00:04.066 --> 00:15.762 [SPEAKER_06]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk, independent thinking, shared success.

00:17.813 --> 00:26.522 [SPEAKER_06]: Invest talk is may possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

00:27.363 --> 00:33.610 [SPEAKER_06]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.

00:36.147 --> 00:40.110 [SPEAKER_02]: Good afternoon fellow investors and welcome back to Invest Talk.

00:40.130 --> 00:48.738 [SPEAKER_02]: This is our Tuesday August, nineteen twenty twenty five edition and this is going to be a very interesting show.

00:50.102 --> 00:59.547 [SPEAKER_02]: I'm just excited for a show and while mainly because our main focus point, which we do line up a couple of days beforehand, kind of hits on some market reaction today.

01:00.047 --> 01:02.549 [SPEAKER_02]: It is a very interesting day for markets.

01:03.089 --> 01:08.272 [SPEAKER_02]: A very different day than we've seen in a little while, really since the first quarter of the year.

01:08.992 --> 01:23.103 [SPEAKER_02]: But it's also not surprising, I've been kind of calling for some sort of increased market volatility in August, it's in September, part of its being over bot, part of its seasonality, part of its valuation, part of its liquidity, there are multiple factors that go into this.

01:23.143 --> 01:28.968 [SPEAKER_02]: So I'm going to bring this all together for you this hour talking about

01:30.237 --> 01:35.781 [SPEAKER_02]: What is happening in today's market, how maybe you should think about rebalancing your portfolio.

01:35.801 --> 01:41.725 [SPEAKER_02]: Going back to yesterday's topic, we talked about, you don't want to chase returns and you often get caught up in hype.

01:41.765 --> 01:44.046 [SPEAKER_02]: That's the nature of human nature.

01:44.927 --> 01:49.110 [SPEAKER_02]: And then it doesn't mean you don't trade, but it also means that you rebalance.

01:51.230 --> 01:51.790 [SPEAKER_02]: Managed risk.

01:52.290 --> 01:55.531 [SPEAKER_02]: And that's what this show is really about every day.

01:55.571 --> 01:56.832 [SPEAKER_02]: It's not, I'm not here.

01:56.892 --> 01:59.952 [SPEAKER_02]: We're not here to bang bells and whistles like Kramer.

02:00.472 --> 02:09.055 [SPEAKER_02]: We're not here to just spew hype around particular companies or sectors.

02:10.315 --> 02:14.796 [SPEAKER_02]: Bring it back down to Earth of what works over longer term periods.

02:14.836 --> 02:16.957 [SPEAKER_02]: Yes, you can trade and you can

02:18.050 --> 02:25.253 [SPEAKER_02]: make some big returns over short periods of time, but that's not really what the investment world, the financial world, the equity world is about, right?

02:25.273 --> 02:30.655 [SPEAKER_02]: It's about consistently making returns year after year.

02:30.695 --> 02:42.659 [SPEAKER_02]: You're going to have down years, you're going to make mistakes, but if you can compound your returns consistently, then this is a road to financial independence financial success.

02:42.779 --> 02:45.840 [SPEAKER_02]: And so that's what every day on a best talk is really about.

02:45.860 --> 02:47.381 [SPEAKER_02]: And sometimes there are

02:48.672 --> 02:50.133 [SPEAKER_02]: Interesting days like today.

02:51.294 --> 02:53.255 [SPEAKER_02]: Sometimes they're very boring days actually those yesterday.

02:53.395 --> 02:59.318 [SPEAKER_02]: We talked about that in a not much movement, but it shows you any day anything can happen.

02:59.919 --> 03:13.227 [SPEAKER_02]: And so we're here to unpack that and help bring you lessons that can help you become a better investor and improve the performance of your portfolios and your broader financial picture.

03:14.532 --> 03:24.714 [SPEAKER_02]: Now, we do this mainly by answering your findings at a investment questions and giving you actionable, respective in data that can improve your situation.

03:25.614 --> 03:27.414 [SPEAKER_02]: Now, in just a bit, we'll talk about today's market performance.

03:27.494 --> 03:31.835 [SPEAKER_02]: Like I said, and run down the show topics, but first, let's tackle this color question now.

03:32.415 --> 03:40.597 [SPEAKER_08]: Let's see if it had a question on encore capital group, ECPG, just curious what you guys have to say.

03:40.797 --> 03:41.257 [SPEAKER_08]: Thanks a lot.

03:42.082 --> 03:49.164 [SPEAKER_02]: All right, looking at on core capital group, this is actually a name we used to own for clients, but sold it some years back.

03:50.104 --> 03:57.265 [SPEAKER_02]: And what they basically do is they purchase bad debt from banks, and they go and collect it.

03:57.645 --> 04:08.668 [SPEAKER_02]: You're talking about building quick credit cards, car loans, whatever the bank has, customers have fallen behind on the consumer side, and they want to get rid of.

04:10.283 --> 04:12.683 [SPEAKER_02]: At a certain point, they just sell it off to debt collectors.

04:12.743 --> 04:16.724 [SPEAKER_02]: And on core capital, it was one of the largest public debt collectors out there.

04:17.364 --> 04:20.605 [SPEAKER_02]: Now historically, they've had pretty good profitability.

04:21.045 --> 04:27.726 [SPEAKER_02]: The issue as of late, and this is an interesting one, because when times are good, they don't do that well.

04:28.466 --> 04:35.128 [SPEAKER_02]: Because consumers have good balance sheets, they have jobs, most of them are paying on their loans.

04:35.968 --> 04:36.788 [SPEAKER_02]: And there's not a lot of

04:38.745 --> 04:39.405 [SPEAKER_02]: Loads to buy.

04:39.825 --> 04:47.068 [SPEAKER_02]: And one of the ones they do buy, these are for consumers that are really down the ups and they're not really collecting much.

04:47.108 --> 04:50.269 [SPEAKER_02]: And so they lost money in twenty twenty three twenty twenty four.

04:50.590 --> 04:52.890 [SPEAKER_02]: So let's make seven dollars and ninety seven cents this year.

