00:04.218 --> 00:12.940 [SPEAKER_05]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk.

00:13.580 --> 00:15.961 [SPEAKER_05]: Independent Thinking, shared success.

00:17.981 --> 00:26.683 [SPEAKER_05]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

00:27.523 --> 00:33.765 [SPEAKER_05]: Here is KPP Financial Chief Executive Officer, Financial Advisor Justin Klein,

00:38.172 --> 00:42.595 [SPEAKER_04]: Good afternoon fellow investors and welcome back to Invest Talk.

00:42.655 --> 01:03.669 [SPEAKER_04]: This is our Tuesday, August fifth, twenty twenty five edition of Invest Talk and I'm excited for this hour with you unpacking some interesting economic news that came across the wire today and most importantly answering your finance investment questions helping me become a better investor giving you data and context and perspective

01:04.070 --> 01:06.538 [SPEAKER_04]: that can help you make better decisions with your money.

01:06.578 --> 01:09.207 [SPEAKER_04]: That's what this hour is all about.

01:11.412 --> 01:11.912 [SPEAKER_04]: They're got the phone.

01:12.132 --> 01:13.453 [SPEAKER_04]: You may have called.

01:13.473 --> 01:20.617 [SPEAKER_04]: Hey, today, Andy Neinchart is the number to reach out during our four to five specific time live show or you feel listening after hours.

01:20.677 --> 01:21.238 [SPEAKER_04]: No big deal.

01:21.278 --> 01:21.938 [SPEAKER_04]: That's fine, too.

01:22.278 --> 01:25.961 [SPEAKER_04]: You can call and leave a question and we'll answer it on a future show.

01:26.601 --> 01:31.004 [SPEAKER_04]: Now, we're just a bit where we'll talk about today's market performance and run down the show topics.

01:31.044 --> 01:35.026 [SPEAKER_04]: But as usual, let's tackle this first caller question now.

01:35.853 --> 01:41.195 [SPEAKER_03]: Hi, this is Dan from Walnut Creek and I have a question about Qualcomm, the current QCOM.

01:41.695 --> 01:49.158 [SPEAKER_03]: My purchase this one in my brokerage account that I have set aside for bucks that are kind of on the down and out.

01:49.178 --> 01:53.079 [SPEAKER_03]: I'm going to get them at the cheap purchase of very small position.

01:53.499 --> 01:57.921 [SPEAKER_03]: Probably about a year or so ago now and I'm down my four percent, almost five percent.

01:58.527 --> 02:02.109 [SPEAKER_03]: The sooner would you thought the other stuff is going to do in the future.

02:02.349 --> 02:03.330 [SPEAKER_03]: Thanks for your answer.

02:03.630 --> 02:03.810 [SPEAKER_04]: All right.

02:03.850 --> 02:11.174 [SPEAKER_04]: Qualcomm came out earnings a name that we own for some clients by two point four percent dividend yields earnings this year.

02:11.194 --> 02:15.897 [SPEAKER_04]: So if you have sixteen percent to eleven dollars and eighty one cents then twelve o eight next year.

02:16.898 --> 02:20.540 [SPEAKER_04]: And last quarter revenue grew ten percent earnings grew nineteen percent.

02:20.580 --> 02:27.364 [SPEAKER_04]: Now that was a bit lighter than the market expected and and but but going forward analysts continue to upgrade.

02:27.844 --> 02:29.468 [SPEAKER_04]: their earnings expectations.

02:29.528 --> 02:33.997 [SPEAKER_04]: So you have to like that and we still really like the business.

02:34.818 --> 02:36.121 [SPEAKER_04]: The market was a bit worried about

02:37.579 --> 02:41.201 [SPEAKER_04]: projections for demands for smartphones going forward.

02:41.901 --> 02:53.967 [SPEAKER_04]: And certainly there are tariff worries as well that kind of hang over this name and names that you utilize Qualcomm chips to build their devices, right?

02:54.628 --> 02:58.610 [SPEAKER_04]: So overall though, you know, we, we like the

03:01.042 --> 03:01.502 [SPEAKER_04]: The earnings.

03:02.263 --> 03:04.925 [SPEAKER_04]: You had a good free cash flow.

03:05.546 --> 03:12.271 [SPEAKER_04]: Their balance sheet remains very, very robust and minimal debt.

03:13.072 --> 03:15.854 [SPEAKER_04]: They're free cash flow to eleven.

03:15.894 --> 03:17.135 [SPEAKER_04]: Six billion training twelve months.

03:17.155 --> 03:21.999 [SPEAKER_04]: You're talking about eight percent free cash flow yield somewhere in that range.

03:22.659 --> 03:24.401 [SPEAKER_04]: That's pretty, pretty good.

03:25.381 --> 03:26.582 [SPEAKER_04]: And what are they doing with that?

03:26.602 --> 03:27.563 [SPEAKER_04]: Well, they're paying a dividend.

03:28.124 --> 03:29.565 [SPEAKER_04]: That's only about a third of their cash flow.

03:30.637 --> 03:34.819 [SPEAKER_04]: And the rest, they are taking that and they're buying back shares.

03:35.599 --> 03:51.067 [SPEAKER_04]: So the business prospects, store main solid, forty three percent return of equity and currently trading at just nine point six times forward looking enterprise value, EBITDA ratio, which is over the last ten years near the low end of the range.

03:51.127 --> 03:54.729 [SPEAKER_04]: So we still like Qualcomm at these levels.

03:55.569 --> 03:56.910 [SPEAKER_04]: Thanks for the call.

03:59.406 --> 04:13.530 [SPEAKER_04]: Now we lot of ground to cover over the next forty five minutes or so in time permitting we're going to get to a bunch of topics but our main one is about AI and how tech big tech plans to feed AI's demand for power.

04:15.831 --> 04:23.533 [SPEAKER_04]: So these hyper scale AI models drive explosive growth in data center demand as well as

04:24.533 --> 04:25.654 [SPEAKER_04]: the power that goes into them.

04:25.954 --> 04:31.096 [SPEAKER_04]: You start my nuclear deals, renewable, procurements, for grid flexibility.

04:31.356 --> 04:36.559 [SPEAKER_04]: These are all being bandied about by Google Amazon Microsoft and meta.

04:36.599 --> 04:45.723 [SPEAKER_04]: So we'll take a look at that topic and what you can learn about the energy sector and where demand will continue to come from.

04:46.623 --> 04:49.484 [SPEAKER_04]: In addition, we have other topics on the docket.

04:50.805 --> 04:51.846 [SPEAKER_04]: One is in regards to

04:53.004 --> 05:08.563 [SPEAKER_04]: Kind of the haves and have nuts in this economy, not just from kind of the k-shaped economy that we're in now, right, where those that have assets and have good job, good paying jobs, they're at the top of the food chain.

05:08.863 --> 05:11.466 [SPEAKER_04]: And they continue their lives continue to get better while you have

05:12.269 --> 05:15.511 [SPEAKER_04]: You know, those in the lower end, that could you just struggle with inflation, et cetera.

05:15.911 --> 05:18.933 [SPEAKER_04]: But that's also the case on Wall Street with the new tariff regime.

05:19.273 --> 05:23.475 [SPEAKER_04]: I was talking about what companies are benefiting and what companies are hurting.

05:24.476 --> 05:37.023 [SPEAKER_04]: And then if we have time, let's go back in time and look at some history of what tariffs say about the economy going forward and what to expect.

05:37.043 --> 05:38.144 [SPEAKER_04]: So we'll take a look at

05:39.218 --> 05:47.181 [SPEAKER_04]: This street, once again, if it gets going to be very interesting to unpack what happened over previous tariff regimes.

05:48.181 --> 05:53.043 [SPEAKER_04]: We also have voice bank calls, one is on news, well, bonds, and the one, now there is on OKE, what else?

