00:04.285 --> 00:13.032 [SPEAKER_05]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

00:13.673 --> 00:16.035 [SPEAKER_05]: Independent Thinking, shared success.

00:18.057 --> 00:26.764 [SPEAKER_05]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

00:27.445 --> 00:32.149 [SPEAKER_05]: Here is KPP Financial Portfolio Manager, Luke Guerrero.

00:34.481 --> 00:38.482 [SPEAKER_01]: Good afternoon fellow investors and welcome back to Invest Talk.

00:39.642 --> 00:45.163 [SPEAKER_01]: I'm Lou Guerrero and today is Wednesday, July, twenty-third, twenty-twenty-five.

00:45.183 --> 00:51.584 [SPEAKER_01]: We're about halfway through, exactly halfway through this week and nearly at the end of July.

00:52.685 --> 00:58.346 [SPEAKER_01]: And so I hope as summer is fully into swing that you are able to do

00:59.400 --> 01:22.202 [SPEAKER_01]: What we all need to do on a daily basis, which is monitor our investments, figure out our portfolio, see how good of a job we're doing, of trying to reach our financial goals, but at the same time, understanding that there is a life beyond investing, spending your summer with your family, with your friends, relaxing, recovering, but always keeping an eye on what is going on.

01:23.842 --> 01:30.511 [SPEAKER_01]: And so during these times when maybe you're a little distracted and hopefully you're distracted by the things that we all would rather be doing.

01:31.052 --> 01:40.145 [SPEAKER_01]: Hopefully we hear it in Vestock can be a daily part of you staying focused.

01:42.364 --> 01:49.109 [SPEAKER_01]: Now in order to do that, our goal is to bring you items that you find educational items that you believe to be actionable.

01:49.149 --> 01:56.875 [SPEAKER_01]: Things that can help you along your journey, but the most important part is what you bring to us to Justin and to myself.

01:57.575 --> 01:59.577 [SPEAKER_01]: That is those finance and investment.

01:59.897 --> 02:03.580 [SPEAKER_01]: Questions that is the most important part of this program.

02:03.620 --> 02:11.686 [SPEAKER_01]: And so because that's the case, before we tackle those stories, we have for you today, we have a big focus on housing.

02:12.955 --> 02:19.738 [SPEAKER_01]: Before we run down the market performance with fresh record closes, let's tackle this color question now.

02:32.397 --> 02:35.780 [SPEAKER_01]: Brady Corporation is a manufacturing company.

02:35.820 --> 02:45.728 [SPEAKER_01]: They sell to telecom companies, medical and aerospace companies, and what they do is they create printing systems software and a spill control devices.

02:46.449 --> 02:49.771 [SPEAKER_01]: You're today, it's down about four point eight, six percent.

02:50.732 --> 02:56.118 [SPEAKER_01]: And down as well over the past few weeks, down just about one percentage point.

02:56.839 --> 03:05.388 [SPEAKER_01]: One of the reasons why will growth looks pretty slow about two point nine percent on an annualized basis going back five years.

03:06.989 --> 03:09.252 [SPEAKER_01]: And in the most recent earnings, Q two earnings.

03:10.435 --> 03:13.538 [SPEAKER_01]: They missed, they missed on bottom line, they missed on top line as well.

03:13.598 --> 03:17.621 [SPEAKER_01]: They have been seeing some pressures from the integration costs within their business.

03:17.641 --> 03:22.865 [SPEAKER_01]: They've closed some facilities in China and Australia.

03:23.226 --> 03:26.889 [SPEAKER_01]: They have been subject to some currency headwinds as well.

03:26.929 --> 03:29.911 [SPEAKER_01]: And so the company has been struggling just a bit.

03:30.451 --> 03:33.294 [SPEAKER_01]: In twenty twenty four, they had some pretty solid performance.

03:33.334 --> 03:38.878 [SPEAKER_01]: Up twenty five point eight percent outperforming the S&P five hundred outperforming their industry by nearly thirty percent.

03:39.885 --> 03:43.009 [SPEAKER_01]: But it's been a rough year this year.

03:43.649 --> 03:45.091 [SPEAKER_01]: Still, their margins are pretty solid.

03:45.111 --> 03:47.994 [SPEAKER_01]: About fourteen point seven percent margin is what they saw last year.

03:48.555 --> 03:52.119 [SPEAKER_01]: Downward to about thirteen percent is where it's projected to go this year.

03:52.159 --> 03:59.207 [SPEAKER_01]: And with the downtrend, forward looking price earnings now sits at about fourteen times.

04:00.483 --> 04:07.671 [SPEAKER_01]: Now in terms of debt, we have about a hundred and sixteen million dollars of debt on a three point three billion dollar market cap company.

04:07.711 --> 04:08.972 [SPEAKER_01]: So nothing too crazy.

04:09.012 --> 04:14.298 [SPEAKER_01]: The air quick ratio current ratio all looking pretty solid in my opinion.

04:15.907 --> 04:20.688 [SPEAKER_01]: But I can't get past the fact that they really have been struggling from the diversity of their business.

04:21.448 --> 04:29.530 [SPEAKER_01]: And given the fact that their business geographically is split all over the place, thirty percent in Europe, only fifty eight percent in the United States, twelve percent elsewhere.

04:30.330 --> 04:33.171 [SPEAKER_01]: And relative strength has been pretty weak since well twenty twenty.

04:34.011 --> 04:34.631 [SPEAKER_01]: Gross margins.

04:35.612 --> 04:40.813 [SPEAKER_01]: Following as well, you see some restructuring costs that they have been dealing with.

04:42.147 --> 04:45.849 [SPEAKER_01]: You don't really see an estimate here, but from their Q-two report, didn't look too great.

04:46.589 --> 04:47.650 [SPEAKER_01]: And so overall, right?

04:48.950 --> 04:51.672 [SPEAKER_01]: You're seeing a situation where you might want to be cautious.

04:51.712 --> 04:56.534 [SPEAKER_01]: You're looking at this name saying, okay, we're below our five-year average right now on forward looking price earnings.

04:56.574 --> 05:01.036 [SPEAKER_01]: But there is a reason why the company is struggling at the moment.

05:01.076 --> 05:08.500 [SPEAKER_01]: And so until you see some sort of technical correction such that momentum turns,

05:10.310 --> 05:11.771 [SPEAKER_01]: I wouldn't enter into a position here.

05:11.791 --> 05:14.912 [SPEAKER_01]: It's underperforming its industry by seven point five percent.

05:15.753 --> 05:20.075 [SPEAKER_01]: Hopefully it turns it around, but for now, if you're watching this name, I would keep it right on that list.

05:20.655 --> 05:23.557 [SPEAKER_01]: That is a Brady Corporation, ticker BRC.

05:26.478 --> 05:31.741 [SPEAKER_01]: Got a lot of ground to cover in the next forty-five minutes or so, and my main focus point concerns this headline.

05:32.421 --> 05:32.661 [SPEAKER_01]: U.S.

05:32.741 --> 05:36.183 [SPEAKER_01]: housing market flashes warning signs for the economy.

05:37.200 --> 05:43.607 [SPEAKER_01]: High mortgage rates into climbing home sales are raising concerns about a potential housing market drag on the broader U.S.

05:43.647 --> 05:50.514 [SPEAKER_01]: economy and keeping in line that housing theme will also touch on home prices hitting a record high in June.

05:50.534 --> 05:53.477 [SPEAKER_01]: It's new housing data that we will dive into.

