02.04.25 Ask An Advisor With Wes Moss - DeepSeek Shockwave: What It Means for the Economy and Your Investments
Feb 4, 2025
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Wes Moss, a fee-only fiduciary financial advisor and expert in investing and retirement, dives into the recent AI breakthrough, DeepSeek, and its potential to boost American productivity. He discusses how this technology impacts markets and investment strategies. Wes also shares five key tips for stock diversification to mitigate losses. The conversation touches on the motivations driving workforce engagement and strategies for effective retirement planning, including the importance of maintaining safe assets for stability.
The introduction of the DeepSeek AI technology is expected to significantly enhance productivity and positively influence the U.S. economy.
Diversification in investments is essential to mitigate risks and prevent significant losses during market fluctuations and sector-specific downturns.
Deep dives
The Army of American Productivity
The underlying force driving U.S. productivity is integral to innovation, economic growth, and rising standards of living. Despite a Gallup poll revealing that only about 31% of Americans love their jobs, the workforce remains highly productive, propelled by three primary drivers: fear, optimism, and purpose. Fear of financial instability compels many to maintain a good work ethic, while optimism fuels a belief that circumstances can improve over time. Purpose, which ties daily activities to larger goals, offers fulfillment for a segment of workers, collectively contributing to a resilient and productive labor force.
The Importance of Diversification
Diversification is crucial for investors to mitigate risks associated with market fluctuations and single-security investments. Despite widespread knowledge about its importance, many individuals tend to concentrate their assets in trending sectors, such as technology, risking significant losses. Recent events highlighted the dangers of such concentration, as seen with a major tech company that dramatically impacted the market by offering services at a fraction of the cost of established firms. A well-rounded investment approach encompasses diversification across various sectors, company sizes, geographical regions, and investment strategies to safeguard against volatility.
Roth Conversions as a Strategic Move
Roth conversions can be advantageous, especially for those with long timelines before required minimum distributions take effect. Understanding tax implications is vital when considering conversions; strategizing to fill lower tax brackets without exceeding them can optimize tax benefits. The idea of treating tax brackets like locks can help individuals maximize their conversion strategies while avoiding unnecessary tax burdens. By distributing conversions over time, individuals can minimize tax impacts and potentially increase their wealth accumulation in tax-advantaged Roth accounts.
Understanding Investment Protection
Concerns regarding the safety of investments held in brokerage accounts are common, particularly in light of historical financial crises. While there is no equivalent to FDIC insurance for investment accounts, the Securities Investor Protection Corporation (SIPC) offers some level of protection against brokerage firm failures, covering up to $500,000 per account. This insurance applies only in cases of firm insolvency, not for declines in investment value due to market conditions. Familiarity with reputable brokerage firms and understanding SIPC protections can provide peace of mind for investors regarding their hard-earned assets.
Just recently, big news from China jolted the market and the media in the U.S. as a new AI technology entered the field: DeepSeek. In the first part of this episode, fee-only fiduciary financial advisor Wes Moss explains how this development will only increase productivity in America and improve our economy. Also, Wes continues to discuss the DeepSeek news and how it is impacting markets and our investments. He shares five keys to stock diversification to help you limit losses and bad returns.
Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the February 4, 2025, Ask an Advisor episode of the Clark Howard podcast. Submit your questions at clark.com/ask.
We hope you enjoy our weekly Ask An Advisor episodes, in which Christa and Wes discuss investing and retirement savings in depth. Let us know what you think in the comments!