05:53.263 --> 05:57.184 [SPEAKER_04]: And then we have some questions that came in via the comment section over on the Invest talk YouTube channel.

05:57.204 --> 06:04.387 [SPEAKER_04]: As well, and of course, I welcome your finance and investment questions right now at eight and eight and nine chart, but we're going to do a quick break.

06:05.047 --> 06:08.813 [SPEAKER_04]: Please remember to call and call any time and leave your question on the advice bank.

06:09.314 --> 06:15.545 [SPEAKER_04]: Or if you're listening via the live stream on the Amtleto in the Bay Area, you can call right now at eight eight ninety nine chart.

06:16.025 --> 06:18.489 [SPEAKER_04]: Up next, I will comment on today's market activity.

06:25.019 --> 06:29.961 [SPEAKER_06]: Serious investors are certain to have finance and investment questions.

06:30.181 --> 06:34.043 [SPEAKER_06]: Wanted to get your take on WW Granger.

06:34.263 --> 06:38.604 [SPEAKER_06]: And the best person to ask your question in the right way is you.

06:38.904 --> 06:44.086 [SPEAKER_06]: I was wondering from your standpoint that they're at Gownside in buying fractional shares versus whole shares.

06:44.386 --> 06:53.270 [SPEAKER_06]: And twenty four seven rain or shine, Justin Klein and Luke Rero stand ready to provide their unbiased answers.

06:53.630 --> 06:56.932 [SPEAKER_04]: The issue, though, is really over the last decade or so.

06:57.292 --> 07:00.754 [SPEAKER_04]: It's never maintained this level of profitability for a long period of time.

07:01.055 --> 07:04.937 [SPEAKER_04]: Modernies are incredibly volatile, so when the going is good, take some profit.

07:05.117 --> 07:08.019 [SPEAKER_06]: Your participation makes an invest talk better.

07:08.279 --> 07:08.859 [SPEAKER_06]: My name is Mike.

07:08.899 --> 07:10.760 [SPEAKER_06]: I'm calling in from Orange County, California.

07:10.820 --> 07:13.042 [SPEAKER_06]: This is Lewis calling from Bolivia.

07:13.062 --> 07:15.023 [SPEAKER_04]: Let's go talk to Chris and me.

07:15.243 --> 07:17.965 [SPEAKER_06]: So don't forget to call, invest talk.

07:18.225 --> 07:19.346 [SPEAKER_06]: First off, great show.

07:19.546 --> 07:20.546 [SPEAKER_06]: I went with you, too.

07:20.887 --> 07:23.028 [SPEAKER_06]: Hey, date eight, ninety nine chart.

07:29.192 --> 07:31.934 [SPEAKER_06]: Have you heard about the new Invest Talk store?

07:32.494 --> 07:33.054 [SPEAKER_06]: That's right.

07:33.094 --> 07:36.176 [SPEAKER_06]: You'll find great merch for the savvy investor.

07:36.656 --> 07:41.179 [SPEAKER_06]: It's all there for you now at InvestTalkStore.com.

07:41.659 --> 07:47.642 [SPEAKER_06]: And now Justin Klein is here and taking your finance and investment questions live.

07:48.103 --> 07:49.143 [SPEAKER_06]: Call Invest Talk.

07:55.352 --> 07:58.453 [SPEAKER_04]: Now let's go take a look at the market today.

07:58.693 --> 08:01.613 [SPEAKER_04]: It was overall a negative day.

08:01.653 --> 08:02.753 [SPEAKER_04]: We had the big sell off.

08:02.773 --> 08:04.494 [SPEAKER_04]: I'm Thursday and Friday of last week.

08:04.534 --> 08:10.715 [SPEAKER_04]: A nice little bounce back day yesterday, but certainly rolled over once again today.

08:10.735 --> 08:13.435 [SPEAKER_04]: The large gap growth down over one percent.

08:13.855 --> 08:16.276 [SPEAKER_04]: Nasdaq was down about two thirds of one percent.

08:16.696 --> 08:21.877 [SPEAKER_04]: S&P was down about half a percent down barely down about fourteen basis points there.

08:22.577 --> 08:32.469 [SPEAKER_04]: So a modest down day, but you continue to see this very choppy new downtrend that we're starting to create.

08:32.509 --> 08:36.253 [SPEAKER_04]: Now, probably not a downtrend to worry too much about, at least in the near term.

08:36.874 --> 08:41.619 [SPEAKER_04]: I mean, because liquidity remains relatively robust, but certainly volatility.

08:42.560 --> 08:44.201 [SPEAKER_04]: should be expected in these months.

08:44.261 --> 08:45.421 [SPEAKER_04]: We know August, September.

08:45.481 --> 08:47.062 [SPEAKER_04]: They tend to be more volatile months.

08:47.102 --> 08:49.883 [SPEAKER_04]: You go into this time period over bot.

08:50.363 --> 08:57.686 [SPEAKER_04]: And now you have the catalyst, which is clearly a stagflationary type of economic environment.

08:58.927 --> 09:03.408 [SPEAKER_04]: We know we have the jobs data and the revisions that showed the labor market was weak.

09:04.148 --> 09:09.230 [SPEAKER_04]: And the ISM services index came out for July today.

09:09.770 --> 09:11.930 [SPEAKER_04]: And that came at a fifty point one.

09:12.390 --> 09:22.313 [SPEAKER_04]: The excretations was fifty one point four up from June's fifty point eight, but instead of accelerating and going up, it actually went down once again for fifty point eight to fifty point one.

09:22.373 --> 09:25.034 [SPEAKER_04]: Now it's still positive, anything about fifty is growth, but

09:26.149 --> 09:29.871 [SPEAKER_04]: effectively no growth in this in the survey.

09:30.571 --> 09:35.374 [SPEAKER_04]: And remember, services are the vast majority of the economy.

09:35.394 --> 09:41.477 [SPEAKER_04]: You're talking to seventy plus percent of our economic output has to do with services overall.

09:42.258 --> 09:44.119 [SPEAKER_04]: Now, they're always sub components here.

09:45.412 --> 09:46.553 [SPEAKER_04]: A big one is employment.

09:47.054 --> 09:52.618 [SPEAKER_04]: So is that driving with the economic or the jobs data that we saw on Friday?

09:52.939 --> 09:57.302 [SPEAKER_04]: And the answer is yes, if fell again for the second straight month.

09:58.192 --> 10:01.713 [SPEAKER_04]: to forty six point four from forty seven point two.

10:01.913 --> 10:07.494 [SPEAKER_04]: So anything below fifty, make sure that means there's in the service sector, there's more layoffs than hiring.

10:07.514 --> 10:07.994 [SPEAKER_04]: Okay.

10:08.334 --> 10:08.814 [SPEAKER_04]: So there's that.

10:09.154 --> 10:10.694 [SPEAKER_04]: Then you have the prices paid index.

10:11.034 --> 10:12.674 [SPEAKER_04]: This has to do with inflation.

10:12.894 --> 10:20.316 [SPEAKER_04]: You know, our prices and the services economy going up or down in this simple answer is they're going up.

10:20.816 --> 10:27.197 [SPEAKER_04]: They're from sixty seven point five to sixty nine point nine to high since October of twenty twenty two.

10:28.257 --> 10:30.199 [SPEAKER_04]: October of twenty twenty two.

10:30.859 --> 10:40.928 [SPEAKER_04]: That's when inflation, you know, we had a peak inflation kind of late twenty twenty one, early twenty twenty two, but it was coming down, but clearly we're re-accelerating.

10:40.968 --> 10:44.471 [SPEAKER_04]: And so this is a stag-flationary report.

10:45.072 --> 10:46.974 [SPEAKER_04]: Okay, new orders in next stop did.

