going to ask you before you mentioned the politics, I was going to ask you, you know, some people have a lot of stock exposure to their own companies vis-a-vis their bonus plans and whatnot. And you know, I'm reminded, I've got a person I know who works for, has worked for years and years and years with UnitedHealthcare and they just lost four years of value and they're now over 65. So what are they going to do, right? I mean, how do you, how, what do you recommend to folks who you know are highly exposed to their own company through these stock plans, these bonus plans?

Marcus Sturdivant:

Another great, another great question. So whether it be so if there are issues where they're like vesting on schedule. I actually had this conversation with a client a couple of weeks ago. He had a lot of stock just in his personal company and I explained to him that, okay, so you and your wife both work, but let's say your wife didn't work and all your income came from this company. All your stock is in this company. It's so much risk you lose your job with this company. That's stock is in this company. It's so much risk you lose your job with this company. That's your income, right, if the stock price goes down in this company, that's a lot of income, like you said with the Unite Health example.

Marcus Sturdivant:

So that example, these people you want to sell some of these stocks, but you want to sell them, you know, probably at a shorter capital gains exposure, or you want to sell them as soon as you get them right. You don't want to sit there and let them grow and have time to be volatile with the market and then you can take the assets I'm not trying to give investment strategy, I guess I kind of am and then you can diversify outside of that by investing other equities or just having it in cash if you want to feel safer. But yeah, you definitely. You run across several risks from single stock exposure like that. Even in a situation where you're both spouses are working, if one spouse loses that job and it's at the company with the company stock, if that person worked at United Healthcare and lost their job, united Healthcare stock went from $600 to $300, like it just did in the last year or so. That's really going to store your portfolio, especially at 65.

Steve Davenport:

Yeah, I think that's great advice. So I guess I'd like to kind of wrap by saying what do you think today's environment is telling you and what is it telling you to buy right now? In terms of, if you looked at it from an educational standpoint? We're not recommending any stocks to buy, but we're just saying the things that are going on in the market make me want to own. And my answer, as I'll go first, is I think dividends and good dividend payers are going to be a way for you to insulate yourself from some of what I think is going to be a volatile time with the Fed. I think the Fed is looking to avoid inflation, but I think they're also looking to lower rates because that will please the political and I just think that interest rates are going to move and I don't have necessarily a real good feeling.

Steve Davenport:

Dividends there's a real discipline in the market where you say, hey, I'm covering my dividend three times. That company is pretty safe with that dividend. You've got others that are paying a 9% dividend and you know they're not sustainable with their cash flow. Avoid those dividends. But I think having some real high quality dividend payers particularly in my mind in the healthcare space, because I look at us and I think the US still has. We have a debt problem, but we also have a health problem and as we address these problems, I think that that space is going to get more money and more interest, and I just think it's a good place for you to hide out, still get growth and still get a good dividend yield. What do you think of the market today, marcus?

Marcus Sturdivant:

Gotcha. So the market today is so dynamic, so fluid, like we spoke about before. I took the approach a couple of months ago. A few months ago, like I said earlier, I just stopped listening to all this stuff, pretended I went to Mars. I stopped listening to stuff the outside noise with investment when I saw how the market will move in the morning on the tariff talks, then just go right back to where it was. Trading's different. I'm working with people investing. We're not really trading. That would be a different story.

Marcus Sturdivant:

So what I'm looking to invest in, like you said, off of the dividends, are quality companies, right, so you have quality companies and paying a dividend is usually a sign of that. But I want companies that have, like you said, strong balance sheets. Like you said, strong balance sheets, I want companies that have been here for a while. I want companies that, if they aren't paying a high dividend or if their stock prices kind of stand where it is, they're at least like returning equity to shareholders. In other ways, they're buying bad their stocks. A lot of companies that pop out their stocks like go ahead and buy it back. That's fine for investing purposes, right, because you buy it back, you're getting it cheaper for me and when it comes time to uh the returns, it's a beautiful thing. As far as sectors that I like, like you said, we're not going to just pick any stocks.

Marcus Sturdivant:

I love cybersecurity. I've said that since the beginning of the year. Cybersecurity is like. I feel it's like AI, jason. As AI goes up, you have to have as much cybersecurity to protect. You have people out here with these AI fakes, with people integrating systems and ransomware, spyware. All this is just attacking. So cybersecurity and then, right now, defense as well. So the ITA is a good defense for me, not a recommendation, but it's a good defense for me.