05:55.030 --> 06:03.834 [SPEAKER_01]: There's also been a trend, not just in the US, but externally as well, to try and move trading towards twenty four hours a day, seven days a week.

06:04.014 --> 06:04.895 [SPEAKER_01]: Is that a good idea?

06:05.275 --> 06:07.776 [SPEAKER_01]: Spoiler alert, not really, we'll dive into why.

06:08.196 --> 06:09.457 [SPEAKER_01]: Should we have time at the end of the show?

06:09.857 --> 06:20.482 [SPEAKER_01]: We'll touch on how big boys on Wall Street, BNY and Goldman Sachs are teaming up to try and take those money market funds and bring them to the crypto space.

06:21.929 --> 06:29.072 [SPEAKER_01]: We also have some voice bank questions ready to play, including one on earnings, and one on Kingston Company Inc.

06:29.572 --> 06:31.353 [SPEAKER_01]: that is KINS, the ticker there.

06:31.373 --> 06:40.397 [SPEAKER_01]: There's also some questions that came in from the comment section of the Invest Talk YouTube channel, and hopefully some live calls from one of our many listeners.

06:42.558 --> 06:47.520 [SPEAKER_01]: Head it into our first break, a short break, and I would love to hear directly from you.

06:48.321 --> 06:50.802 [SPEAKER_01]: So give me a call at eight, eight, and ninety nine chart.

06:55.708 --> 06:57.789 [SPEAKER_09]: Okay, gotta get serious with my finances.

06:58.190 --> 07:03.873 [SPEAKER_09]: I've been working a long time and I know there's still gotta be more that I can do to build my wealth quicker.

07:03.893 --> 07:05.915 [SPEAKER_09]: I don't wanna have to work forever.

07:06.395 --> 07:12.659 [SPEAKER_04]: If you are not maximizing your employer's sponsor retirement plan, KPP Financial can help.

07:13.319 --> 07:21.685 [SPEAKER_04]: With our professional oversight, you can potentially enhance your investment performance by an average of three percent annually.

07:22.565 --> 07:30.775 [SPEAKER_04]: At KPP Financial, we provide a comprehensive four-of-one K-management program designed to optimize your retirement savings.

07:31.376 --> 07:38.084 [SPEAKER_04]: Our approach includes creating custom investment allocations tailored to your goals and risk tolerance.

07:38.584 --> 07:41.348 [SPEAKER_04]: That can make a big difference in your favor.

07:41.848 --> 07:44.532 [SPEAKER_09]: And maybe it's time to tune up my retirement plan.

07:44.893 --> 07:54.788 [SPEAKER_04]: For more information on how you can take control of your retirement savings, visit our website KPPFinancial.com KPPFinancial sounds good.

08:00.333 --> 08:01.834 [SPEAKER_08]: The numbers are in.

08:02.474 --> 08:07.516 [SPEAKER_08]: Invest talk downloads have now surpassed sixty-one million.

08:08.097 --> 08:09.638 [SPEAKER_08]: And there's a simple reason.

08:10.158 --> 08:18.382 [SPEAKER_08]: Justin Klein and Luke Guerrero provide unbiased answers to your finance and investment questions.

08:19.062 --> 08:22.944 [SPEAKER_08]: Invest talk, eight, eight, ninety-nine chart.

08:26.146 --> 08:50.357 [SPEAKER_01]: Let's talk about the market today's stocks up quite a bit down up one point one four percent S&P five hundred up seventy eight basis points NASDAQ up sixty one and the Russell two thousand up one point five three percent overall trading finish the day ending near best levels as I mentioned at the top of the show S&P five hundred and NASDAQ setting fresh record closing highs

08:51.197 --> 08:58.224 [SPEAKER_01]: Performers included med tech names, credit card companies, oil services, AI power and nuclear names.

08:58.985 --> 09:09.335 [SPEAKER_01]: Relative underperformers included semis software, some insurers, rails, dollar stores, and looks like hotel names generally were a bit lower.

09:10.273 --> 09:18.576 [SPEAKER_01]: Treasuries were weaker with a bit of curve flattening yields up on that shorter end, about five to six basis points.

09:19.356 --> 09:38.723 [SPEAKER_01]: On the day, one of the dollar, it looks like dollar index was down at twenty basis points gold, finished down as well, down about one point, three percent copper, headed in the opposite direction up one point, seven percent, crude oil, pretty flat, so though settling a little bit down at about ten basis points.

09:39.595 --> 09:50.022 [SPEAKER_01]: Not a lot going on in terms of directional drivers, really, market responded a bit positively to a barrage of trade headlines overnight.

09:51.082 --> 09:52.503 [SPEAKER_01]: Maybe not even overnight, probably.

09:52.523 --> 09:59.728 [SPEAKER_01]: About this time yesterday, it was announced the US in Japan reaching an agreement that features a fifteen percent tariff

10:00.728 --> 10:02.129 [SPEAKER_01]: on Japanese goods.

10:02.889 --> 10:10.233 [SPEAKER_01]: Certainly, tariffs generally are not good, but when the letter threatened a twenty-five percent tariff, fifteen sounds pretty good.

10:10.874 --> 10:16.077 [SPEAKER_01]: Media reports, the US and EU nearing a deal as well involving a fifteen percent tariff.

10:17.057 --> 10:33.810 [SPEAKER_01]: though obviously until things are written down be a little bit skeptical there pretty quiet elsewhere earnings as I mentioned last week right we're getting into the thick of things with earnings season here and overall still a bit of a mixed bag

10:34.797 --> 10:43.881 [SPEAKER_01]: On the macro front, June, June existing home sales printed at three point nine, three million slightly below that consensus of four million.

10:44.541 --> 10:51.905 [SPEAKER_01]: They released noting a bit of an under supply, boosting prices, but high mortgage rates causing sales to remain stuck at cyclical lows.

10:52.565 --> 10:59.448 [SPEAKER_01]: Obviously, if supplies are low and rates are high, demand tends to not follow either.

11:01.264 --> 11:14.152 [SPEAKER_01]: Looking ahead to tomorrow, flash USPMI's for July and June, or for July rather as well as June and New Home Sales, durable good orders for June caps off the week this Friday.

11:14.172 --> 11:17.954 [SPEAKER_01]: You may be thinking, why is the Fed not talking where are they?

11:18.975 --> 11:23.678 [SPEAKER_01]: Now, if let's speak this week with the blackout period into the July FOMC meeting.

11:24.438 --> 11:30.661 [SPEAKER_01]: From that meeting, no real policy changes expected, though there may be some dissents from Waller and Bowman.

11:30.882 --> 11:39.886 [SPEAKER_01]: Both of whom have kind of been jocking for a position as front runner to be the next Fed chair, certainly trying to get in the good graces of the president.

11:39.906 --> 11:40.447 [SPEAKER_01]: Might see some

11:41.047 --> 11:46.992 [SPEAKER_01]: division in the near term between the board with those two saying that we should cut rates immediately.

11:47.373 --> 11:52.277 [SPEAKER_01]: The market though currently pricing in about forty five basis points of cuts for the rest of the year.

11:52.297 --> 11:59.022 [SPEAKER_01]: It's like we got our first live call Jane from the Bay Area on listening on am twelve twenty has a question about taxes and ETFs.

11:59.063 --> 11:59.723 [SPEAKER_01]: How can I help you out?

12:01.905 --> 12:02.325 [SPEAKER_02]: Hi.