10:48.198 --> 11:10.097 [SPEAKER_04]: remaining about the fifty level came at fifty one point three but fifty point three is uh uh sorry last month was fifth June was at the one point three this month for a July is fifty point three so once again growth but modest and so what you can see here is this is a stag flationary report and that's what the market was really reacting

11:10.237 --> 11:10.517 [SPEAKER_04]: too.

11:11.037 --> 11:12.678 [SPEAKER_04]: That's why you had gold up.

11:13.078 --> 11:19.481 [SPEAKER_04]: You had the dollar was flat overall after kind of lagging on my name.

11:19.521 --> 11:28.305 [SPEAKER_04]: So it's rally that everyone thought there was going to be this rally in the dollar starting to flag a bit, especially when you have that economic data that is weakening in the material way.

11:28.945 --> 11:30.746 [SPEAKER_04]: And it's pretty clear that there is a

11:31.938 --> 11:34.939 [SPEAKER_04]: New easing cycle that it will commence in September.

11:35.560 --> 11:42.722 [SPEAKER_04]: Progressive will be we'll see, but the market is now pricing in roughly a ninety percent chance of a rate cut in September.

11:43.083 --> 11:52.326 [SPEAKER_04]: So you have two major reports back to back Friday and here today that really tell you the economy is weakening or answering stack flation more than anything.

11:53.027 --> 11:55.508 [SPEAKER_04]: And Bitcoin was off one point two percent.

11:56.448 --> 12:02.255 [SPEAKER_04]: WTI that was down at one point seven percent after being that another one and a half percent yesterday.

12:02.695 --> 12:05.118 [SPEAKER_04]: So that's certainly adding pressure to

12:07.387 --> 12:15.832 [SPEAKER_04]: to the oil market and, you know, the, I guess the only positive you can say here is that the S&P global is separate survey.

12:16.412 --> 12:18.473 [SPEAKER_04]: They look at global services PMI.

12:18.493 --> 12:20.294 [SPEAKER_04]: So not just to your in America, but globally.

12:20.534 --> 12:25.077 [SPEAKER_04]: That actually was up from fifty to point nine to fifty five point seven in July.

12:25.097 --> 12:30.099 [SPEAKER_04]: New orders expanded its fastest paints since January of this year.

12:31.360 --> 12:34.102 [SPEAKER_04]: But in but prices continue to rise sharply.

12:34.182 --> 12:34.282 [SPEAKER_04]: So

12:35.312 --> 12:38.435 [SPEAKER_04]: at least there's growth globally, and that can help.

12:39.737 --> 12:54.453 [SPEAKER_04]: I think the earnings, the earnings picture overall, but obviously domestically, our economy continues to take a stair step lower, not recessionary, but stagnationary.

12:55.710 --> 12:59.773 [SPEAKER_04]: And every day we receive questions from the comments section on R and desktop, YouTube channel.

12:59.793 --> 13:00.714 [SPEAKER_04]: Here's when I came in earlier.

13:01.354 --> 13:06.438 [SPEAKER_04]: Randy, twenty three says that's an STRL looking for industrial long-term play.

13:06.458 --> 13:09.261 [SPEAKER_04]: I would love to hear what you are thinking about.

13:09.281 --> 13:11.622 [SPEAKER_04]: Let's look at STRL.

13:12.163 --> 13:15.505 [SPEAKER_04]: This is Sterling Sterling infrastructure.

13:15.526 --> 13:18.047 [SPEAKER_04]: A couple of my systems here.

13:19.127 --> 13:21.449 [SPEAKER_04]: And this is doing very, very well.

13:21.969 --> 13:27.974 [SPEAKER_04]: You're talking about relative strength at ninety seven revenue earnings ups.

13:28.154 --> 13:30.936 [SPEAKER_04]: Those we have thirty one percent this year or eleven percent next year.

13:31.617 --> 13:35.340 [SPEAKER_04]: So that's certainly a nice nice boost.

13:36.140 --> 13:38.122 [SPEAKER_04]: And so you can see why it's so strong.

13:38.742 --> 13:40.904 [SPEAKER_04]: And then you look at what they do.

13:41.024 --> 13:49.030 [SPEAKER_04]: They're a construction company, it's specialized in heavy civil infrastructure, construction, and infrastructure rehabilitation, as well as residential construction projects.

13:49.990 --> 13:53.073 [SPEAKER_04]: It operates transportation solutions, e and infrastructure solutions.

13:53.113 --> 14:01.059 [SPEAKER_04]: So that's where you're seeing the strength you're e and infrastructure solutions, the Zall around data centers, and their business is booming.

14:01.619 --> 14:03.360 [SPEAKER_04]: Question is, did you miss it?

14:04.341 --> 14:05.442 [SPEAKER_04]: It's already rallied.

14:05.822 --> 14:17.669 [SPEAKER_04]: considerably bring up a chart here, but if you look at where it was just back in the COVID, not to cover those the liberation day lows, this was around ninety eight dollars per share.

14:18.109 --> 14:28.255 [SPEAKER_04]: Now, it's at two hundred and ninety six dollars per share, okay, earnings next year, it'll be nine dollars and sixty cents on the three dollar stock, roughly, and they're talking about a low thirties multiple.

14:29.153 --> 14:40.012 [SPEAKER_04]: So, and what I would say is, if it had earnings, they're this morning or after I was yesterday and had a big move higher, but this is what we call a, at least a near term topping tail.

14:41.014 --> 14:41.555 [SPEAKER_04]: It was,

14:42.923 --> 14:51.627 [SPEAKER_04]: a wide-ranging bar, it closes the lower third of that bar on earnings, near a high, and this likely marks at least a short-term high.

14:52.268 --> 14:59.251 [SPEAKER_04]: Now, doesn't mean that has to go dramatically lower, it could just pull back, maybe into the low to hundreds, and that's probably where I'd pick it up.

14:59.271 --> 15:05.034 [SPEAKER_04]: If it gets below, if it gets back into the two-ten level, two-ten, that's where I'd pick up.

15:05.754 --> 15:07.175 [SPEAKER_04]: Sterling infrastructure, STRL.

15:07.615 --> 15:17.620 [SPEAKER_04]: I like the theme obviously, but I don't like it from time to time perspective at the moment, and would prefer a pullback, and yeah, two-ten would be my bike point.

15:18.321 --> 15:18.961 [SPEAKER_04]: Thanks for the call.

15:18.981 --> 15:23.243 [SPEAKER_04]: All right, thanks for the question submitted via our YouTube channel.

15:23.724 --> 15:24.784 [SPEAKER_04]: And we're moving to a quick break.

15:24.804 --> 15:25.204 [SPEAKER_04]: Still to come.

15:25.245 --> 15:26.965 [SPEAKER_04]: My focus point more answers to your questions.

15:27.406 --> 15:29.187 [SPEAKER_04]: So I encourage you calling it out in the best stock at eight and eight.

15:29.347 --> 15:29.927 [SPEAKER_04]: Thank you guys, Sharp.

15:36.413 --> 15:37.295 [SPEAKER_06]: Invest talk.

15:37.675 --> 15:39.358 [SPEAKER_06]: Your questions are free.

15:39.779 --> 15:41.743 [SPEAKER_06]: The answers are unbiased.

15:42.163 --> 15:43.746 [SPEAKER_06]: Justin Klein is here now.

15:51.264 --> 15:59.387 [SPEAKER_04]: Now, our main focus point today, concerns how big tech plans to feed AI's veracious, veracious.

15:59.447 --> 15:59.827 [SPEAKER_04]: There we go.

16:00.047 --> 16:01.628 [SPEAKER_04]: Appetite for power.

16:02.788 --> 16:06.349 [SPEAKER_04]: And we know that they are spending the hyperscaler.

16:06.369 --> 16:12.792 [SPEAKER_04]: If you're talking about alphabet, Amazon, Microsoft, meta, they all rely on these data centers for their services.