04:53.711 --> 04:56.452 [SPEAKER_02]: That would be good earnings have come back with the last couple of quarters.

04:57.572 --> 04:58.633 [SPEAKER_02]: So this would be a play.

04:59.953 --> 05:04.655 [SPEAKER_02]: If you were feeling we're definitely going into a deeper recession.

05:07.247 --> 05:08.870 [SPEAKER_02]: That's where I would buy it.

05:09.852 --> 05:11.836 [SPEAKER_02]: I think we're a way, I was here always.

05:12.297 --> 05:16.504 [SPEAKER_02]: As I said before, we're in the latter innings of this growth phase, but there's still time on the clock.

05:17.625 --> 05:18.886 [SPEAKER_02]: So I would be patient with it.

05:19.086 --> 05:36.134 [SPEAKER_02]: It's something maybe I pick up next year, but it's still in the downtrend and I would be, well, it's got to be patient and probably, oh, the real name I would pick up sometime next year, because it is fairly well-run has good profitability, good balance sheet, et cetera.

05:36.215 --> 05:42.778 [SPEAKER_02]: So, name of the watch list, but I would wait for the, I come up with a situation deteriorating in a bigger way.

05:43.795 --> 06:01.287 [SPEAKER_02]: Now we have a lot of ground to cover over the next forty five minutes or so and my main focus point is about value investing in how it's finally excelling again in twenty twenty five but not here domestically it's in foreign stocks so international stocks in general about past u.s.

06:01.547 --> 06:03.589 [SPEAKER_02]: domestic equities so far this year

06:04.790 --> 06:11.796 [SPEAKER_02]: But some of you might say, well, yeah, but the growth side of the market is had a huge comeback since April lows, it's doing really well, and the back of the eye, all of that.

06:12.636 --> 06:20.082 [SPEAKER_02]: But even considering that, even if you just look at US growth, international values to upperforming that.

06:20.363 --> 06:29.190 [SPEAKER_02]: So that's an interesting shift, and it could tell you a lot more about some emerging trends in the broader equity markets, not just domestically, but worldwide as well.

06:29.850 --> 06:32.692 [SPEAKER_02]: On top of that, we have other topics, and this is the big one, which is,

06:33.627 --> 06:48.919 [SPEAKER_02]: The I winter talked about this recently that the parallels between now and the telecom boom in the late nineties around fiber optic build out and capacity there that there's definitely some parallels.

06:50.161 --> 06:52.724 [SPEAKER_02]: There's always differences, but there are a lot of parallels also.

06:53.225 --> 06:54.747 [SPEAKER_02]: And there's usually an inflection point.

06:55.127 --> 06:57.230 [SPEAKER_02]: With that, it was world-con going bankrupt.

06:57.330 --> 07:01.615 [SPEAKER_02]: Now, it doesn't mean you have to have a company go bankrupt, but there's certainly can be disappointments.

07:02.296 --> 07:07.162 [SPEAKER_02]: And there are a couple of recent disappointments that are telling you a lot about

07:08.075 --> 07:11.837 [SPEAKER_02]: maybe the sentiment that is shifting within the AI space.

07:12.417 --> 07:18.200 [SPEAKER_02]: And today is a good example of the potential manifestation of the sentiment shift.

07:18.220 --> 07:19.480 [SPEAKER_02]: So we'll look at that story.

07:20.101 --> 07:23.622 [SPEAKER_02]: Also, the Fed is set to cut rates next month.

07:23.843 --> 07:25.323 [SPEAKER_02]: We know I have Jackson Hole this week.

07:25.823 --> 07:34.988 [SPEAKER_02]: And certainly the speech by Jerome Palin Friday will likely precipitate some sort of market reaction

07:37.012 --> 07:42.395 [SPEAKER_02]: And a lot of people will say, well, if that's going to cut rates, and barren costs are going to go down, and the answer that is maybe.

07:43.595 --> 07:55.162 [SPEAKER_02]: So what we're going to look at are some studies of what does a cut in the Fed funds rate mean for the tenure treasure you rate, because that's the proxy for most borrowing the economy.

07:55.602 --> 08:01.505 [SPEAKER_02]: You're talking about mortgages, you're talking about your heloc, you're talking about

08:04.026 --> 08:07.111 [SPEAKER_02]: the rate that companies pay when they borrow money, et cetera.

08:07.812 --> 08:11.478 [SPEAKER_02]: So we'll look at that story and what the statistics about the past tell us.

08:12.961 --> 08:15.745 [SPEAKER_02]: And then lastly, Ken, if we have time,

08:18.896 --> 08:24.480 [SPEAKER_02]: Top ten percent of income earners in this country continue to drive consumer spending going forward.

08:24.780 --> 08:25.780 [SPEAKER_02]: So we'll look at that story.

08:25.801 --> 08:27.442 [SPEAKER_02]: We also have voice bank calls.

08:27.762 --> 08:28.782 [SPEAKER_02]: Those are always most important.

08:28.863 --> 08:30.884 [SPEAKER_02]: Your phone calls are always most important.

08:30.904 --> 08:32.305 [SPEAKER_02]: So I encourage you to call.

08:32.345 --> 08:33.746 [SPEAKER_02]: We love your live calls.

08:34.806 --> 08:36.007 [SPEAKER_02]: between four and five Pacific time.

08:36.567 --> 08:41.411 [SPEAKER_02]: So don't hesitate to reach out if you are listening live, or after hours, that's great too.

08:41.771 --> 08:43.132 [SPEAKER_02]: And we have some voice bank questions.

08:43.893 --> 08:46.835 [SPEAKER_02]: One on gains in taxes and the others on deer in company.

08:47.516 --> 08:53.160 [SPEAKER_02]: And then we have questions that came in via the comment section over on the investment on YouTube channel as well.

08:55.140 --> 09:00.585 [SPEAKER_02]: Now we're gonna head into a quick break, but I welcome your finance and investment questions right now.

09:00.665 --> 09:02.788 [SPEAKER_02]: No questions too simple or too complex.