12:03.226 --> 12:03.586 [SPEAKER_02]: Hello.

12:04.227 --> 12:04.407 [SPEAKER_01]: Hi.

12:06.629 --> 12:06.909 [SPEAKER_02]: Hey.

12:07.330 --> 12:08.891 [SPEAKER_02]: Thank you for taking my call.

12:09.812 --> 12:15.537 [SPEAKER_02]: I'm looking for a tax exam fund ETF or anything.

12:16.918 --> 12:25.104 [SPEAKER_02]: I previously owned, let me see, VCADX and not anymore.

12:25.124 --> 12:33.731 [SPEAKER_02]: And I think this one was midterm and I'm interested in show term, it possible.

12:36.917 --> 12:52.005 [SPEAKER_02]: I understand VSTP is a kind of short duration point, but I'm not sure which one would be better fit for me.

12:53.894 --> 13:01.137 [SPEAKER_01]: Yeah, so what you are looking for is getting some tax exemption, meaning that I hope you are in a high tax bracket.

13:01.818 --> 13:13.663 [SPEAKER_01]: I often find that clients and prospects and people are coming for portfolio reviews or callers, light the idea of tax exemption from these municipal bond funds.

13:14.423 --> 13:19.208 [SPEAKER_01]: But they're not taking the consideration we should be looking at, which is after tax return.

13:19.688 --> 13:22.030 [SPEAKER_01]: You don't get the tax benefit for nothing, right?

13:22.491 --> 13:28.977 [SPEAKER_01]: If you are a municipal bond and you get that tax, you give that tax benefit to investor, you therefore offer lower yields.

13:29.577 --> 13:39.350 [SPEAKER_01]: And so if you aren't in a high tax bracket, it doesn't really make sense for you to seek these municipal bond funds because what you should be looking at is after you pay taxes.

13:39.850 --> 13:43.836 [SPEAKER_01]: What is my return on a traditional bond fund versus after I pay taxes?

13:44.256 --> 13:46.900 [SPEAKER_01]: What is my return on the municipal bond fund?

13:47.400 --> 13:54.246 [SPEAKER_01]: And so if you are the type of person who is in the high tax bracket, you're going to want to be more on the short term, uni bond fund.

13:54.266 --> 13:58.509 [SPEAKER_01]: So maybe two, two year maximum duration here.

13:58.950 --> 14:01.312 [SPEAKER_01]: I shares has some short term municipal bond fund.

14:01.332 --> 14:02.413 [SPEAKER_01]: They're going to be pretty large.

14:03.053 --> 14:03.754 [SPEAKER_01]: Spider has

14:04.414 --> 14:08.477 [SPEAKER_01]: Bloomberg, aggregate, short-term municipal bond fund, as well.

14:09.078 --> 14:10.058 [SPEAKER_01]: Vanette has them.

14:10.299 --> 14:22.087 [SPEAKER_01]: They're all sorts of them, but essentially what you're going to want to look for is probably an ETF that has a duration less than two years if you're looking for the shorter end and make sure that it invests in municipal bonds.

14:22.408 --> 14:29.433 [SPEAKER_01]: But again, that's only if you are in the highest of rather higher tax brackets, you really get that overall benefit.

14:30.353 --> 14:30.814 [SPEAKER_01]: Thanks for the call.

14:32.775 --> 14:38.957 [SPEAKER_01]: Well, we had one call already and we're only about a third of the way through this show.

14:39.637 --> 14:40.537 [SPEAKER_01]: But hopefully it's a trend.

14:40.957 --> 14:43.198 [SPEAKER_01]: I love talking to you guys live.

14:43.238 --> 14:51.740 [SPEAKER_01]: It's not that I don't love your voicemails and I don't love the questions on the comment section and I don't love the hubspot questions or however you decide to submit them to me.

14:52.300 --> 14:54.921 [SPEAKER_01]: It's just that honestly, I get it alone here.

14:54.941 --> 14:58.362 [SPEAKER_01]: I just got Tom, my producer, and Jorge, my editor, and my year.

14:58.402 --> 14:59.782 [SPEAKER_01]: So I'd rather talk to somebody new.

15:01.612 --> 15:04.234 [SPEAKER_01]: That being said, we are moving into a brick.

15:04.854 --> 15:07.636 [SPEAKER_01]: Still to come, my main focus point, which is on housing.

15:08.136 --> 15:10.457 [SPEAKER_01]: My talking point, which is on housing.

15:11.938 --> 15:17.461 [SPEAKER_01]: Another talking point on trading and another on how everybody just wants to turn everything into crypto.

15:18.282 --> 15:24.606 [SPEAKER_01]: Though there's some great story, so I can't wait to get to those, but more importantly, I would love to answer more of your questions.

15:25.246 --> 15:26.187 [SPEAKER_01]: We got voice mails.

15:27.099 --> 15:28.300 [SPEAKER_01]: We got YouTube questions.

15:28.440 --> 15:30.281 [SPEAKER_01]: What we don't have lined up is live calls.

15:30.361 --> 15:34.064 [SPEAKER_01]: So if you want us to, that decision is entirely yours.

15:34.764 --> 15:37.766 [SPEAKER_01]: I encourage you to call now at eight, eight, nine chart.

15:50.953 --> 15:53.735 [SPEAKER_08]: Have you heard about the new Invest Talk Store?

15:54.275 --> 15:57.977 [SPEAKER_08]: That's right, you'll find great merch for the savvy investor.

15:58.457 --> 16:02.959 [SPEAKER_08]: It's all there for you now at InvestTalkStore.com.

16:03.660 --> 16:08.903 [SPEAKER_08]: Luke Guerrero is here now, taking your finance and investment questions live.

16:09.483 --> 16:12.705 [SPEAKER_08]: Call Invest Talk, eight, eight, eight, ninety-nine.

16:15.202 --> 16:16.383 [SPEAKER_01]: eight, eight, nine, nine.

16:16.683 --> 16:23.487 [SPEAKER_01]: Chart is the number if you want to follow in James footsteps and give me a call of his beautiful Wednesday.

16:23.967 --> 16:30.690 [SPEAKER_01]: But until you do, let's dive right into my main focus point, which is going to focus on housing.

16:30.831 --> 16:39.415 [SPEAKER_01]: Something that I think is applicable to a lot of people, whether or not you own a house or trying to sell a house, or you're trying to buy a home.

16:39.435 --> 16:42.037 [SPEAKER_01]: And that's because for a while,

16:43.195 --> 17:00.050 [SPEAKER_01]: Home sales have been dragging, be it because supply is a little bit low, or because mortgage rates have been rather high, and now some people are issuing a warning that housing will soon become a major drag on the economy.

17:01.163 --> 17:05.486 [SPEAKER_01]: Now the main culprit is likely going to be interest rates.

17:06.286 --> 17:17.694 [SPEAKER_01]: High mortgage rates roughly around seven percent or dampening home sales, but also construction and pricing even if you have supply increases if you're a business that builds homes.

17:18.754 --> 17:24.058 [SPEAKER_01]: But people are willing to give up their two, three, four percent mortgages for a new seven percent one.

17:24.298 --> 17:28.661 [SPEAKER_01]: You're not really incentivized to bring in new supply.

17:30.253 --> 17:42.101 [SPEAKER_01]: Just as an example, if you're looking to buy a four hundred and twenty five thousand dollar home with a ten percent down payment, your monthly cost is about twenty nine hundred dollars a month.