16:14.072 --> 16:15.513 [SPEAKER_04]: And they're spending

16:16.799 --> 16:19.800 [SPEAKER_04]: hundreds of billions of dollars, hundreds of billions.

16:20.501 --> 16:30.406 [SPEAKER_04]: Google said it would raise capital spending for twenty twenty five by ten billion to eighty five billion, taking the total of the four this year to be three hundred and twenty two billion dollars.

16:31.006 --> 16:34.628 [SPEAKER_04]: That's up from a hundred and twenty five billion in total in twenty twenty one.

16:35.468 --> 16:45.173 [SPEAKER_04]: So you're talking nearly a three folding court in increase in capex in just a lot, you know, from over five year period, right?

16:45.844 --> 16:56.938 [SPEAKER_04]: So this is certainly dramatic and you have all of them unveiling massive projects.

16:57.578 --> 17:06.069 [SPEAKER_04]: Metas unveiling was called Prometheus, the cluster of data centers in Louisiana covering an area of the size of Manhattan, roughly.

17:07.178 --> 17:16.884 [SPEAKER_04]: You also have the fact that these AI data centers consume about ten times more power than non-AI versus.

17:16.904 --> 17:22.347 [SPEAKER_04]: So a lot of people think, oh, the cloud has been around for a long time, right?

17:22.367 --> 17:25.909 [SPEAKER_04]: You've used cloud services for over a decade.

17:26.649 --> 17:28.370 [SPEAKER_04]: That's not uncommon.

17:28.390 --> 17:30.692 [SPEAKER_04]: If you're talking about one drive or

17:32.625 --> 17:42.132 [SPEAKER_04]: I cloud or think of if you work in a white college job, you probably deal with some sort of software CRM or something that operates in the cloud.

17:42.452 --> 17:44.714 [SPEAKER_04]: That's been in existence for a long time.

17:44.754 --> 17:48.196 [SPEAKER_04]: But most of those are just storing data and you go and you access that data.

17:48.556 --> 17:59.604 [SPEAKER_04]: That's relatively low energies compared to AI data centers that are doing massive amounts of computations every single second.

18:01.826 --> 18:07.488 [SPEAKER_04]: In twenty twenty three, America's data centers used a hundred and seventy six terawatts of electricity.

18:08.368 --> 18:19.191 [SPEAKER_04]: Best forecasted to a go up to five hundred and eighty terawatts by twenty twenty eight, twelve percent of the total energy consumption of the country as a whole.

18:21.072 --> 18:28.434 [SPEAKER_04]: And the hyperscalers themselves, those four, are expected to account for about half of that five hundred eighty terawatts.

18:31.101 --> 18:36.444 [SPEAKER_04]: Now right now, most of the data centers are training AI models.

18:39.586 --> 18:46.771 [SPEAKER_04]: But as there's more, more adoption, more of the data centers will be handling what we call inferences.

18:48.702 --> 19:01.969 [SPEAKER_04]: And that's when you have a query right, you go on to chatGPT, Gemini, Perplexity, whatever, and you run, you ask them a question, and you solve a problem and you tell them to go, do X, Y, and see, that's a inference.

19:03.230 --> 19:06.291 [SPEAKER_04]: And is that, is a doppvenmore and more, more and more power is going to be in that?

19:08.272 --> 19:11.634 [SPEAKER_04]: And it's really about how these companies are meeting the challenge.

19:12.295 --> 19:16.357 [SPEAKER_04]: So the first is these data centers are starting to

19:18.945 --> 19:31.931 [SPEAKER_04]: They've cluster to run around areas with favorable tax regimes, proximity to high speed cables, proximity to cheap power.

19:33.011 --> 19:36.333 [SPEAKER_04]: And that's becoming a burden on the grid.

19:36.953 --> 19:46.658 [SPEAKER_04]: So a lot of what's happened is they're not allowing these data centers to get up and running on existing power grids, because they're already

19:47.945 --> 19:54.808 [SPEAKER_04]: straining them and causing the cost of power to go up for citizens, right?

19:54.888 --> 19:59.409 [SPEAKER_04]: And that's certainly something that many in those areas are pushing back against.

19:59.469 --> 20:00.970 [SPEAKER_04]: They don't want to see that inflation, right?

20:01.010 --> 20:04.651 [SPEAKER_04]: That's the most part doesn't really benefit that.

20:06.832 --> 20:08.773 [SPEAKER_04]: So the question here is how are they going to meet it?

20:08.833 --> 20:08.953 [SPEAKER_04]: Well,

20:10.633 --> 20:14.414 [SPEAKER_04]: All of them are taking different tax.

20:14.474 --> 20:18.596 [SPEAKER_04]: So Amazon is looking to buy and develop nuclear powered data centers.

20:19.777 --> 20:27.459 [SPEAKER_04]: One is, one that they set up was for talent energy, but the it was blocked by redic regulators once again for fear of raising local bills.

20:28.400 --> 20:33.742 [SPEAKER_04]: On July, fifteenth Google announced a three billion dollar deal for hydropower dam in Pennsylvania.

20:35.636 --> 20:42.518 [SPEAKER_04]: And a lot of them are starting to put this power right next to the data centers.

20:43.198 --> 20:50.041 [SPEAKER_04]: And actually creating the power themselves, whether that's with natural gas, wind turbines, solar, et cetera.

20:50.441 --> 21:00.484 [SPEAKER_04]: Blue energy says that by twenty thirty, twenty seven percent of the electricity from four of these facilities will come on site.

21:03.320 --> 21:07.901 [SPEAKER_04]: So for example, metaspermethias will come from gas extracted there.

21:07.921 --> 21:11.983 [SPEAKER_04]: So they're doing it where the gas is coming out of the ground for the most part.

21:13.103 --> 21:25.086 [SPEAKER_04]: And then Google has agreed to, as a group of caros power, a startup that is developing small modular reactors, provide nuclear power, starting in twenty thirty, not that far from that.

21:27.367 --> 21:30.548 [SPEAKER_04]: Amazon invested another small modular reactor startup, et cetera.

21:31.602 --> 21:33.102 [SPEAKER_04]: And then the last strategy is go brought.

21:33.143 --> 21:41.225 [SPEAKER_04]: So a lot of them are setting up in the Gulf countries where natural gas is very cheap and these sovereign wealth funds want to invest.

21:41.325 --> 21:44.086 [SPEAKER_04]: And so they're helping finance a lot of these developments.

21:44.866 --> 21:47.167 [SPEAKER_04]: Spain has a lot of solar power.

21:47.767 --> 21:53.669 [SPEAKER_04]: That's popular destination in Asia, Malaysia is as big as a cheap power there.

21:54.989 --> 21:59.751 [SPEAKER_04]: And so they're building very fast and they will need more and more power.

22:00.685 --> 22:11.270 [SPEAKER_04]: But this does worry me a bit because with so much money put into these data centers, there's no real guarantee that these advanced models will need this much power.

22:12.250 --> 22:13.571 [SPEAKER_04]: Five, ten years now.

22:13.591 --> 22:22.815 [SPEAKER_04]: It reminds me a little bit of the fiber deployment in the nineties and a lot of those companies went bankrupt.

22:22.936 --> 22:24.656 [SPEAKER_04]: So I think there's a lot of risk in this space.

22:25.517 --> 22:27.858 [SPEAKER_04]: And so you have to choose carefully on what you invest in.

22:28.633 --> 22:29.493 [SPEAKER_04]: They're heading to a break.

22:29.653 --> 22:30.954 [SPEAKER_04]: Give me a call now at eight a.m.

22:31.014 --> 22:31.314 [SPEAKER_04]: at chart.

22:39.656 --> 22:44.738 [SPEAKER_06]: Every investor is working to build a secure financial future.

