Money Life with Chuck Jaffe

Robert Pozen, senior lecturer at the MIT Sloan School of Management, says that investors with significant savings should eschew classic 60-40 diversification strategies for a mix that is almost entirely stocks, with no bonds at all. That strategy might sound odd, considering the source — Pozen is the former president of Fidelity Investments — but Pozen contends that long-term investors will be better off bucking up for the market's ride than they will be trying to protect themselves from downturns where the pain will be relatively short-lived. Pozen, who detailed his research in a recent Wall Street Journal column titled  "You're Probably Overinvested in Bonds," recognizes that his strategy will shake up portfolios, but says it also gives investors permission to let their winnings run, provided they don't have to tap the investments in order to meet living expenses.
In the ETF of the Week, Todd Rosenbluth, head of research at VettaFi, is highlighting an ETF focused on blue-chip stocks, which requires defining what blue-chips really are and how it's not just the Magnificent Seven or the current mega-cap market leaders. He also notes how active management with brand-name companies can deliver returns that are different from index results, even if there is significant overlap on the names in a portfolio. 
Plus, Ken Applegate, portfolio manager for the Wasatch International Growth and Global Opportunities funds, talks international small-cap investing in the Money Life Market Call.

Wayne Penello, president and chief executive officer at NextGen EMP, says he expects the Standard & Poor's 500 to double in the next five years, in the "greatest bull market we have seen in 60 to 80 years," though he acknowledges that this kind of rise ultimately will end in a bubble. He thinks the market can rally, with only modest to moderate corrections, before it reaches that crescendo, and says investors should be watching for the point where artificial intelligence is over-saturating the market to where prices collapse to see when that is likely to happen. Penello, a Wall Street veteran whose firm recently opened the Efficient Market Portfolio Plus ETF — a long-short fund that tries to balance risks by leaning into or away from market sectors, says he is leaning into semiconductors, particularly when the market sorus on them, and is going light or away from consumer discretionary stocks and utilities.
Olivia Valdes, senior researcher at the FINRA Investor Education Foundation, updates us on the group's study of financial frauds. FINRA recently released "Patterns in Fraud Awareness: What Comes to Mind When Americans Think About Financial Fraud," which asked people to name the common schemes and tactics fraudsters use, and found that even identity-based crimes — the thievery that most Americans are aware of and cautious about — was top of mind for only half of the population. Valdes says this helps to explain how even savvy consumers get taken in by schemes, as fraud losses in the U.S. now run at nearly $200 billion per year. 
In the Money Life Market Call, Stefan Grater, portfolio manager overseeing the domestic and international value strategies at Eldred Rock Partners, discusses his disciplined, concentrated approach to value investing.

Brian Allen, chief investment officer at CS McKee, says that while stock valuations are at "heady levels," the current spending expectations for the artificial intelligence revolution can justify those high prices, and even make them seem somewhat cheap. He notes that the current economy seems like "the gilded age and industrial revolution repeated some 135 years later." While concerned with valuations, Allen remains constructive on the market, noting that the trend on forward inflation "looks to be more under control" — especially when viewed through some alternative indicators — and that investor concerns don't appear insurmountable for the market, at least for now.
In the Market Call, Laks Ganapathi, chief executive officer at Unicus Research — an independent research firm that specializes in short selling — discusses how she decides which stocks to bet against, what conditions she won't challenge even when she foresees trouble ahead and more.
Plus, Chuck talks about his adventures in spending and saving on a big purchase during the tax-free weekend in Massachusetts and how, to maximize the savings, he agreed to an outrageous credit card interest rate that, for a less-vigilant consumer, would quickly turn a good deal into something very ugly.

Jose Torres, senior economist at Interactive Brokers, says that while the stock market has been climbing the wall of worry, the one thing overcoming many of those worries has been that government policy is pro-business and pro-market. As a result, he doesn't expect the stock market to have a down year while President Trump is in office, despite real economic concerns that are worrisome but not having much current impact. He discusses Friday's jobs numbers, the current level of inflation and much more in a wide-ranging Big Interview.
In "The Week That Is," Vijay Marolia, chief investment officer at Regal Point Capital, discusses whether gold's recent rebound will get it all the way back to recent record levels, whether value's domination of growth this year is a sign of long-term market weakness — since value typically dominates only when markets are troubled — and celebrates the 91st birthday of Social Security by noting that he thinks investors with the means to not live off payments shouldn't follow conventional wisdom and wait to collect, preferring instead for them to take the money and reinvest it in the market, to further enhance growth of their long-term retirement portfolio.
David Trainer, president at New Constructs, puts companies that failed his firm's "core earnings leaders" test in The Danger Zone, noting that businesses with higher core earnigns than generally-accepted accounting earnings tend to be more profitable than the market realizes, which means that companies which fail to meet core-earnings tests may be headed for trouble, as they will be less profitable than expected. He cites NXP Semiconductors as an example of a stock that has become grossly overvalued because the market isn't looking at its true earnings picture.

Greg Harmon, founder and president at Dragonfly Capital Management, says the market's bounce this week is a potential sign that the market's next move higher could be starting now. Harmon says the market is broadening out, and has come through "a great earnings season," creating "a strong market, fundamentally and technically." Harmon sees some potential problems, but he says that the market's ability to shrug off bad news will get helped out as some of those worrisome events get solved and fall by the wayside; that leaves him looking at a strong finish to the year for the market, and a good start to 2027 barring "an unexpected crisis."
Rob Shaker, portfolio manager at Shaker Financial Services — which uses a discount-capture strategy with closed-end funds — says that he's seen a lot of "good widenings" of discounts as the market returned to peak levels. A good widening is one where a fund's net asset value goes up more than the price of the closed-end fund itself. It happens when markets get volatile and indexes pull up faster than closed-end funds can move, creating attractive buying opportunities. 
In the Other Interview on today's show, James Barra, head of content and research at BrokerListings.com, discusses "Financial Literacy in the TikTok Era: Who Should You Trust," a research paper the site published that took a scientific approach to looking at the financial information on TikTok. Barra says that there's a wide range of content, but an alarming amount of it is "potentially problematic, high risk and largely untrustworthy." Over 70 percent of creators on TikTok have no clear background in financial services and no relevant qualifications and about two-thirds of the content failed to disclose downsides to the advice, conflicts of interest the creator has and more.