17:42.181 --> 17:45.803 [SPEAKER_01]: That's the power of what happens when interest rates are higher.

17:45.863 --> 17:49.946 [SPEAKER_01]: It can send those monthly payments to unaffordable levels.

17:50.006 --> 17:55.909 [SPEAKER_01]: And so it's understandable that those people who have lower rates who don't need to move

17:56.890 --> 17:58.091 [SPEAKER_01]: aren't moving.

17:58.611 --> 18:02.513 [SPEAKER_01]: And so while at the same time, people aren't building as many homes.

18:02.913 --> 18:13.338 [SPEAKER_01]: If people aren't selling as many homes, I think anybody can realize that that means the availability, the housing supply is therefore limited.

18:14.685 --> 18:19.070 [SPEAKER_01]: And you see that, again, from the building side as well, you're seeing delayed land purchases.

18:19.090 --> 18:30.064 [SPEAKER_01]: You're seeing abandoning costly incentives like rate by-downs that some of these buyers have tried to do to incentivize housing purchases.

18:31.005 --> 18:46.971 [SPEAKER_01]: Goldman Sachs slash its forecast, now predicting that fifty faces point home price growth in twenty twenty five and a one point two percent in twenty twenty six, certainly far different from what we've seen in the first half of the twenty twenty.

18:48.872 --> 18:50.853 [SPEAKER_01]: Before they change that, right, just a month ago.

18:51.887 --> 18:57.530 [SPEAKER_01]: Rather than the fifty basis point growth that they're now projecting in twenty twenty to five, then it was three point two percent.

18:57.550 --> 19:00.751 [SPEAKER_01]: That's a significant downward revision.

19:03.612 --> 19:05.693 [SPEAKER_01]: And it's not all about housing increases, right?

19:05.713 --> 19:15.578 [SPEAKER_01]: You're also seeing some areas like Sunbelt cities or Miami or Lando Nashville Dallas, expected to see maybe five percent price decreases through twenty twenty six.

19:18.600 --> 19:23.405 [SPEAKER_01]: The thing about housing, the thing about real estate that you have to understand, right, is you do have national trends, right?

19:23.765 --> 19:26.328 [SPEAKER_01]: Mortgage rates are national trends, okay?

19:26.949 --> 19:29.992 [SPEAKER_01]: But you also have local trends, and so you have markets that overbuilt housing.

19:30.920 --> 19:33.721 [SPEAKER_01]: putting a lot of downward pressure on prices.

19:34.661 --> 19:36.861 [SPEAKER_01]: And you may think you're celebrating down repression on prices.

19:36.901 --> 19:37.841 [SPEAKER_01]: This can be good for me.

19:38.161 --> 19:41.482 [SPEAKER_01]: But from a overall economic perspective, not really great.

19:41.942 --> 19:44.543 [SPEAKER_01]: Think of the analogous area of oil, right?

19:44.583 --> 19:45.583 [SPEAKER_01]: We talked about it before.

19:45.843 --> 19:51.484 [SPEAKER_01]: When oil prices were falling significantly, what did that mean for oil wells?

19:51.724 --> 19:58.085 [SPEAKER_01]: The construction of new oil wells, digging those oil wells, utilizing those oil, rather drilling those oil wells, opening those wells.

19:58.105 --> 20:00.186 [SPEAKER_01]: Well, those oil companies, the prices too low,

20:01.557 --> 20:02.397 [SPEAKER_01]: didn't do those things.

20:02.657 --> 20:03.997 [SPEAKER_01]: That hurts supply down the road.

20:04.397 --> 20:05.898 [SPEAKER_01]: It is a self-reinforcing issue.

20:06.018 --> 20:06.838 [SPEAKER_01]: Same thing with housing.

20:07.578 --> 20:11.959 [SPEAKER_01]: If prices are lower, yet input and building costs remain where they are.

20:12.519 --> 20:14.839 [SPEAKER_01]: Well, if I'm a home builder, I'm not going to fix this problem.

20:14.879 --> 20:16.860 [SPEAKER_01]: And that impacts year over year over year.

20:17.300 --> 20:20.500 [SPEAKER_01]: Over year, it compounds year over year over year.

20:21.400 --> 20:30.282 [SPEAKER_01]: And so in less mortgage rates fall material, which given the level of deficits, we are likely to see over the next decade,

20:31.696 --> 20:37.704 [SPEAKER_01]: making it rather unlikely that we see significant downward pressure regardless of if the Fed starts to cut rates.

20:39.066 --> 20:46.295 [SPEAKER_01]: Goldman and many others expect a broader housing lead economic slowdown that could impact us four years to come.

20:49.037 --> 20:55.762 [SPEAKER_01]: Seems like every day now, we receive fresh questions from the comment section of the Invest talk YouTube channel.

20:56.523 --> 21:03.208 [SPEAKER_01]: And when you leave those over there, we love that you're watching our videos, just as much as we love that you are listening to the podcast for the radio show.

21:03.768 --> 21:07.251 [SPEAKER_01]: And so we try and tackle those questions as quickly as we can.

21:07.891 --> 21:10.153 [SPEAKER_01]: Let's get to one right now before this next break.

21:10.213 --> 21:15.017 [SPEAKER_01]: And it is on a thin evolution group, an ADR out of China.

21:16.111 --> 21:30.442 [SPEAKER_01]: Now, a thin evolution group is a Chinese FinTech company, they specialize in online consumer lending, including platforms like ppda.com, servicing markets in China, and in Southeast Asia.

21:31.283 --> 21:39.429 [SPEAKER_01]: It's about forty four point seven seven percent year to date, pretty significant, eighty one percent of its revenue is coming from China.

21:40.070 --> 21:43.292 [SPEAKER_01]: It's about twenty eight point eight three percent over the past three months.

21:44.369 --> 22:00.698 [SPEAKER_01]: sales growth, fifteen point two percent on an utilized basis going back to twenty nineteen net income though negative and so out expect margins have been falling now they've been rising just slightly but overall right

22:01.974 --> 22:21.525 [SPEAKER_01]: Excuse me, what the reason why net income growth is negative is because while they had three hundred and forty three million dollars in net income in twenty nineteen, this will be three thirty one this year headed into next year though growth continues to four eleven and so the reason why you're seeing this company's revenue grow in this company do very well is because of the expansion that you're seeing out of Asia that being said

22:22.045 --> 22:28.528 [SPEAKER_01]: Given heightened trade tensions and a lot of people wanting to deal list Chinese ADRs, a lot of risk with investing in those names right now.

22:28.608 --> 22:33.931 [SPEAKER_01]: So I would have to pass on FINV, that is Finvolution Group, an ADR.

22:35.432 --> 22:40.294 [SPEAKER_01]: Headed into New Break, on the other side, we're going to answer more of your questions and get to more stories.

22:41.094 --> 22:41.635 [SPEAKER_01]: Give me a call.

22:41.995 --> 22:44.396 [SPEAKER_01]: You know the number, eight, eight, ninety nine chart.

22:53.817 --> 22:55.497 [SPEAKER_08]: Your questions are free.

22:55.898 --> 22:57.838 [SPEAKER_08]: The answers are unbiased.

22:58.318 --> 22:59.859 [SPEAKER_08]: Look, Guerrero is here now.

23:00.119 --> 23:02.619 [SPEAKER_08]: Ready to take your calls live.

23:03.139 --> 23:06.960 [SPEAKER_08]: Investor, eight, eight, nine, chart.