09:03.428 --> 09:07.913 [SPEAKER_02]: You set the agenda on a best stock, so give us a call now at eight and a day, nine and a share.

09:12.812 --> 09:21.318 [SPEAKER_04]: The prosperous future you envision for yourself and your family will not happen without strategic planning and definitive action.

09:27.982 --> 09:36.466 [SPEAKER_04]: For the unprepared investor, market volatility around the world demonstrates risk, but opportunities wait for no one.

09:37.026 --> 09:43.008 [SPEAKER_04]: And now, maybe the best time in years to invest wisely, to invest strategically.

09:43.328 --> 09:46.870 [SPEAKER_02]: What I would do is keep saving and look for other opportunities.

09:47.310 --> 09:54.193 [SPEAKER_04]: But how can you decide what sectors to avoid, which stocks to buy, and what might be the best price point?

09:57.875 --> 10:06.941 [SPEAKER_04]: The next decisive step on your path to financial freedom begins with a Spotify search for in Vestock.

10:07.721 --> 10:10.683 [SPEAKER_04]: Listen live or download the free podcast.

10:15.607 --> 10:18.369 [SPEAKER_03]: Have you heard about the new Invest Talk store?

10:18.930 --> 10:22.593 [SPEAKER_03]: That's right, you'll find great merch for the savvy investor.

10:23.094 --> 10:27.617 [SPEAKER_03]: It's all there for you now at InvestTalkStore.com.

10:28.098 --> 10:34.083 [SPEAKER_03]: And now Justin Klein is here and taking your finance investment questions live.

10:34.563 --> 10:35.584 [SPEAKER_03]: Call Invest Talk.

10:41.372 --> 10:58.357 [SPEAKER_02]: In the United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States, United States,

11:09.860 --> 11:23.145 [SPEAKER_02]: What drove the market down, it was large cap growth and small cap growth, large cap growth, according to Morningstar down one in two thirds percent and small cap growth down about one and a quarter percent.

11:23.845 --> 11:26.346 [SPEAKER_02]: So that was the driver.

11:26.786 --> 11:31.248 [SPEAKER_02]: You had, if you look at the heat map of the, and if you're lost on YouTube, you'll see these

11:32.756 --> 11:34.037 [SPEAKER_02]: In video down three and a half percent.

11:34.297 --> 11:35.938 [SPEAKER_02]: Broadcom down three and a half percent.

11:36.038 --> 11:36.818 [SPEAKER_02]: Met it down two.

11:37.139 --> 11:38.219 [SPEAKER_02]: Amazon down one and a half.

11:38.459 --> 11:39.820 [SPEAKER_02]: Oracle down five point eight.

11:39.880 --> 11:41.621 [SPEAKER_02]: Palin's here down nine point three.

11:41.661 --> 11:43.342 [SPEAKER_02]: Tesla down one point seven five.

11:44.423 --> 11:45.264 [SPEAKER_02]: And so on.

11:46.604 --> 11:48.486 [SPEAKER_02]: But the breath was actually good.

11:48.546 --> 11:50.307 [SPEAKER_02]: Most stocks were actually up today.

11:51.032 --> 11:52.392 [SPEAKER_02]: Most talks were up today.

11:53.192 --> 11:54.513 [SPEAKER_02]: So it was a rotation.

11:54.593 --> 11:55.653 [SPEAKER_02]: This is part of that story.

11:55.733 --> 11:57.133 [SPEAKER_02]: I'll bring to you with here in a little bit.

11:57.193 --> 11:59.574 [SPEAKER_02]: It's just the starting tube.

12:00.114 --> 12:00.914 [SPEAKER_02]: Be a sentiment shift.

12:01.674 --> 12:09.216 [SPEAKER_02]: And with the market so heavily weighted towards those mag seven names, you're really tied.

12:09.416 --> 12:13.217 [SPEAKER_02]: The market's going to be really tied to the sentiment around AI.

12:14.137 --> 12:14.277 [SPEAKER_02]: Now,

12:16.178 --> 12:39.285 [SPEAKER_02]: If you look at the max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max, max

12:45.949 --> 12:49.272 [SPEAKER_02]: a sector that struggled beyond tech.

12:50.332 --> 12:53.254 [SPEAKER_02]: Really wasn't another sector besides tech that struggled.

12:54.073 --> 12:55.675 [SPEAKER_02]: Well, that's pulling up and I can give you that.

12:55.695 --> 12:58.638 [SPEAKER_02]: I'll give you what the rest of the asset classes did.

12:59.238 --> 13:01.481 [SPEAKER_02]: Treasuries were a bit stronger.

13:01.541 --> 13:04.564 [SPEAKER_02]: You had rates down a little bit too to four bases points across the curve.

13:04.984 --> 13:07.567 [SPEAKER_02]: Dollar was that point one percent to not much movement there.

13:07.907 --> 13:12.372 [SPEAKER_02]: Gold finished down point six percent and Bitcoin features down two point seven percent.

13:13.353 --> 13:16.756 [SPEAKER_02]: And WTI was down one point seven percent.

13:17.297 --> 13:17.837 [SPEAKER_02]: as well.

13:17.958 --> 13:21.240 [SPEAKER_02]: So, what's interesting is Bitcoin prices.

13:21.561 --> 13:27.185 [SPEAKER_02]: I talked about this, I believe yesterday, that the weakness over the weekend was very interesting.

13:27.205 --> 13:36.113 [SPEAKER_02]: We kind of, you know, try to break out into the mid one, twenties on Bitcoin and that quickly reversed and hung back down into the, you know, about the one and fifteen level.

13:37.073 --> 13:39.815 [SPEAKER_02]: And a one, twelve is kind of the big support.

13:40.355 --> 13:44.318 [SPEAKER_02]: And now we're hanging right around one, thirteen as we speak right now.

13:44.398 --> 13:52.483 [SPEAKER_02]: And so the fact that that's starting to break a little bit is usually a canary in the coal mine of liquidity as well as high correlation to

13:53.783 --> 13:55.504 [SPEAKER_02]: the broader tech sector.

13:56.105 --> 14:00.968 [SPEAKER_02]: And so the fact that that's now I just broke one, thirteen, one, twelve, nine, thirty, two right now.