22:45.238 --> 22:50.740 [SPEAKER_06]: The more you learn about how the market works, the better your chances for success.

22:51.380 --> 22:52.900 [SPEAKER_06]: In Vestark, eight a.m.

22:52.920 --> 22:54.821 [SPEAKER_06]: at eight ninety nine chart.

22:55.887 --> 22:59.590 [SPEAKER_01]: Hey Justin and Luke, this is Marlow from New York City area.

22:59.610 --> 23:01.032 [SPEAKER_01]: I love the show.

23:01.072 --> 23:01.933 [SPEAKER_01]: You guys are awesome.

23:01.953 --> 23:02.934 [SPEAKER_01]: Thanks for everything you do.

23:02.954 --> 23:07.818 [SPEAKER_01]: I have a question on a company, one oak, midstream company.

23:07.838 --> 23:19.088 [SPEAKER_01]: I mean as far as I can tell, it's obviously it's a great industry with natural gas, growth, growing, and all the demands on data centers and just, you know, energy in general.

23:19.169 --> 23:21.731 [SPEAKER_01]: It's just a growth area, is it for you guys talk about a lot?

23:22.282 --> 23:24.083 [SPEAKER_01]: It just seems like a really healthy business.

23:24.403 --> 23:31.427 [SPEAKER_01]: It started to pull back here down to about seventy five dollars and just trying to figure out if you think this is a good entry point.

23:32.028 --> 23:33.689 [SPEAKER_01]: It does pay a healthy dividend.

23:33.709 --> 23:41.934 [SPEAKER_01]: That's not the only reason why I'm buying it because I think that it the value of natural gas assets will be higher in the future and they continue to

23:42.734 --> 23:49.697 [SPEAKER_01]: a dividend buying new assets and I understand they're growth is slowing a little bit but it seems like a pretty good healthy business.

23:49.897 --> 23:56.620 [SPEAKER_01]: So if you could tell me what you think of it and if you think this is a good time to add to a position and around seventy five dollars.

23:57.221 --> 23:57.721 [SPEAKER_01]: Thanks guys.

23:58.041 --> 23:59.722 [SPEAKER_01]: We'll I'll listen for the answer on the podcast.

23:59.962 --> 24:00.122 [SPEAKER_01]: Bye.

24:01.402 --> 24:02.763 [SPEAKER_04]: All right, looking at one oak.

24:03.104 --> 24:09.129 [SPEAKER_04]: Okay, e is the simple name we've owned for clients for a long period of time and we like the business now.

24:09.429 --> 24:23.462 [SPEAKER_04]: I will say we've trimmed it a bit and and cut it as a lower waiting for some of our strategies mainly because just the growth in

24:24.863 --> 24:27.365 [SPEAKER_04]: shale production is starting to wane.

24:28.586 --> 24:39.393 [SPEAKER_04]: Remember, the life of these wells is relatively short-lived and they're not really deploying as much cap X. And so that's why you've seen this thought kind of come down recently.

24:40.473 --> 24:47.598 [SPEAKER_04]: It was surging until late last year and had a rougher year as expectations have come down.

24:47.638 --> 24:52.101 [SPEAKER_04]: Although expectations for earnings are re-accelerating, that's a positive here.

24:53.041 --> 24:55.922 [SPEAKER_04]: after yesterday's earnings announcement.

24:56.383 --> 25:03.586 [SPEAKER_04]: So overall, we really like the company, but I do think there are some near-term headwinds to consider.

25:04.126 --> 25:11.349 [SPEAKER_04]: So what I would say is, understand this would be a longer-term play.

25:12.489 --> 25:14.470 [SPEAKER_04]: It's a great business, okay?

25:15.050 --> 25:16.031 [SPEAKER_04]: We really like the business.

25:18.091 --> 25:21.933 [SPEAKER_04]: But once getting near-term, it's really about what's going on with

25:23.934 --> 25:26.195 [SPEAKER_04]: growth of production from its customers.

25:26.996 --> 25:29.617 [SPEAKER_04]: So it's a return equity is sixteen percent.

25:30.037 --> 25:31.818 [SPEAKER_04]: We cash those three billion dollars.

25:32.258 --> 25:36.620 [SPEAKER_04]: They do have a good amount of debt in their balance sheet, but it's a consistent business.

25:37.461 --> 25:38.401 [SPEAKER_04]: And that's the positive.

25:38.461 --> 25:47.586 [SPEAKER_04]: It's a think of a toll road, but for products, energy products, oil, gas, natural gas, liquids, refined products, et cetera.

25:48.126 --> 25:49.567 [SPEAKER_04]: That's how they make their money.

25:50.307 --> 25:51.328 [SPEAKER_04]: And they're less

25:53.479 --> 25:55.900 [SPEAKER_04]: They're less correlated to oil prices.

25:55.920 --> 25:58.981 [SPEAKER_04]: And I'd say they're not correlated because this is what you're seeing.

25:59.161 --> 26:10.005 [SPEAKER_04]: When you have oil prices that are relatively subdued, you get less production and you get less product pumping through their pipes.

26:10.706 --> 26:13.147 [SPEAKER_04]: And that would be the biggest risk near term.

26:13.207 --> 26:19.489 [SPEAKER_04]: But longer term, I still like, okay, E, one out, even though it has some near term headlines.

26:22.578 --> 26:28.620 [SPEAKER_04]: Now, people take the time to leave an investment talk podcast review on iTunes, and we'd like to thank them for the courtesy by getting to the questions.

26:28.680 --> 26:32.441 [SPEAKER_04]: Quickly, Susman says, what are your thoughts on RITN?

26:32.921 --> 26:36.723 [SPEAKER_04]: Is this a good hold at roughly three percent of my portfolio?

26:37.283 --> 26:39.123 [SPEAKER_04]: I love the iTunes review questions.

26:39.183 --> 26:40.144 [SPEAKER_04]: Appreciate that.

26:41.004 --> 26:47.126 [SPEAKER_04]: RITN is a re-investing in residential real estate mortgages.

26:48.547 --> 26:48.807 [SPEAKER_04]: Okay.

26:50.975 --> 26:52.576 [SPEAKER_04]: This is an interesting one.

26:53.316 --> 26:58.520 [SPEAKER_04]: So this typically, these type of reads, they pay a high dividend, eight percent dividend yields.

26:59.080 --> 27:07.085 [SPEAKER_04]: But, but currently, but what you have to always look at is that this, the dividend tends to fluctuate.

27:07.945 --> 27:10.567 [SPEAKER_04]: And over time, it tends to actually fall.

27:11.307 --> 27:18.552 [SPEAKER_04]: For example, in nineteen, the dividend yield was, or dividend rate was fifty cents per, as per quarter, per quarter.

27:19.815 --> 27:22.156 [SPEAKER_04]: Now it's twenty five cents per quarter.

27:22.176 --> 27:25.877 [SPEAKER_04]: Okay, it's a little April and Divineal, but I understand that that can be cut.

27:26.217 --> 27:26.517 [SPEAKER_04]: Why?

27:27.257 --> 27:28.718 [SPEAKER_04]: Because they're highly lever now.

27:28.918 --> 27:33.939 [SPEAKER_04]: You would argue it's kind of like a bank that borrow short and lens long and see the mortgage market.

27:35.019 --> 27:40.301 [SPEAKER_04]: And that typically is a good business, especially when the yield curve is steep.

27:41.721 --> 27:43.782 [SPEAKER_04]: So this is going up recently because

27:45.735 --> 27:46.595 [SPEAKER_04]: The yield curve is steeped.

27:47.396 --> 27:51.538 [SPEAKER_04]: Markets are expecting ray cuts, so their cost of funds will go down.

27:52.399 --> 27:53.979 [SPEAKER_04]: They tend to borrow shorter term.

27:56.121 --> 27:58.362 [SPEAKER_04]: And they take that money and they go buy mortgage back to securities.