23:09.561 --> 23:12.022 [SPEAKER_01]: On the next invest talk, we will look into this topic.

23:12.562 --> 23:15.723 [SPEAKER_01]: How investors compare companies to find true value.

23:17.574 --> 23:28.422 [SPEAKER_01]: A relative valuation model is a financial tool that helps investors assess a company's worth by providing a clear picture of whether a stock may be fairly priced within its industry.

23:29.362 --> 23:36.107 [SPEAKER_01]: That's tomorrow, but for now, I'm Luke Guerrero and I love answering your questions, so let's play another question now.

23:37.270 --> 23:37.930 [SPEAKER_07]: Hi, I'm Bestock.

23:38.230 --> 23:46.493 [SPEAKER_07]: Also, when you guys could take a look at Kinstone, K-I-N-S, and insurance company, smaller insurance company, really trying to get into the space.

23:46.873 --> 23:50.714 [SPEAKER_07]: I wanted to avoid one of the bigger names, just because I feel like this might have some more upside.

23:50.734 --> 23:54.935 [SPEAKER_07]: And what I can see, it looks like a strong balance sheet and a growing company.

23:55.356 --> 24:03.058 [SPEAKER_07]: And I feel like some of these smaller insurance companies might have an edge for maybe some of the other people who are trying to get out of the bigger ones where, you know, premiums keep going up and

24:03.646 --> 24:06.037 [SPEAKER_07]: Maybe switch over to something a little bit smaller, better price.

24:06.338 --> 24:07.302 [SPEAKER_07]: I'll let me know what you guys think.

24:07.382 --> 24:08.045 [SPEAKER_07]: I'll listen on the show.

24:08.327 --> 24:08.527 [UNKNOWN]: Thanks.

24:10.328 --> 24:15.610 [SPEAKER_01]: All right, let's take a look at Kin's, Kin, Kin Stone companies incorporated.

24:15.630 --> 24:21.153 [SPEAKER_01]: Over the past fifty two weeks up, a hundred and fifty one point five percent.

24:21.213 --> 24:27.115 [SPEAKER_01]: But that's after having a very rough, twenty nineteen twenty twenty twenty twenty twenty twenty twenty twenty two.

24:27.755 --> 24:32.837 [SPEAKER_01]: Where the company was down fifty six fourteen twenty four and seventy three percent respectively.

24:32.917 --> 24:38.400 [SPEAKER_01]: So what you're seeing here in terms of pricing is something we call volatility.

24:39.151 --> 24:47.854 [SPEAKER_01]: Something that is going to be more likely to come from an insurance company that has a market cap of two hundred and thirty two million dollars, rather than the big boys.

24:47.914 --> 24:50.155 [SPEAKER_01]: And yes, the balance sheet looks okay.

24:50.975 --> 24:53.956 [SPEAKER_01]: Only about eleven million dollars in debt.

24:55.317 --> 24:58.258 [SPEAKER_01]: On that two hundred roughly million dollar market cap.

25:00.158 --> 25:03.919 [SPEAKER_01]: Looking at their cash, they've about two hundred and thirty seven million dollars in cash.

25:03.939 --> 25:05.380 [SPEAKER_01]: So their net debt is negative.

25:05.420 --> 25:08.241 [SPEAKER_01]: Meaning they have more cash than debt they have on their balance sheet.

25:10.060 --> 25:12.100 [SPEAKER_01]: But at the same time, what is an insurance company?

25:12.160 --> 25:14.041 [SPEAKER_01]: It is a pooled risk company.

25:14.761 --> 25:33.846 [SPEAKER_01]: And so if you are trying to quote, get away from the big boys because of how you are pricing, they're pricing power, or your premiums are going, if I go to an insurance company, my goal is to pay premiums such that if something happens to me, I know that I can get a payout from the insurance company.

25:35.486 --> 25:36.806 [SPEAKER_01]: What's some of these smaller companies?

25:36.846 --> 25:39.547 [SPEAKER_01]: There's a little bit of a thing called counterparty risk.

25:41.855 --> 25:45.377 [SPEAKER_01]: And that also leads to some of this volatility that we are seeing.

25:46.497 --> 25:52.481 [SPEAKER_01]: Now that two hundred percent or you guys one hundred and fifty percent return is pretty stunningly dramatic.

25:53.241 --> 26:05.067 [SPEAKER_01]: And a lot of that is because you did see that a strong post pandemic turn around starting in twenty twenty three continuing in twenty twenty four and still happening right now.

26:05.608 --> 26:06.448 [SPEAKER_01]: Growth looks great.

26:06.528 --> 26:09.590 [SPEAKER_01]: Trailing twelve months twenty three percent premium growth.

26:10.633 --> 26:12.434 [SPEAKER_01]: Forty-five percent EBITIX mansion.

26:14.516 --> 26:24.622 [SPEAKER_01]: But when looking at insurance, I think of insurance as more stable companies pay good dividends.

26:25.883 --> 26:31.546 [SPEAKER_01]: Not names that may return anywhere from six hundred and thirteen percent to negative seventy three percent in any given year.

26:31.586 --> 26:36.009 [SPEAKER_01]: Now, if you are okay with that risk profile, that's one thing.

26:36.970 --> 26:38.671 [SPEAKER_01]: The momentum is certainly very strong.

26:40.155 --> 26:44.517 [SPEAKER_01]: but understand that momentum turns and volatility works both ways.

26:44.597 --> 27:02.047 [SPEAKER_01]: So for me, given that it is such a small company that had such a rough pandemic, in spite of them turning it around, I would give it a pass on Kingston companies incorporated to your KINS, a lot of pop side, but even more risk.

27:02.987 --> 27:03.488 [SPEAKER_01]: Thanks for the call.

27:04.748 --> 27:07.830 [SPEAKER_01]: Let's keep going and play two in a row from eight, eight, and ninety nine chart.

27:08.943 --> 27:13.867 [SPEAKER_03]: I am calling from Northern California and have a question about earnings.

27:14.508 --> 27:28.340 [SPEAKER_03]: Say if a company did good and earnings, could it be possible to stop could just stay flat or go on its own journey instead of going up or down?

27:28.360 --> 27:30.722 [SPEAKER_03]: I appreciate all you do.

27:31.002 --> 27:34.124 [SPEAKER_03]: I've been listening for many, many, many years.

27:34.845 --> 27:36.366 [SPEAKER_03]: I hope you guys have a wonderful day.

27:36.727 --> 27:37.007 [SPEAKER_03]: Thank you.

27:38.698 --> 27:48.193 [SPEAKER_01]: So this is a very good question because I think some people don't correctly interpret why earnings are important.

27:48.866 --> 27:58.454 [SPEAKER_01]: Yes, earnings are important because they tell you how a company has done, but markets are forward looking, meaning that they are far more interested on where companies are going.

27:58.534 --> 28:09.442 [SPEAKER_01]: And so because of that, if somebody had a great last quarter, but their guidance for the next quarter is revised downward because of company specific issues, because of prevailing market condition, cyclical issues, what have you?

28:10.303 --> 28:16.548 [SPEAKER_01]: Well, then just because the earnings are good, doesn't mean the company's stock will react positively.

28:17.710 --> 28:27.139 [SPEAKER_01]: The reality is, is that prices are, as I said forward, looking, meaning that investors and aggregate are trying to determine the future path of a company.

28:27.880 --> 28:30.262 [SPEAKER_01]: And so earnings can be positive, and returns can be negative.