Steve Davenport:

Nice Glenn, how about you?

Clem Miller:

Well, I don't disagree with anything that either of you just said. I do tend to take a more quant approach, at least to screening, and you know the three quantitative indicators that I tend to look at and there's sort of a fourth one too that I sometimes look at. But the three are short interest. I generally want to have lower short interest because that tells me the sentiment is at least okay, if not pretty good, about a stock investor sentiment or sentiment by short sellers who are trying to make a lot of money on stocks that go poorly. Secondly, I want to have lower peg ratios, forward peg ratios, and you know it's always a question of how high you want to go on that or allow yourself to go on that. You know, do you allow yourself to go to two? Three, I mean, how high do you allow yourself to go right? One is too tight. You know which is the traditional. Three is I want to try to control the beta of my portfolio. I don't want a beta that's over one. You know I'll have a number of lower beta stocks. I'll have some higher beta stocks. You know I don't want to have a portfolio beta that's higher than one. You know. Preferably, you know, a little lower than one is what I want.

Clem Miller:

And then the fourth one that I tend to look at at times, although I found it to be, you know, overall less a little bit less useful, are, you know, employee ratings through Glassdoor. And I see Glassdoor as employee ratings of a company, as sort of a quality proxy, and probably more so than the kinds of quality proxies a lot of people use, like you know, return on equity and so on, or lower debt. I tend to look at employee ratings. I think a high employee rating Glassdoor is on a one to zero to five scale over four is fantastic, over, you know, 3.5 is great, and you start getting below 3.5, then I start, then I start to worry a bit. But even there, even there, sectors you know to some degree determine ratings. I mean, how high a glass door rating can you get for, like an RSG, which is a garbage company, right? So you have to, you have to be mindful of differences among sectors, but I do look at that as a quality measure.

Steve Davenport:

I think that's great. I mean, I think everybody's made some great comments today and I want to wrap it up and give everybody one last chance for any comments, comments. My comment to be right now is that I believe that the volatility we're seeing in this ceasefire calming things down is temporary. I don't see these situations maintaining any kind of semblance of normality. We still have a huge problem in the Ukraine.

Steve Davenport:

Although Europe has spent a lot of money on defense, which is good for our portfolios, I think Europe spending more and more money on defense might be a self-fulfilling prophecy, right? Because I think that if you look at its enemies, its enemies would say, well, yeah, they're going to start to get militarily busy. If I'm going to move on someone, do I wait for them to get fully armed and attack, or do I step in front of that? And so I think that you know, unity is great and I think that the peace in Israel and Iran, I would like to see it last. But I would just say to people you're the best judge of your own portfolio and the risk you want to take, and if you want to take a little less risk, take a little less risk. I'm not saying sell everything but I'm saying to make sure you look at your risks and make sure you understand what you're taking and why and how they align with your personal goals. How about you, marcus? Any last notes? How?

Marcus Sturdivant:

they align with your personal goals. How about you, marcus? Any last notes? Yeah, so one of the main things that I try to do is help Main Street meet Wall Street right, like. So get things simplified for you. Like, don't try to jump into fancy, complicated investment strategies or just go with the fastest thing going on the internet. I like to give people a little perspective when they're trying new things and kind of think about even with, like, the crypto, people are going to buy what they want to buy. Sometimes They'll have a little portion outside there. If you got to satisfy that niche, satisfy that itch, spend no more than you would spend on a nice dinner for two or maybe going out to a professional sporting event. Don't go all in on any like uh, clem said thematic issue.

Clem Miller:

So just think before you invest that's great, well any final notes no, I think we covered a lot of territory today. Marcus and Steve, I think this has been a great podcast.

Steve Davenport:

All right, thanks everybody, and please keep listening to us. We've got Rich Weiss, who is going to join us for a podcast also today, and we are trying to bring you what you need, so text us, like us, share us, and we look forward to trying to help you going forward. So, everybody, have a good day and stay out of the heat and have another glass of Arnold Palmer's. Be good Bye.

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Clem Miller, CFA

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Steve Davenport, CFA

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