14:01.068 --> 14:03.970 [SPEAKER_02]: So you're definitely seeing some weakness overall.

14:04.191 --> 14:06.072 [SPEAKER_02]: And that's why I now have the sectors up.

14:06.332 --> 14:08.073 [SPEAKER_02]: You have telecom was down one point.

14:08.173 --> 14:08.414 [SPEAKER_02]: Sorry.

14:08.954 --> 14:11.155 [SPEAKER_02]: technology was down one point seven percent today.

14:11.475 --> 14:17.617 [SPEAKER_02]: Communications, which is kind of an offshoot with a lot of, you know, met in Google and there, uh, point six percent down on that front.

14:17.917 --> 14:19.118 [SPEAKER_02]: Everything else was flat up.

14:19.658 --> 14:21.538 [SPEAKER_02]: So it wasn't a bad day in the market.

14:21.558 --> 14:25.400 [SPEAKER_02]: So it was just a bad day for tech and communications and anything AI related and

14:27.448 --> 14:39.723 [SPEAKER_02]: It's hard to call it top, but when you have this sentiment extreme, and then you have this big shift in one day, it's something that makes me stand up and notice.

14:40.003 --> 14:41.325 [SPEAKER_02]: And if we get fall through tomorrow,

14:42.630 --> 14:46.732 [SPEAKER_02]: That could be the end of this recent cycle in the AS stocks.

14:46.912 --> 14:58.758 [SPEAKER_02]: So just understand that, that this was a day that you have to pay attention to, and being looked up for tomorrow for a fall, if you get another decent down day in that space, I think a top might be in.

14:59.418 --> 15:04.321 [SPEAKER_02]: But I'm moving to a break so to come, my focus point, and more answers to your questions.

15:04.981 --> 15:05.942 [SPEAKER_02]: So anything that's on your mind?

15:06.022 --> 15:08.203 [SPEAKER_02]: Give me a call now at eight, eight, eight, ninety nine chart.

15:11.327 --> 15:13.228 [SPEAKER_06]: Got a question for Justin or Luke?

15:13.649 --> 15:15.490 [SPEAKER_06]: You're the best person to ask it.

15:15.790 --> 15:22.454 [SPEAKER_01]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?

15:22.754 --> 15:24.996 [SPEAKER_05]: Invest Talk is ready, twenty-four-seven.

15:25.016 --> 15:32.100 [SPEAKER_05]: I would really appreciate if you could give me an entry point for a company called Metronic M.D.P.

15:32.460 --> 15:39.445 [SPEAKER_06]: Call Invest Talk, eight-eight-nine chart, or post your questions on the Invest Talk YouTube channel.

15:45.716 --> 15:58.043 [SPEAKER_03]: 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

16:02.770 --> 16:13.501 [SPEAKER_02]: Now, our main focus point on the best talk today is about how value investing is finally excelling in twenty twenty five, but there's one catch and it's the fact that it's an international equities.

16:14.021 --> 16:18.566 [SPEAKER_02]: Now, overall international stocks have outperformed US equities so far this year.

16:21.840 --> 16:26.103 [SPEAKER_02]: It's even if you look at just the growth side of the market, it's still outperforming.

16:26.703 --> 16:36.228 [SPEAKER_02]: International value equities have remained well ahead of the pack, even with that resurgence in AI stocks to post April.

16:40.033 --> 16:51.841 [SPEAKER_02]: Now, international equities in general are slanted more towards value, the value side of the market just as if you bought the S&P or any broad index that's US focused, you're pretty much slanting towards the growth side of the market.

16:52.081 --> 16:53.282 [SPEAKER_02]: So you have to always understand that.

16:55.243 --> 17:01.087 [SPEAKER_02]: Now, periods where international value stocks have out-performed US stocks are pretty common.

17:02.508 --> 17:02.648 [SPEAKER_02]: Right.

17:02.949 --> 17:04.430 [SPEAKER_02]: Our pretty uncommon, excuse me.

17:06.777 --> 17:12.860 [SPEAKER_02]: You have to look at, twenty- twenty-two obviously, you had Nasdaq was down thirty-three percent, the S&P was down nearly twenty percent.

17:13.421 --> 17:18.543 [SPEAKER_02]: That was a year where value certainly outperformed and international value definitely.

17:19.924 --> 17:23.126 [SPEAKER_02]: But before that, you have to go back to two thousand six-teen when that happened.

17:23.466 --> 17:28.569 [SPEAKER_02]: And that was really driven by a rise in energy stocks and financials.

17:30.230 --> 17:36.593 [SPEAKER_02]: So those types of names tend to be slanted more towards the value side of the market.

17:38.468 --> 17:53.231 [SPEAKER_02]: And that's why international indexes tend to have a lot more value type names because they tend to be more large banks, international energy names, et cetera.

17:53.791 --> 17:54.471 [SPEAKER_02]: And that a lot of tech.

17:54.911 --> 17:57.711 [SPEAKER_02]: There's not a lot of tech innovation outside of the United States.

17:59.932 --> 18:06.133 [SPEAKER_02]: Now, the question is when will this translate to outperforms a value here in the United States?

18:08.978 --> 18:15.643 [SPEAKER_02]: Because when international tends to outperform, value domestically also tends to outperform.

18:15.803 --> 18:24.430 [SPEAKER_02]: So it's kind of odd to see that international value outperform domestic growth, but not domestic value outperform domestic growth.

18:27.852 --> 18:33.997 [SPEAKER_02]: And the answer, I think, really comes down to what I said is when is that inflection point around AI?

18:35.890 --> 18:39.291 [SPEAKER_02]: You're earlier this year, you had the deep seek, remember that deep seek news?

18:39.331 --> 18:42.931 [SPEAKER_02]: And that really kind of took the wind out of AI a little bit.

18:44.051 --> 18:49.913 [SPEAKER_02]: And you started to see utilities, consumer staples, nutritional value type names, start to outperform.

18:51.093 --> 18:55.053 [SPEAKER_02]: And what's interesting is today is another one of those days.