28:30.362 --> 28:32.284 [SPEAKER_01]: Irons can be negative, and returns can be positive.

28:33.045 --> 28:40.352 [SPEAKER_01]: Don't think that the direction of earnings is going to exactly determine the direction of the stock price.

28:41.200 --> 28:41.720 [SPEAKER_01]: Thanks for the call.

28:42.181 --> 28:45.103 [SPEAKER_01]: Because it's an important topic, I want to talk about it even more.

28:45.303 --> 28:52.008 [SPEAKER_01]: We already talked a little bit about housing, but we did get some more housing data on housing prices and existing home sales today.

28:52.788 --> 29:02.896 [SPEAKER_01]: Home prices hit a record high in June with the median existing home price reaching four hundred and thirty five thousand dollars up to percent year over year.

29:03.656 --> 29:08.080 [SPEAKER_01]: At the same time, home sales for reasons that we know why fell.

29:08.540 --> 29:10.061 [SPEAKER_01]: Two point seven percent from May.

29:10.121 --> 29:17.167 [SPEAKER_01]: Three point nine three million an annual pace that makes it the lowest since September of twenty twenty three.

29:18.473 --> 29:26.878 [SPEAKER_01]: And the reason why this is even more important is because spring tends to be the time of year when housing or rather when selling is more robust, right?

29:26.898 --> 29:27.839 [SPEAKER_01]: It's selling season.

29:27.879 --> 29:40.427 [SPEAKER_01]: And so seeing this week, seeing this continuously sluggishness, continued sluggishness into summer and fall doesn't bode well unless a rate drop, which again is unlikely.

29:42.392 --> 29:45.154 [SPEAKER_01]: Affordability, as we already know, is incredibly low.

29:45.234 --> 29:47.836 [SPEAKER_01]: Inventory, therefore, is rising.

29:48.016 --> 29:49.818 [SPEAKER_01]: Sixteen percent year over here.

29:50.378 --> 29:59.104 [SPEAKER_01]: More sellers are entering the market due to life events, not rate relief, but buyers who are trapped by their low rates aren't really biting into this stock.

29:59.905 --> 30:05.309 [SPEAKER_01]: Zillow reports twenty-five percent plus of listings have had price cuts in June.

30:05.789 --> 30:09.092 [SPEAKER_01]: The most for any June, since at least twenty-eighteen.

30:10.488 --> 30:17.997 [SPEAKER_01]: Typical time on the market, increased to twenty seven days up from twenty two days, just a year earlier.

30:18.057 --> 30:26.766 [SPEAKER_01]: And so what you're starting to see, maybe, is in certain areas in Florida and Texas where a lot of the supplies concentrated, buyers are starting to gain leverage.

30:27.447 --> 30:36.253 [SPEAKER_01]: Some buyers are lucky enough, I remember when my sister sold her house when she moved from Florida out to California.

30:36.893 --> 30:40.196 [SPEAKER_01]: She was able to have the buyer take a rather from Arizona to California.

30:40.676 --> 30:43.518 [SPEAKER_01]: She was able to have the buyer take over her home loan.

30:44.158 --> 30:50.803 [SPEAKER_01]: And so that incentivization there makes it easier to sell if you are able to lock in that same lower rate.

30:52.504 --> 30:55.486 [SPEAKER_01]: The reality is housing is unlikely to rebound in twenty twenty five.

30:56.388 --> 31:03.654 [SPEAKER_01]: We went over it on our main focus point, the many reasons why, and now we're seeing it in the data, affordability, affordability, affordability.

31:04.174 --> 31:14.203 [SPEAKER_01]: It remains constrained and a rate cuts being uncertain means that we don't really see a path for affordability to improve going forward.

31:16.104 --> 31:20.388 [SPEAKER_01]: All righty, let's swing back to the invest document voice bank for this caller question.

31:21.782 --> 31:26.123 [SPEAKER_00]: Hello, this is Paolo from Gatorsburg, calling.

31:26.143 --> 31:29.505 [SPEAKER_00]: I have a question about Coutera Energy.

31:30.445 --> 31:45.690 [SPEAKER_00]: I have the stock in my portfolio and it's quite a big chunk and I believe generally in their business model, but I wanted to ask you guys what your opinion is on Coutera Energy right now.

31:46.236 --> 31:48.299 [SPEAKER_00]: I don't have very much gain on it.

31:48.459 --> 31:58.633 [SPEAKER_00]: I bought it for their dividend and I'd like to know if I should reduce it for now and maybe put my money somewhere else.

31:59.334 --> 31:59.615 [SPEAKER_00]: Thank you.

32:02.538 --> 32:04.200 [SPEAKER_01]: Okay, go to Cotera Energy.

32:04.440 --> 32:05.060 [SPEAKER_01]: Is it ticker?

32:05.341 --> 32:07.022 [SPEAKER_01]: C-T-R-A.

32:07.062 --> 32:10.725 [SPEAKER_01]: It's an eighteen billion dollar market cap company.

32:10.745 --> 32:15.309 [SPEAKER_01]: It has about three point eight billion dollars in debt, so not too much debt there.

32:15.730 --> 32:21.175 [SPEAKER_01]: And one of the reasons why you bought it was, well, it has a solid juicy dividend yield.

32:21.435 --> 32:28.501 [SPEAKER_01]: City about three point seven percent right now, which is about where it should be to show that the stock doesn't have any distress.

32:29.342 --> 32:38.572 [SPEAKER_01]: That's because the pair ratio is about fifty-five, so pretty solid, no real threat right now in terms of, excuse me, reducing that dividend.

32:39.714 --> 32:40.955 [SPEAKER_01]: With that moderate leverage, right?

32:40.995 --> 32:45.877 [SPEAKER_01]: Again, three point eight billion on seventeen point nine billion, you're seeing decent coverage here.

32:45.917 --> 32:57.324 [SPEAKER_01]: If we scroll down to this quick ratio, scroll down to the current ratio, about one point seven and one point eight respectively means we're in a pretty solid, financial position in terms of leverage and cash.

32:57.804 --> 32:59.465 [SPEAKER_01]: And margins are pretty solid as well, right?

32:59.505 --> 33:05.168 [SPEAKER_01]: Sitting at about twenty point five percent net margin, I'll be down from twenty twenty two when oil did very well.

33:06.295 --> 33:09.136 [SPEAKER_01]: but set to rebound again to twenty six point six.

33:09.176 --> 33:15.417 [SPEAKER_01]: This is a company that again, because most of it is coming, most of its revenue is coming from oil from the United States, right?

33:15.477 --> 33:20.258 [SPEAKER_01]: Oils makes up fifty four percent of its revenue, get natural gas makes up thirty one percent of its revenue.

33:20.278 --> 33:29.801 [SPEAKER_01]: It's no surprise if it's down eight point three percent year to date down ten point three seven percent over the past seventy two weeks because of predominantly where the price of oil has been.

33:30.521 --> 33:35.982 [SPEAKER_01]: And as such, it's trading near its five year low.

33:37.263 --> 33:43.231 [SPEAKER_01]: The reality is, right, you're not going to see a lot of rebound from any of these names until the price of oil rebounds.

33:43.272 --> 33:50.641 [SPEAKER_01]: And so for us, we think there are better themes out there with the energy space, natural gas, uranium,

33:51.919 --> 34:04.004 [SPEAKER_01]: being two of them, nuclear power, but it doesn't mean that you shouldn't buy stable energy companies, or stable oil companies, given that they are trading at some incredible lows that being said.