27:58.382 --> 27:59.603 [SPEAKER_04]: They're effectively lending, right?

27:59.623 --> 28:00.323 [SPEAKER_04]: And the mortgage market.

28:02.472 --> 28:08.457 [SPEAKER_04]: And so as long as they can make that spread, and their cash flow is good enough, and they can pay out that dividend.

28:08.837 --> 28:14.021 [SPEAKER_04]: If not, well, they have to add more debt, or eventually cut the dividend, et cetera.

28:14.061 --> 28:19.546 [SPEAKER_04]: So can be a volatile type of business, and you have to be prepared for that.

28:20.487 --> 28:23.629 [SPEAKER_04]: And know that this is a company that just always issues more shares.

28:23.969 --> 28:29.494 [SPEAKER_04]: And so generally, it's going to be in a downtrend, longer term.

28:30.417 --> 28:39.767 [SPEAKER_04]: But near-term, it's an option because of the expectation that earnings will go up near-term because of that fed-it-easing cycle.

28:40.287 --> 28:49.156 [SPEAKER_04]: So as the fed-easing cycle becomes more and more real, this will continue to do well.

28:50.077 --> 28:52.439 [SPEAKER_04]: But when the fed-it-easing cycle

28:53.592 --> 28:53.972 [SPEAKER_04]: is over.

28:54.673 --> 28:56.094 [SPEAKER_04]: That's when you don't want to hold this name.

28:56.595 --> 29:08.847 [SPEAKER_04]: Because what's going to happen is shorter rates are generally going to start to rise, then anticipating fed hiking rates, and that will flatten the yields curve, and their earnings will go down.

29:09.768 --> 29:13.471 [SPEAKER_04]: And then you could have earnings cut, dividend cut, etc.

29:14.767 --> 29:25.034 [SPEAKER_04]: So it's fine for now, because they do think we're going through an easing cycle, we get that dividend, but it's more of a short-term play, and it's not super safe because there's also the underlying mortgages that they're owning.

29:25.614 --> 29:34.800 [SPEAKER_04]: If housing market falls apart, which I don't think it will, man, because forty percent of people don't have a mortgage, and the majority of people I do have locked in a three percent.

29:34.820 --> 29:37.842 [SPEAKER_04]: So I don't think there's going to be this default cycle like you saw in Italy.

29:38.382 --> 29:47.749 [SPEAKER_04]: So I'm not really too worried about that, but understand what you're getting into, understand what drives the stock up over the short medium and long term.

29:47.869 --> 29:51.592 [SPEAKER_04]: Long term, I don't love it, but short to medium term, I'm fine with it.

29:52.953 --> 29:55.435 [SPEAKER_04]: Thanks for the question and the review.

29:56.436 --> 30:02.501 [SPEAKER_04]: Now let's talk a little bit about some lessons from the past when it comes to the tariffs.

30:03.631 --> 30:12.118 [SPEAKER_04]: Well, I people say, well, we had liberation day, markets, bottoms, and we've rallied since, and, you know, the trend is your friend.

30:14.761 --> 30:19.705 [SPEAKER_04]: But when you dig deeper into these tariffs that we now know are becoming more and more solid, right?

30:19.745 --> 30:29.594 [SPEAKER_04]: It was, I think the rally was trying to climb, it was climbing that wall of worry, the taco train, the Trump police chickens out, and that it's all talk and they're not really going to

30:32.001 --> 30:33.242 [SPEAKER_04]: follow through with these threats.

30:34.022 --> 30:36.063 [SPEAKER_04]: Well, now we're past that August first.

30:36.403 --> 30:38.224 [SPEAKER_04]: Deadline, I think you pushed it till next week.

30:38.564 --> 30:46.108 [SPEAKER_04]: It seems like we're starting to coalesce around a high teens overall effective territory, territory.

30:46.948 --> 30:53.752 [SPEAKER_04]: If you go based on August first, Deadline numbers that he announced, it'd be eighteen point three, the highest since nineteen thirty four.

30:56.217 --> 31:02.822 [SPEAKER_04]: And most of the continents agree this will slow GDP growth, higher inflation, and the ISM service report today kind of reflects that.

31:04.780 --> 31:10.524 [SPEAKER_04]: And typically when you get a stagnation area environment, you get market valuations falling.

31:10.544 --> 31:11.564 [SPEAKER_04]: Now we haven't seen that yet, right?

31:11.784 --> 31:14.046 [SPEAKER_04]: Market valuations are staying really till your bust.

31:14.386 --> 31:20.430 [SPEAKER_04]: Mainly because earnings expectations for the next twelve months are as of now about eleven point four percent.

31:21.170 --> 31:24.532 [SPEAKER_04]: That's above the ten year average of ten point four percent growth.

31:25.133 --> 31:29.035 [SPEAKER_04]: So earnings expectations going forward remain solid.

31:29.415 --> 31:30.556 [SPEAKER_04]: Now that is a year out.

31:30.636 --> 31:33.038 [SPEAKER_04]: We know that far that you go out the

31:34.745 --> 31:40.366 [SPEAKER_04]: Rosier, those expectations tend to be, and as time goes on, you have lower expectations.

31:40.426 --> 31:47.767 [SPEAKER_04]: So, when you hit the actual earnings report and we're probably lower than that, but still, expectations remain relatively robust.

31:47.787 --> 31:51.868 [SPEAKER_04]: Now, optimism is really around three driving factors.

31:51.948 --> 31:52.548 [SPEAKER_04]: Number one is, U.S.

31:53.528 --> 31:55.349 [SPEAKER_04]: is domestically driven.

31:55.409 --> 31:58.329 [SPEAKER_04]: We talked about services being seventy plus percent of the economy.

31:59.049 --> 32:03.530 [SPEAKER_04]: Tariffs are important for goods production.

32:04.702 --> 32:09.444 [SPEAKER_04]: which feeds into services because a lot of times you need goods to execute on those services.

32:11.044 --> 32:21.067 [SPEAKER_04]: But it's still domestically driven and the impact, direct impact of tariffs for most of the economy is not there.

32:21.107 --> 32:21.868 [SPEAKER_04]: It's more indirect.

32:23.048 --> 32:28.290 [SPEAKER_04]: And you're seeing that through the isom services, prices paid index, that is accelerating.

32:28.330 --> 32:34.112 [SPEAKER_04]: So they are feeling it, but not in a dramatic way.

32:36.376 --> 32:38.398 [SPEAKER_04]: Number two is companies passed through the tariffs.

32:38.478 --> 32:51.287 [SPEAKER_04]: That's the assumption that the consumer and business balance sheet are strong and companies can just raise prices and for the most part, those prices will be just eaten by the consumer.

32:52.608 --> 33:03.356 [SPEAKER_04]: And the number three is that if you look back, the most recent period of tariffs under the Nixon administration, the impact was relatively limited.

33:04.132 --> 33:05.633 [SPEAKER_04]: And that is true, but let's talk.

33:05.713 --> 33:07.375 [SPEAKER_04]: Let's dig deeper on all three of those.

33:07.936 --> 33:13.140 [SPEAKER_04]: The first is exports account for about eleven percent of US GDP.

33:15.302 --> 33:22.489 [SPEAKER_04]: And the US levels much lower than company countries like UK and Germany, UK, it's thirty one percent, Germany, it's forty two percent.

33:25.105 --> 33:32.069 [SPEAKER_04]: that whole global trade isn't really any, you know, tit-for-tat type of tariffs is not really going to impact us.

33:32.089 --> 33:37.533 [SPEAKER_04]: And if you look at S&P five hundred earnings, about forty one percent of those earnings come from overseas.

33:40.595 --> 33:40.695 [SPEAKER_04]: Okay.

33:42.376 --> 33:44.057 [SPEAKER_04]: Or at least that revenue comes from overseas.