18:59.074 --> 19:00.054 [SPEAKER_02]: And could this be the start?

19:00.714 --> 19:03.515 [SPEAKER_02]: Are the best performers today were REITS?

19:04.983 --> 19:07.044 [SPEAKER_02]: consumer staples and utilities.

19:07.765 --> 19:08.205 [SPEAKER_02]: Think about that.

19:08.425 --> 19:15.350 [SPEAKER_02]: Those were all up one percent or more as a sector on a day where the NASDAQ was down nearly one and a half percent.

19:17.451 --> 19:20.714 [SPEAKER_02]: So that's very interesting and this could be the start of that.

19:20.774 --> 19:28.919 [SPEAKER_02]: Now, another aspect to value upperforming, often is amygdala activity.

19:30.200 --> 19:34.083 [SPEAKER_02]: So there are a couple factors that will spark

19:34.962 --> 19:35.742 [SPEAKER_02]: more aminactivity.

19:36.183 --> 19:37.063 [SPEAKER_02]: Number one, lower rates.

19:37.783 --> 19:47.348 [SPEAKER_02]: So if the Fed goes on an easing cycle and it does translate into lower interest rates, which I'll talk about later, may or may not, that could drive more aminactivity.

19:47.608 --> 19:49.309 [SPEAKER_02]: But also profitability.

19:49.649 --> 19:57.733 [SPEAKER_02]: A lot of times when businesses profit slow, how do they spur profit growth?

19:58.848 --> 20:05.251 [SPEAKER_02]: You can do that organically by investing in the business and trying to grow the business or you can do it through acquisition.

20:06.352 --> 20:17.398 [SPEAKER_02]: And a lot of times when you seek a profit slow, that's where M&A activity tends to pick up, especially if interest rates are reasonable, the cost of capital is reasonable.

20:19.863 --> 20:24.805 [SPEAKER_02]: So that's kind of the story here of when value will perform.

20:24.825 --> 20:32.509 [SPEAKER_02]: It hasn't quite yet, but today, maybe the start of that trend, especially if we get follow through tomorrow.

20:35.351 --> 20:38.772 [SPEAKER_02]: Every day we see questions from the comments section over on the best talk.

20:39.333 --> 20:39.993 [SPEAKER_02]: YouTube channel.

20:41.292 --> 20:44.733 [SPEAKER_02]: Here's when they came in earlier, Lindsey says, what are your thoughts on the short term rental market?

20:45.313 --> 20:51.315 [SPEAKER_02]: Are there good opportunities for investments in short term rental properties out there or is the market to saturate at this point?

20:51.935 --> 20:56.736 [SPEAKER_02]: Now, the first thing you have to understand about every real estate market is that it's localized.

20:57.937 --> 21:02.718 [SPEAKER_02]: Now, there are general trends in generally the real estate market is slowing.

21:05.912 --> 21:10.014 [SPEAKER_02]: But there are pockets of, you know, like in Denver, for example, Austin, Texas.

21:10.054 --> 21:11.395 [SPEAKER_02]: These are markets that are very weak.

21:11.915 --> 21:13.796 [SPEAKER_02]: Other markets, not quite as bad.

21:14.556 --> 21:15.917 [SPEAKER_02]: Now, it comes to short-term rental market.

21:16.597 --> 21:18.358 [SPEAKER_02]: I'm very weary of that market.

21:19.199 --> 21:23.681 [SPEAKER_02]: Mainly because it hasn't really seen a true recession.

21:25.619 --> 21:31.203 [SPEAKER_02]: The Airbnb VRBL market, it was really in its infancy in two thousand eight nine, right?

21:31.223 --> 21:33.585 [SPEAKER_02]: I don't even know if it really existed at that point.

21:33.605 --> 21:37.848 [SPEAKER_02]: It didn't really start taking off until, you know, the twenty-tens, mid-twenty-tens.

21:39.350 --> 21:52.340 [SPEAKER_02]: And if you buy at the rate price and you buy the rate low cow, there's not a lot of competition, you can make very good returns, but it's also kind of headache.

21:53.238 --> 21:55.199 [SPEAKER_02]: It's hot, you know, clients have talked to it.

21:55.259 --> 21:58.440 [SPEAKER_02]: Friends, family, that have these type of properties.

21:59.221 --> 22:00.381 [SPEAKER_02]: And it's a lot of work.

22:00.481 --> 22:01.682 [SPEAKER_02]: It's own little business.

22:01.802 --> 22:05.364 [SPEAKER_02]: It's basically a bed and breakfast, so that's what Airbnb stands for, right?

22:05.664 --> 22:07.925 [SPEAKER_02]: It's air, bed, and breakfast.

22:09.626 --> 22:18.910 [SPEAKER_02]: And so it's a lot of work, and you can get good returns, but you need to have the time and the discipline and the know-how to manage these properties.

22:19.662 --> 22:27.588 [SPEAKER_02]: And then there are regulatory issues, locales, and then they change the laws, the rules, and that can hurt the value you're seeing that if you can, in Palm Springs area right now.

22:28.389 --> 22:36.315 [SPEAKER_02]: So, are there opportunities sure, but you have to do your deep research and make sure you buy right, both on price and the right low cap.

22:37.697 --> 22:39.138 [SPEAKER_02]: Now, next in best stock, we're looking to the stock.

22:39.338 --> 22:42.660 [SPEAKER_02]: New student loan repayment policies following Trump's budget bill.

22:42.921 --> 22:46.764 [SPEAKER_02]: That's story tomorrow, but for now I'm Justin Klein ready to take your calls now at eight, eight, nine, nine chart.

22:52.203 --> 22:56.605 [SPEAKER_03]: Invest talk downloads have now surpassed sixty one million.

22:57.146 --> 23:05.370 [SPEAKER_03]: Justin Klein and Luke Guerrero provide unbiased answers to your finance and investment questions.

23:06.050 --> 23:10.072 [SPEAKER_03]: Invest talk eight eight ninety nine chart.

23:10.732 --> 23:12.893 [SPEAKER_09]: Justin Luke Johnson Clayton.