34:04.404 --> 34:06.445 [SPEAKER_01]: The relative strength of this name has been pretty weeks since,

34:07.745 --> 34:09.247 [SPEAKER_01]: I wouldn't be adding more to it.

34:09.347 --> 34:22.099 [SPEAKER_01]: I would be looking to diversify into a larger name that gives you more exposure beyond adjust the permeant base in which is predominantly where this company has its product projects.

34:23.480 --> 34:23.861 [SPEAKER_01]: Excuse me.

34:24.281 --> 34:25.622 [SPEAKER_01]: That is a Coteira Energy Inc.

34:25.722 --> 34:27.004 [SPEAKER_01]: Take your CTR in.

34:27.967 --> 34:33.228 [SPEAKER_01]: You do know that you don't just have to call me live, though I do prefer that.

34:33.428 --> 34:40.590 [SPEAKER_01]: You can actually call the anytime listener line, twenty-four-seven, and leave your stock or finance question on our investor's voice bank.

34:41.470 --> 34:43.911 [SPEAKER_01]: Well, people do call and you should as well.

34:44.771 --> 34:47.132 [SPEAKER_01]: So let's play one of those questions right now.

34:47.897 --> 34:49.938 [SPEAKER_06]: I have my name is Lou, Long time listener.

34:50.378 --> 34:54.740 [SPEAKER_06]: I was wondering what your thoughts are on Tim Code Dynamics Fund, PDI.

34:55.240 --> 35:02.983 [SPEAKER_06]: I've invested a little bit into that fund and I'm just wondering if I should continue investing or just hold it.

35:03.583 --> 35:03.763 [SPEAKER_06]: Thanks.

35:07.150 --> 35:13.661 [SPEAKER_01]: Alrighty, let's pull up the PIMCO dynamic income fund that is ticker PDI.

35:14.442 --> 35:21.373 [SPEAKER_01]: The PIMCO dynamic income fund is a high yielding closed end fund.

35:22.952 --> 35:28.839 [SPEAKER_01]: Sealed is probably about ten to the thirteen percent is where I would guess it is right about.

35:29.540 --> 35:36.028 [SPEAKER_01]: Now actually it's long-term distribution yield is, for the last twelve month distribution yield is about fifteen point six five percent.

35:36.609 --> 35:41.535 [SPEAKER_01]: Pinco is one of the probably most well-known bond managers and that's why this fund has about

35:41.995 --> 35:57.262 [SPEAKER_01]: six billion dollars and so what the fund does and I think we get calls on this pretty frequently because of that high yield is it uses about thirty one percent leverage to amplify returns here meaning that well if the trade moves against them it can move against them pretty quick.

35:57.802 --> 36:01.723 [SPEAKER_01]: Now the other aspect of this fund that it's important to know is it is a closed-end fund.

36:02.384 --> 36:07.006 [SPEAKER_01]: Now I've got questions on closed versus open-end funds before but it's important to go over again.

36:07.766 --> 36:09.747 [SPEAKER_01]: Open-end funds think of your ETFs.

36:10.863 --> 36:17.452 [SPEAKER_01]: You're a spy ETFs or NASDAQ ETFs, not all ETFs, but you know, the ones that you generally are trading in are open-ended funds.

36:17.712 --> 36:24.101 [SPEAKER_01]: Meaning that shares are essentially created and destroyed whenever you buy in or redeemed from them.

36:24.581 --> 36:26.964 [SPEAKER_01]: You are buying shares directly from the company.

36:27.565 --> 36:31.629 [SPEAKER_01]: For a mutual fund, you're buying it directly from the mutual fund.

36:31.669 --> 36:37.335 [SPEAKER_01]: For an ETF, you're buying it from an authorized purchaser who gives in kind applications and redemption.

36:37.735 --> 36:47.465 [SPEAKER_01]: But either way, because of that, the price is generally going to be the net asset value of everything that is owned by that fund.

36:48.346 --> 36:50.027 [SPEAKER_01]: that is not the case with closed-end funds.

36:50.707 --> 37:01.493 [SPEAKER_01]: With closed-end funds, there is a limited amount of shares, meaning that just like a company's stock, you are buying and selling the shares of that fund from a different investor.

37:02.273 --> 37:10.617 [SPEAKER_01]: And so, with that being the case, it means that it is not always going to be a situation where the share of the fund is

37:12.660 --> 37:16.223 [SPEAKER_01]: exactly representative of the net asset value of everything on bed at fun.

37:16.263 --> 37:21.407 [SPEAKER_01]: In fact, this fun in particular consistently trains at a ten to fifteen percent premium.

37:22.928 --> 37:29.413 [SPEAKER_01]: And so with that being the case, you have to understand that a lot of that is due to the fact that PIMCO is a very well-known bond manager.

37:30.274 --> 37:37.860 [SPEAKER_01]: But the risk is there given the high demand, right, supply and demand dynamics are driving these prices.

37:39.000 --> 37:41.683 [SPEAKER_01]: The ten to fifteen percent premium is a lot.

37:42.542 --> 37:50.792 [SPEAKER_01]: And so although that fifteen percent yield sounds nice, you're paying a lot more to own the assets of this fund.

37:51.793 --> 37:55.297 [SPEAKER_01]: That being said, I think the premium looks a little high for me right now.

37:55.918 --> 38:00.484 [SPEAKER_01]: So for PDI, PIMCO dynamic income fund going to have to pass.

38:02.030 --> 38:11.116 [SPEAKER_01]: All right, well, let's get to actually, you know what, I do want to briefly mention one thing before we get to our next talking point, which I think is a really important one.

38:11.717 --> 38:27.128 [SPEAKER_01]: I think that oftentimes what you see within the crypto space, what you see within younger generations, younger adults, is a proclivity for capability for chasing casino like behavior.

38:27.608 --> 38:29.930 [SPEAKER_01]: And so after the break, we will dive into

38:31.358 --> 38:40.787 [SPEAKER_01]: Whether or not it's a good idea that you're seeing a lot of exchanges, a lot of brokers try to expand the amount of hours that we can all trade.

38:40.827 --> 38:46.673 [SPEAKER_01]: It may sound good at first, but sometimes having that ability at your fingertips can be a little bit dangerous.

38:46.713 --> 38:49.996 [SPEAKER_01]: So when we come back from the break, we will dive directly into that.

38:50.037 --> 38:53.400 [SPEAKER_01]: Maybe we'll get to a question in first, but we'll definitely touch on that story.

38:55.318 --> 39:01.360 [SPEAKER_01]: This is in Vestock, I'm Lou Guerrero, we have one goal here, and that is to help you achieve your financial freedom.

39:02.440 --> 39:03.781 [SPEAKER_01]: Our work continues after this break.

39:03.861 --> 39:04.981 [SPEAKER_01]: It is our final break.

39:05.561 --> 39:13.224 [SPEAKER_01]: So if you want to get, if you want to talk to me and get your questions in now at eight, eight, eight, eight, nine, nine chart, and don't forget to cruise over to the new in Vestock store.

39:13.624 --> 39:16.445 [SPEAKER_01]: If you call me live, let me know what your favorite item is.

39:17.365 --> 39:19.746 [SPEAKER_01]: I would love for you to rep the family.