33:46.826 --> 34:00.389 [SPEAKER_04]: So I think that one holds a bit of water that we are domestically focused and the overall impact to our economy is material, but it's not overly dramatic.

34:01.770 --> 34:11.832 [SPEAKER_04]: The second part, however, around Nixon tariffs, really, that's where I think the problems lie.

34:13.002 --> 34:13.223 [SPEAKER_04]: Why?

34:13.283 --> 34:16.128 [SPEAKER_04]: Because back then, the tariffs were only ten percent.

34:16.429 --> 34:17.932 [SPEAKER_04]: So you're talking nearly double with there today.

34:18.052 --> 34:24.705 [SPEAKER_04]: And they only lasted for about four months until there was an international agreement to end the dollar convertibility to gold.

34:28.619 --> 34:35.004 [SPEAKER_04]: But if you look back into the twenties and thirties, everyone focuses on the sweet holly tariffs, and those are certainly impactful.

34:35.764 --> 34:52.457 [SPEAKER_04]: But there's the lesser known, lesser talked about tariffs, of nineteen twenty one, the emergency tariff act, increasing tariffs on farm products, and in nineteen twenty two, Fordney Maccomber tariffs, which was more wide-ranging.

34:53.232 --> 34:56.874 [SPEAKER_04]: And back then, the average duty on tariffs was thirty-eight percent.

34:56.914 --> 35:01.698 [SPEAKER_04]: So not as dramatic as it was today, as it is today, but still significant increase.

35:01.738 --> 35:03.939 [SPEAKER_04]: Remember we ended this year about two and a half percent tariffs.

35:03.959 --> 35:05.340 [SPEAKER_04]: Now we're at eighteen and a half roughly.

35:07.185 --> 35:17.191 [SPEAKER_04]: Back then, S&P earnings fell sixty-one percent in nineteen twenty-one, and equities dropped from their peak into nineteen nineteen into twenty-two.

35:18.051 --> 35:23.975 [SPEAKER_04]: Sorry, nineteen twenty-two, excuse me, from nineteen nineteen twenty-two, a forty-four percent.

35:24.275 --> 35:30.238 [SPEAKER_04]: So that's where you had that mistakenary environments, lower earnings, higher inflation, etc.

35:32.660 --> 35:32.980 [SPEAKER_04]: And so,

35:34.409 --> 35:44.637 [SPEAKER_04]: One thing to understand, not only are tariffs, not as high today as it was then, but our economy wasn't as reliant on directly on physical kids, like it was back then.

35:45.578 --> 35:49.040 [SPEAKER_04]: Like I said, the services side is more indirect impact on goods.

35:50.842 --> 35:51.823 [SPEAKER_04]: Our impact on inflation.

35:51.843 --> 35:52.183 [SPEAKER_04]: Excuse me.

35:53.560 --> 35:59.743 [SPEAKER_04]: And so the structure of the economy has clearly changed since the last time we had tariffs anywhere close to this high.

36:00.483 --> 36:12.048 [SPEAKER_04]: But at the end of the day, the true impact is, I think, underappreciate because estimates going forward are over eleven percent earnings growth.

36:12.950 --> 36:20.593 [SPEAKER_04]: And so as you see labor markets start to shift, that will feed into, I think the earnings expectation.

36:20.654 --> 36:25.336 [SPEAKER_04]: So I wanted to cover that because I love history, I love going back in time and looking at what happened in the past.

36:25.896 --> 36:35.960 [SPEAKER_04]: It's never exactly the same, but you can take tidbits of it and gives you context to understand where what the impact will likely be, you know, six, twelve months down the line.

36:35.980 --> 36:39.262 [SPEAKER_04]: And let's keep things rolling and play another listener question now.

36:40.121 --> 36:41.567 [SPEAKER_02]: This is Chris from Minnesota.

36:41.889 --> 36:43.938 [SPEAKER_02]: I had a question regarding municipal bonds.

36:44.583 --> 36:52.647 [SPEAKER_02]: I keep about six months of loan expenses and a high yield savings account and keep another six months worth at the same institution and no penalty CDs.

36:53.267 --> 37:02.111 [SPEAKER_02]: I'm in the highest tax bracket and was thinking about moving that additional six months and then no penalty CDs to municipal bonds to lower the taxes on those returns.

37:02.331 --> 37:13.056 [SPEAKER_02]: I've never invested in Unibod before and was wondering, one, how liquid municipal bond market is and two, would you recommend municipal bond ETF like MU and I?

37:13.396 --> 37:13.656 [SPEAKER_02]: Thank you.

37:15.893 --> 37:26.576 [SPEAKER_04]: All right, looking at, I mean, just what bonds are the first lesson, first to take away from that call, is that he said he's in the highest tax bracket.

37:27.257 --> 37:28.197 [SPEAKER_04]: And that's important.

37:28.277 --> 37:35.299 [SPEAKER_04]: When you are looking at, a lot of people love, oh, tax free, tax free, tax free, nobody wants to pay the taxes.

37:36.359 --> 37:39.320 [SPEAKER_04]: Well, it's always about your tax adjusted yields.

37:39.480 --> 37:42.982 [SPEAKER_04]: When you're looking at tax exempt investments.

37:45.765 --> 37:58.549 [SPEAKER_04]: Ninety-nine percent of the time, these tax free vehicles are only for those that are in the highest tax bracket, because they drive up the price yield down to a level where it makes sense for them.

37:58.609 --> 38:13.393 [SPEAKER_04]: If you're in a middling tax bracket, well, they're tax saving is not as large, and therefore you're probably better off, and it's taxable to just invest in, say, corporate bonds and getting a higher tax adjusted yield, because your impact from that is not as high.

38:15.105 --> 38:20.774 [SPEAKER_04]: That's the first check mark that I hear is, okay, he's an entire house tax bracket, so municipal's maybe a good idea.

38:21.683 --> 38:25.005 [SPEAKER_04]: Then the next question is, what is the vehicle that he wants?

38:25.166 --> 38:28.348 [SPEAKER_04]: He wants to utilize for this.

38:28.668 --> 38:35.133 [SPEAKER_04]: And he looks, he's looking at MU and I, and that is a very common, very liquid municipal bond ETF.

38:35.553 --> 38:43.799 [SPEAKER_04]: But remember, just because it says municipal doesn't mean that it's without risk or low risk, there are other types of risks, right?

38:43.840 --> 38:47.202 [SPEAKER_04]: Municipal is just credit risk and taxation, et cetera.

38:47.843 --> 38:49.304 [SPEAKER_04]: But this is the PIMCO intermediate.

38:50.120 --> 38:51.521 [SPEAKER_04]: Municipal Bond, ETF.

38:51.981 --> 38:57.084 [SPEAKER_04]: And what you see within our media is, the fact that the duration is about six years, yields are relatively low.

38:57.405 --> 39:02.528 [SPEAKER_04]: This is a high correlation to bond yields.

39:02.568 --> 39:03.729 [SPEAKER_04]: And I wouldn't want that.

39:03.829 --> 39:04.629 [SPEAKER_04]: I want short.

39:04.970 --> 39:06.170 [SPEAKER_04]: Munis, that's what I would go with.

39:06.210 --> 39:09.292 [SPEAKER_04]: I would look at something like a SMB or something like that.

39:09.312 --> 39:10.833 [SPEAKER_04]: The Vanix short, uni ETF.

39:11.193 --> 39:12.774 [SPEAKER_04]: I much rather have short duration.

39:13.115 --> 39:17.958 [SPEAKER_04]: Munis are fine, but make sure you stay away from a lot of duration, which MUNI kind of has.

39:18.636 --> 39:35.205 [SPEAKER_04]: Now we're heading into our final break with the questions in now, eight and a nine and a nine chart.