23:13.634 --> 23:16.155 [SPEAKER_09]: So appreciative for everything you've done for us.

23:16.515 --> 23:17.175 [SPEAKER_09]: Here's my question.

23:17.376 --> 23:19.337 [SPEAKER_09]: Listen to your advice in the last ten years.

23:20.807 --> 23:23.168 [SPEAKER_09]: I've been pretty dang successful in my account.

23:24.088 --> 23:29.369 [SPEAKER_09]: I have an investing account, this is a straight investment account, and a traditional IRA.

23:29.589 --> 23:36.690 [SPEAKER_09]: My understanding is, as we go to the later part of the year, and I move some of this into bonds and treasuries, expecting a little bit of a pullback.

23:36.991 --> 23:44.052 [SPEAKER_09]: As I switch my investment account, whether I pull it out or turn around and put it right into bonds, I will have to pay taxes on my game.

23:44.312 --> 23:45.112 [SPEAKER_09]: Is that correct?

23:45.432 --> 23:48.373 [SPEAKER_09]: And as I switch my traditional IRA,

23:49.160 --> 23:52.182 [SPEAKER_09]: and pull the money out regardless of my gains.

23:52.802 --> 24:03.968 [SPEAKER_09]: If I leave it in the traditional hyera and just move it into what my investment company gives me for stocks and bonds and treasuries, I do not have to play games on that.

24:04.388 --> 24:08.470 [SPEAKER_09]: I only play games on that when I actually pull it out of the hyera area.

24:09.530 --> 24:10.491 [SPEAKER_09]: This all makes mistakes.

24:10.811 --> 24:12.812 [SPEAKER_09]: Look forward to hearing your answer on the podcast.

24:13.372 --> 24:16.234 [SPEAKER_09]: Thanks again for all of your advice and everything you've done for us.

24:17.781 --> 24:30.288 [SPEAKER_02]: Well, appreciate your kind words and simple answer to your questions or yes, you know, if an IRA, whether you have a gain or a loss, the only tax implication is when you take the money out of it, okay?

24:31.268 --> 24:37.712 [SPEAKER_02]: Or if you do a Roth conversion and that is something you should talk about with your advisor, if you want to call us, we can

24:38.332 --> 24:42.374 [SPEAKER_02]: to help you discuss that and what that planning should look like.

24:42.454 --> 24:53.379 [SPEAKER_02]: So that is a strategy, almost everyone should be looking at some sort of Roth conversion strategy at some point, typically between retirement and taking Social Security or taking your arm.

24:53.419 --> 24:54.179 [SPEAKER_02]: These, et cetera.

24:54.499 --> 24:57.161 [SPEAKER_02]: So that's a more, it's a deeper conversation, but you're right.

24:58.541 --> 25:12.597 [SPEAKER_02]: moving money in and out of whatever within an ira is not a tack does not create tax consequences but on a taxable account yeah if you have a gain you sell it hopefully you want to sell it at long-term capital gains so you have a lower tax rate there but

25:14.850 --> 25:18.332 [SPEAKER_02]: You have to consider that as part of the decision-making process, right?

25:18.352 --> 25:26.878 [SPEAKER_02]: Just because we have a market pullback or maybe markets get a little rougher, doesn't necessarily mean that you should be crystallizing those gains.

25:27.258 --> 25:32.001 [SPEAKER_02]: Not a bad, not a terrible idea, but it's in context to your full financial picture.

25:32.041 --> 25:38.705 [SPEAKER_02]: So understand that as well and hopefully your current advisor is helping you with that, if not, got your call with us.

25:39.326 --> 25:39.586 [SPEAKER_02]: There you go.

25:40.404 --> 25:46.330 [SPEAKER_02]: Now let's go with another YouTube comment question, and Selena Marie says, what are your thoughts on BWXT?

25:46.411 --> 25:55.280 [SPEAKER_02]: I mentioned investing in a nuclear holding that isn't a uranium miner, already on CCJ, what is a good price to add to my position for a long-term hold?

25:55.841 --> 26:01.046 [SPEAKER_02]: Well, it's interesting because we also own both of these names for many clients.

26:01.767 --> 26:06.451 [SPEAKER_02]: a CCJ as a uranium miner out of Canada when the largest in the world.

26:07.012 --> 26:11.255 [SPEAKER_02]: But BWXT, a smaller name we've owned this for a while that we bought it.

26:11.275 --> 26:22.304 [SPEAKER_02]: I think in the sixties, if I remember correctly, now it's at one sixty five and earnings this year so it's gonna be three dollars and seventy three cents, four dollars and three cents next year.

26:23.505 --> 26:25.127 [SPEAKER_02]: And it's had a bit of a run.

26:25.548 --> 26:35.359 [SPEAKER_02]: And to be frank, this is a name that we're thinking about trimming a little bit at these valuations, especially with the pivot towards maybe some wind being taken on the sales of AI.

26:38.558 --> 26:47.847 [SPEAKER_02]: Not the best time to, I think, be picking it up, but obviously a very good company, but at forty times for looking earnings, it's looking a bit rich.

26:48.327 --> 26:48.868 [SPEAKER_02]: Now what do they do?

26:48.888 --> 26:56.254 [SPEAKER_02]: The manufacturer power generation systems and nuclear components for US governments, industrial and utility applications.

26:56.955 --> 26:58.137 [SPEAKER_02]: So we like that.

26:58.177 --> 26:58.737 [SPEAKER_02]: It's part of that.

26:58.837 --> 27:06.427 [SPEAKER_02]: He said the nuclear renaissance and over the long term, it's a name that we continue to like, but is this the time to be adding to it?

27:06.848 --> 27:07.789 [SPEAKER_02]: Probably not.

27:08.189 --> 27:09.311 [SPEAKER_02]: We'd want to add to it.

27:10.012 --> 27:10.532 [SPEAKER_02]: I'll give you a price.