39:27.914 --> 39:40.032 [SPEAKER_08]: Twenty twenty five rolls on and you've got finance and investment questions for Justin Klein and Luke Guerrero call in Vestock eight eight eight ninety nine chart

39:42.359 --> 40:07.512 [SPEAKER_01]: Now before the break, I teased this talking point, which I think is a pretty important one, and that's because the New York Stock Exchange and NASDAQ are pushing to expand trading hours with the NASDAQ planning to go twenty four hours a day, seven days a week by late twenty twenty six, and the New York Stock Exchange aiming for twenty two hour days as well.

40:09.093 --> 40:11.274 [SPEAKER_01]: Now this isn't completely new, right?

40:12.473 --> 40:31.371 [SPEAKER_01]: Other asset classes do trade around the clock currencies trade around the clock treasury bonds trade around the clock crypto trade trade around the clock and so the stock market does have a bit of a Relative lag compared to those assets

40:33.006 --> 40:46.837 [SPEAKER_01]: And they aren't the only ones that are pushing this, you're saying Robin Hood, you're seeing Schwab, you're saying interactive brokers, already launching overnight trading with select stocks, leveraging dark pools for execution.

40:47.818 --> 40:49.339 [SPEAKER_01]: Now, what is a dark pool, right?

40:49.359 --> 41:01.088 [SPEAKER_01]: Because that's important, you should want to understand how is my trade possibly going through right now at two in the morning when I got to use the bathroom and I shouldn't be trading, how's it going through?

41:02.113 --> 41:10.196 [SPEAKER_01]: Dark pools offer a limited transparency, but they essentially enable large trades to be executed very, very quickly.

41:11.057 --> 41:22.982 [SPEAKER_01]: But it's a method that tends to favor institutions, large institutions that have size, that have scale, and be pretty disadvantageous to retail traders.

41:24.456 --> 41:27.397 [SPEAKER_01]: And so with its extended hours, it brings risk.

41:27.757 --> 41:28.557 [SPEAKER_01]: It brings risk.

41:28.637 --> 41:46.520 [SPEAKER_01]: It brings poor price discovery because when you trade beyond normal trading hours, you inherently have less volume because you inherently have fewer participants, meaning that it is reducing the quality and the efficiency of market pricing and price discovery.

41:47.781 --> 41:50.061 [SPEAKER_01]: You can even look at the whole trading day.

41:51.337 --> 41:53.478 [SPEAKER_01]: and look at the volume throughout the trading day.

41:54.018 --> 42:01.062 [SPEAKER_01]: You will see that liquidity is typically actually concentrated right at the open and right at the close.

42:01.862 --> 42:07.305 [SPEAKER_01]: And because liquidity is concentrated at those times, that means the volume is supporting tighter spreads.

42:09.302 --> 42:14.867 [SPEAKER_01]: And the spread is what you are paying essentially to one of the things you're paying to execute that trade.

42:15.668 --> 42:27.218 [SPEAKER_01]: The overnight sessions, the non-trading window sessions have very wide spreads because you are demanding immediacy at a time when there is no volume.

42:29.006 --> 42:36.370 [SPEAKER_01]: Marketmakers would also face greater risks overnight requiring more capital to manage positions due to fewer offsetting trades.

42:36.410 --> 42:44.014 [SPEAKER_01]: They may have to hold things on their books when they otherwise would not want to increase the risk within the system.

42:45.614 --> 42:53.879 [SPEAKER_01]: The regulatory framework just does not really exist right now to ensure that quotes and activity persist throughout overnight sessions

42:55.113 --> 42:58.956 [SPEAKER_01]: and don't create inherent liquidity challenges.

42:59.717 --> 43:13.267 [SPEAKER_01]: You also have to understand that as I'm sure you know when you're executing a trade on your cell phone, this shares don't come to your phone, they go to your custodian and so they're operational challenges.

43:15.004 --> 43:27.920 [SPEAKER_01]: twenty four seven trading eliminates nightly downtime critical for these back office processes like settlement like reconciliation like figuring out if you even have shares available like pulling back shares that are on

43:30.360 --> 43:35.604 [SPEAKER_01]: While twenty-four seven markets may, a sound monitor, they sound great.

43:35.644 --> 43:39.207 [SPEAKER_01]: We live in a time of instant gratification.

43:39.267 --> 43:45.352 [SPEAKER_01]: If I want to chipotle burrito, you can get your private burrito taxi via postmates on your phone.

43:46.052 --> 43:55.460 [SPEAKER_01]: If you need something for your backyard, you can order it on Amazon, or you can order it from Walmart, and gosh darn it, it's going to be there for you forty-eight hours later.

43:56.675 --> 44:00.097 [SPEAKER_01]: We live in a time where we can instantly get everything at our fingertips.

44:00.498 --> 44:16.268 [SPEAKER_01]: And so it may sound modern, it may sound good, but investors may come to miss fixed trading windows, which provide these natural pauses, which reduce these pressures, something that does not exist in an always-on system.

44:16.749 --> 44:16.949 [SPEAKER_01]: Well,

44:17.934 --> 44:18.315 [SPEAKER_01]: We made it.

44:19.136 --> 44:20.498 [SPEAKER_01]: We made it through another Wednesday.

44:20.938 --> 44:22.340 [SPEAKER_01]: We made it through another show.

44:22.400 --> 44:26.827 [SPEAKER_01]: We are that much closer to enjoying another weekend.

44:28.649 --> 44:34.277 [SPEAKER_01]: I'm Lou Guerrero and Justin and I thank you for joining us as this completes another invest talk program.

44:35.366 --> 44:46.695 [SPEAKER_01]: We thank you for listening and encourage you to tell your friends and family members about our free podcast downloads on iTunes, Google Play and Spotify as well as our videos over there on YouTube.

44:47.456 --> 44:56.343 [SPEAKER_01]: Now, today's show made you think about your financial picture, your investments, your retirement, your taxes, anything at all, and whether it's all really working together

44:57.553 --> 45:06.259 [SPEAKER_01]: Give us a call head over to investtalk.com and click on the portfolio review button we talk to investors like you every day.

45:08.080 --> 45:08.881 [SPEAKER_01]: Independent thinking.

45:09.441 --> 45:10.162 [SPEAKER_01]: Shared success.

45:10.862 --> 45:11.763 [SPEAKER_05]: This is Invest Talk.

45:12.463 --> 45:12.764 [SPEAKER_05]: Good night.

45:13.813 --> 45:21.455 [SPEAKER_05]: Invest talk is a trademark of KPP financial because of the nature of the interactive dialogue inherent in the format of this program.

45:21.796 --> 45:25.977 [SPEAKER_05]: It's important for the listener to understand that not all comments may, will apply to them.

45:26.377 --> 45:29.658 [SPEAKER_05]: Specifically, nothing said she'll be taken to be investment advice.

45:30.038 --> 45:34.460 [SPEAKER_05]: or shell statements on this program be considered an offer to buy or sell security.

45:34.821 --> 45:42.565 [SPEAKER_05]: Because such advice is rendered solely on an individual basis, and at times, we'll require that the investor review a prospectus before investing.

45:43.065 --> 45:50.929 [SPEAKER_05]: Invest talk is a copyrighted program of Cline, Pavles, and Peasley Financial, a registered investment advisor firm, which retains all rights.

45:51.309 --> 45:58.293 [SPEAKER_05]: For more information regarding KPP's investment advisors, call one-eighthundred-five-five-seven-fifty-four-sixty-one.

45:58.853 --> 46:05.926 [SPEAKER_05]: Thank you for listening and your comments and questions are welcome on our twenty four hour listener line at eight eight eight ninety nine chart.