39:35.225 --> 39:40.708 [SPEAKER_06]: The more you learn about how the market works, the better your chances for success.

39:41.429 --> 39:45.231 [SPEAKER_06]: So don't forget to call, invest, talk, eight, eight, nine, chart.

39:47.897 --> 39:49.078 [SPEAKER_00]: Hello, Jason and dude.

39:49.178 --> 39:51.200 [SPEAKER_00]: This is Paulo from Davisburg.

39:51.680 --> 39:53.782 [SPEAKER_00]: I have a question about talent here.

39:53.963 --> 39:56.405 [SPEAKER_00]: I've owned talent here share students.

39:57.093 --> 40:07.859 [SPEAKER_00]: shortly after his IPO, and after the stop doubled, I sold two thirds of my position to log in profits and decided to let the remaining shares run.

40:07.879 --> 40:19.886 [SPEAKER_00]: We have bought shares, I wanted to keep them at least five to ten years, for the recent rally though, I'm now considering taking some additional profits

40:20.422 --> 40:28.087 [SPEAKER_00]: Currently, Pond here makes up about five point five percent of my portfolio and I'm thinking of trimming it down to five percent.

40:28.487 --> 40:37.953 [SPEAKER_00]: Well, trying to say, yeah, I was also thinking of exploring the idea of hedging against a potential downturn using put options.

40:38.663 --> 40:48.686 [SPEAKER_00]: My long-term conviction in the company remains very, very strong and believes Palantir has a potential to become one of the next trillion dollar companies.

40:48.926 --> 40:52.507 [SPEAKER_00]: What would you advise on very curious to hear your thoughts on this?

40:52.767 --> 40:55.168 [SPEAKER_00]: Thank you and have a good one.

40:55.308 --> 40:55.668 [SPEAKER_00]: Bye bye.

40:55.688 --> 41:00.630 [SPEAKER_04]: All right, looking at Palantir and had good earnings at at least.

41:01.475 --> 41:10.880 [SPEAKER_04]: The market reaction earnings where we're solid, forty-eight percent revenue growth last quarter earnings up to seventy-eight percent, earnings this year will be sixty-three cents in eighty-two cents next year.

41:11.281 --> 41:12.581 [SPEAKER_04]: But it's hundred seventy-three dollars stock.

41:13.222 --> 41:18.525 [SPEAKER_04]: It is probably one of the most overvalued stocks I've ever seen about hundred times sales.

41:19.605 --> 41:21.867 [SPEAKER_04]: And you know, twenty times sales is high.

41:21.927 --> 41:24.089 [SPEAKER_04]: So it's about five times that extreme number.

41:24.690 --> 41:25.750 [SPEAKER_04]: And there's a lot of hype around it.

41:25.830 --> 41:33.277 [SPEAKER_04]: And I think most telling is if you go look at insiders, insiders are dumping shares rapidly.

41:34.333 --> 41:34.793 [SPEAKER_04]: rapidly.

41:34.914 --> 41:45.921 [SPEAKER_04]: So even the CEO who talks a big game, he's selling shares as fast as he can, as fast as their issued, he's selling.

41:46.081 --> 41:58.510 [SPEAKER_04]: And so, you know, it's to me, the insiders are pumping the stock and they come out there and it's, it certainly has potential to be huge, but it's already priced that way.

41:58.530 --> 42:00.892 [SPEAKER_04]: It's a four hundred billion dollar market gap.

42:02.903 --> 42:05.265 [SPEAKER_04]: on a free cash flow of one point three billion.

42:07.166 --> 42:08.287 [SPEAKER_04]: Okay, they have a good balance sheet.

42:08.347 --> 42:08.887 [SPEAKER_04]: That's good.

42:08.967 --> 42:09.368 [SPEAKER_04]: No debt.

42:09.408 --> 42:10.048 [SPEAKER_04]: That's positive.

42:10.448 --> 42:11.149 [SPEAKER_04]: They're profitable.

42:11.689 --> 42:12.130 [SPEAKER_04]: That's good.

42:13.290 --> 42:22.237 [SPEAKER_04]: But if you look at the share count, it's gone from when they want public one point five billion shares to two point three billion shares.

42:22.817 --> 42:25.059 [SPEAKER_04]: And it's only been public for about five years.

42:26.480 --> 42:28.322 [SPEAKER_04]: Okay, so number shares outstanding.

42:28.342 --> 42:29.563 [SPEAKER_04]: I've just got up about fifty percent.

42:29.583 --> 42:30.344 [SPEAKER_04]: What are they been?

42:30.384 --> 42:31.305 [SPEAKER_04]: Where's that going?

42:31.525 --> 42:34.188 [SPEAKER_04]: Those number shares are probably just going to insiders.

42:35.329 --> 42:37.071 [SPEAKER_04]: And they're getting grand shares and they're selling them.

42:37.111 --> 42:39.673 [SPEAKER_04]: And so this is your classic retail stock.

42:40.774 --> 42:45.999 [SPEAKER_04]: If I would take this down to, is that five and absolutely portfolio, I'd take it down after these earnings, probably to two percent.

42:47.180 --> 42:49.383 [SPEAKER_04]: Now, should you hedge it with put options?

42:50.262 --> 42:59.508 [SPEAKER_04]: But typically a good idea, the problem is is that it's such a speculative name, that the implied volatility on the name is very high.

43:00.288 --> 43:07.033 [SPEAKER_04]: So your cost, the bipolar options is going to be, it's going to be hard for me difficult.

43:08.573 --> 43:09.834 [SPEAKER_04]: I wouldn't pay that premium.

43:10.535 --> 43:12.436 [SPEAKER_04]: I would just simply trim it.

43:12.496 --> 43:14.837 [SPEAKER_04]: Probably have a trailing stop, right?

43:14.857 --> 43:17.319 [SPEAKER_04]: I would trim it here on this news.

43:20.647 --> 43:28.981 [SPEAKER_04]: If it ever breaks below the two-and-a-day moving average right now, that's at about ninety-seven dollars per share, I'm just gonna go up over time.

43:29.622 --> 43:29.803 [SPEAKER_04]: If it...

43:31.724 --> 43:32.184 [SPEAKER_04]: breaks that.

43:32.945 --> 43:45.796 [SPEAKER_04]: That's one of the several positions because these have a names where the rifle tower goes up dramatically and then it will fall at eighty ninety plus percent from its peak once growth slows right if they have some sort.

43:45.816 --> 43:51.802 [SPEAKER_04]: Right for now it seems like he's in bed with the current administration and things are going well.

43:53.303 --> 44:06.572 [SPEAKER_04]: So that's fine, but all you have to do is say the wrong thing, and you know, you maybe the new administration comes in and doesn't like volunteers technology, they want to go in a different direction, et cetera.

44:08.180 --> 44:10.262 [SPEAKER_04]: You know, this stock will fall out a bit.

44:10.863 --> 44:19.891 [SPEAKER_04]: For now, the trend is higher, but the risks as it continues go up just accelerated because you have to really grow into this valuation in a dramatic way.

44:19.911 --> 44:25.876 [SPEAKER_04]: You have to have this growth for the next five, ten years for this valuation to make any sense at all.

44:26.557 --> 44:29.360 [SPEAKER_04]: So yeah, I would be trimming it.

44:29.580 --> 44:32.903 [SPEAKER_04]: I would probably cut it in half or more at the current time.

44:35.478 --> 44:59.092 [SPEAKER_04]: Well, I'm Justin Klein, and if today's show, maybe think about your own financial picture in any way, whether you have a plan for the current environment, the stagnation environment we are in, if it fits, if you strategy fits, this environment, whether you're a longer-term goals or like to be met or not, these are things that we run through for our clients and listeners.

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45:05.034 --> 45:10.876 [SPEAKER_04]: So if you need help, need a second opinion, just head over to invest.com, click on the portfolio review button.

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