27:12.114 --> 27:36.330 [SPEAKER_02]: in the in the one teens one twenty one fifteen one twenty in that range would be a great place to pick up more B W X technologies B W X T is the symbol and so if we get down into that yeah say I would say start my position row one thirty five and then add to it as it if it if it dips down into the you know one twenty one ten level

27:37.770 --> 28:06.093 [SPEAKER_02]: Thanks for the call or thanks for the question should we say let's talk a little bit about AI It's on the tip of everyone's tongue everyone's talking about AI and We've seen throughout history with though the AI and other technologies that there's there's hype and often the hype gets goes too far and there's some sort of event that Calls into question that hype and

28:07.396 --> 28:11.299 [SPEAKER_02]: With AI, the most recent one was what happened with DeepSeek.

28:12.840 --> 28:18.264 [SPEAKER_02]: And you had a large pullback in many of those AI names, then you had liberation day.

28:19.124 --> 28:30.192 [SPEAKER_02]: And after that, the market kind of reset and the retail investor, who's very conditioned to buy the dip, they really put a lot of

28:32.188 --> 28:39.435 [SPEAKER_02]: firepower behind these rallies in an AI, an AI adjacent names, including a lot of energy names.

28:40.035 --> 28:45.740 [SPEAKER_02]: And so this is a day where you have to step back and think.

28:46.881 --> 28:49.924 [SPEAKER_02]: And what was the catalyst here?

28:49.984 --> 28:52.706 [SPEAKER_02]: What caused this cell off today?

28:52.726 --> 28:58.812 [SPEAKER_02]: And potentially, at least a near-term top that brings a pullback similar to what happened with DeepSeek.

28:59.523 --> 29:02.444 [SPEAKER_02]: Now, number one is chat GPT-five.

29:03.145 --> 29:11.108 [SPEAKER_02]: And this was a model that was really hyped up by Sam Altman and was supposed to be the next evolution in AI.

29:12.629 --> 29:15.210 [SPEAKER_02]: But so far, it's been poorly received.

29:16.810 --> 29:24.954 [SPEAKER_02]: And they actually rolled back this in some ways by making older models available again, basically saying,

29:26.003 --> 29:29.564 [SPEAKER_02]: Yeah, maybe it's not as good as advertised, and there's a lot of negative feedback.

29:29.665 --> 29:32.706 [SPEAKER_02]: So if you don't want to use it, then here are the old models.

29:33.366 --> 29:38.488 [SPEAKER_02]: So if it was great, obviously nobody will be asking for the old models, but they are.

29:39.068 --> 29:47.132 [SPEAKER_02]: And so it's clear that natural evolution that everyone's expecting, that AI to make just wasn't there.

29:49.633 --> 29:54.435 [SPEAKER_02]: Altman claim that GPT-FI was supposed to be like talking to somebody with a PhD.

29:55.551 --> 30:00.454 [SPEAKER_02]: But there's a long list of tests that have been tested on it where they failed.

30:01.255 --> 30:10.920 [SPEAKER_02]: There was a scientist called Gary Marcus, and he wrote that, quote, by rights, Altman's reputation should buy now, be completely burned.

30:11.981 --> 30:21.407 [SPEAKER_02]: And he listed a laundry list of basic tasks that GPPT-T-V failed, performed at even a reasonable level.

30:22.979 --> 30:24.601 [SPEAKER_02]: And so, that's number one.

30:25.602 --> 30:41.479 [SPEAKER_02]: If your flagship model in software is evolving, like everyone expected, well, what is the true application of this software of this technology?

30:47.287 --> 30:57.751 [SPEAKER_02]: And in this core weave, core weave, a recent IPO that did very well originally, but had recent earnings, and it was down twenty five percent last week, because guidance was not very good.

30:58.072 --> 31:04.854 [SPEAKER_02]: They actually said revenue growth is going to be outpaced by CapEx expenditures.

31:05.035 --> 31:10.497 [SPEAKER_02]: Number CapEx is, is depreciate usually pretty fast, especially in this space.

31:11.522 --> 31:18.744 [SPEAKER_02]: Then you have the lockup endings, so this is a good example of after six months, those insiders able to sell and there's been obviously a negative reaction there.

31:21.245 --> 31:25.346 [SPEAKER_02]: And then you have a report by the McKinsey company, a research outfit.

31:26.687 --> 31:33.829 [SPEAKER_02]: And what they said was eight out of ten companies surveyed, so they were implementing AI in their business in some way, and that's good.

31:35.149 --> 31:41.131 [SPEAKER_02]: But just as many, so then to no significant bottom line impact,

31:42.825 --> 31:44.806 [SPEAKER_02]: And that's really the big worry here.

31:47.508 --> 31:49.830 [SPEAKER_02]: Is that all this money being spent?

31:49.990 --> 32:04.740 [SPEAKER_02]: There's about three hundred and fifty billion dollars in context just this year by the hyperscalish talking about alphabet meta Amazon and what's the other one Microsoft.

32:09.896 --> 32:14.137 [SPEAKER_02]: And all that has to do at some point translate into a lot of revenue.

32:15.197 --> 32:16.077 [SPEAKER_02]: Not a little revenue.

32:16.358 --> 32:17.298 [SPEAKER_02]: Oh, a lot of revenue.

32:20.258 --> 32:27.060 [SPEAKER_02]: And recently, Sam Altman said, quote, you should expect to open and spend trillions of dollars, trillions of dollars.

32:28.960 --> 32:34.942 [SPEAKER_02]: So if they're spending, heading towards trillions of dollars and their next model,

32:36.241 --> 32:40.782 [SPEAKER_02]: isn't much better than the previous model and it seems like in some ways could be worse.

32:43.163 --> 32:45.823 [SPEAKER_02]: Is this money really going to translate to the bottom line?

32:51.025 --> 32:55.026 [SPEAKER_02]: And so there's a bit of a chill in here, right?

32:58.306 --> 33:04.248 [SPEAKER_02]: Around the progress of AI, and it's true real world applications.

33:08.247 --> 33:11.528 [SPEAKER_02]: They're going to be, there already are real with applications.

33:11.708 --> 33:15.710 [SPEAKER_02]: We use these models in our research and definitely is helpful.

33:17.570 --> 33:21.632 [SPEAKER_02]: But in many ways, they're the souped up search engine, right?

33:21.972 --> 33:24.313 [SPEAKER_02]: And that's very useful in a lot of applications.

33:28.434 --> 33:35.037 [SPEAKER_02]: But it's still falling short of, now the next iteration or next,

33:37.987 --> 33:40.269 [SPEAKER_02]: Area of hyper on AI will be around AI agents.

33:43.252 --> 33:44.273 [SPEAKER_02]: Will they be as promised?

33:45.134 --> 33:45.614 [SPEAKER_02]: We shall see.

33:49.077 --> 34:00.448 [SPEAKER_02]: So it's starting to look like there needs to be some real world usefulness urgently, or you might start to see that next.

34:01.720 --> 34:21.451 [SPEAKER_02]: kind of AI winter upon this kind of similar to what you've seen in the crypto winter space right where crypto winter last many months maybe quarters even a year plus and the hype kind of fades and then eventually turns around I think that's what you probably will see in AI but some of those names will

34:22.493 --> 34:23.373 [SPEAKER_02]: probably fade forever.

34:23.854 --> 34:27.976 [SPEAKER_02]: And now there's will come back kind of so much what happened with the dot com bubble, right?

34:28.296 --> 34:30.497 [SPEAKER_02]: You got the fade, many of them faded forever.

34:30.897 --> 34:35.620 [SPEAKER_02]: Your web vans of the world and some survived and did great things like Amazon.

34:37.060 --> 34:42.463 [SPEAKER_02]: Now let's pivot to the best talk voice bank for a question that came in earlier from Southern California on a to the ninety nine chart.

34:42.643 --> 34:44.384 [SPEAKER_00]: This is Frank from Los Angeles.

34:44.804 --> 34:47.566 [SPEAKER_00]: I just wanted you to ask you about Apple and Bay.

34:47.726 --> 34:49.427 [SPEAKER_00]: Take our single A, B, B.

34:50.212 --> 34:57.298 [SPEAKER_00]: I would love to get your opinion on it, and if you have a price target where you think it could be good to pick some up, that would be appreciated.

34:57.318 --> 35:02.522 [SPEAKER_00]: I also wanted to ask you how you see this sector compared to manufacturer housing rates.

35:02.962 --> 35:09.787 [SPEAKER_00]: Do you think that in this environment manufactured housing rates might perform relatively better than residential rates?

35:10.328 --> 35:12.029 [SPEAKER_00]: Thanks so much, and I'll be listening on the show.

35:12.429 --> 35:15.512 [SPEAKER_02]: Well, I would say I like both spaces.

35:16.928 --> 35:19.669 [SPEAKER_02]: But Avalon Bay is a name we actually own for clients.

35:19.689 --> 35:22.791 [SPEAKER_02]: We're actually looking at potentially picking up for another strategy.

35:22.811 --> 35:23.891 [SPEAKER_02]: We have it in one strategy now.

35:24.291 --> 35:27.152 [SPEAKER_02]: We're looking to potentially pick it up in another strategy.

35:27.192 --> 35:29.994 [SPEAKER_02]: So it's kind of on the table for discussion at the moment.

35:30.054 --> 35:35.016 [SPEAKER_02]: So we definitely like it at these prices and criminals.

35:35.076 --> 35:38.457 [SPEAKER_02]: They are a real estate investment trust and they are an apartment.

35:38.817 --> 35:40.058 [SPEAKER_02]: And one of the the best

35:40.818 --> 35:52.981 [SPEAKER_02]: run apart and reach out there, especially when you look at its profitability return equity around ten percent, which for a rate is very high, especially when the cost of capital tends to be around half that.

35:53.961 --> 35:59.463 [SPEAKER_02]: And they're free cash flow, one point four billion on a more capital of two twenty seven billion.

36:00.043 --> 36:02.104 [SPEAKER_02]: So decent free cash flow yield there.

36:02.444 --> 36:04.985 [SPEAKER_02]: Their cash demand pair ratio is only seventy percent.

36:05.105 --> 36:10.226 [SPEAKER_02]: So certainly room for that dividend to be sustained and likely go up.

36:10.306 --> 36:18.469 [SPEAKER_02]: And they pause their dividend growth in twenty twenty two and re-established that growth in twenty twenty three.

36:18.529 --> 36:19.829 [SPEAKER_02]: So we like that.

36:20.149 --> 36:22.470 [SPEAKER_02]: It's starting to grow that dividend once again.

36:22.950 --> 36:24.431 [SPEAKER_02]: Very solid balance sheet.

36:24.591 --> 36:27.712 [SPEAKER_02]: Very solid balance sheet and like I said, one of the best.

36:28.372 --> 36:30.174 [SPEAKER_02]: run apartment reads out there.

36:30.274 --> 36:34.338 [SPEAKER_02]: So we like to have a long day, especially after this pullback.

36:35.159 --> 36:37.461 [SPEAKER_02]: And we think it's at pretty good support.

36:38.142 --> 36:41.806 [SPEAKER_02]: And it's enterprise value to you, but it's right around a little under twenty.

36:42.607 --> 36:46.731 [SPEAKER_02]: And historically, it bottoms around nineteen enterprise value to you.

36:47.571 --> 36:49.592 [SPEAKER_02]: over the vast decade, that's the low end of the range.

36:49.632 --> 36:51.353 [SPEAKER_02]: So it's right there, not far from it.

36:51.713 --> 36:58.596 [SPEAKER_02]: So we think it's a great value at these levels, and I would give Adelaan Bay a thumbs up.

36:59.216 --> 37:00.797 [SPEAKER_02]: Does play another question?

37:01.057 --> 37:01.237 [SPEAKER_02]: Yeah.

37:02.137 --> 37:06.739 [SPEAKER_07]: This is Mark from Fallen, Michigan, hopefully you missed her.

37:06.759 --> 37:09.660 [SPEAKER_07]: I just wanted what you thought about John Deere here.

37:10.000 --> 37:15.883 [SPEAKER_07]: I'm slowly building a position where the smaller right now started this part of July, I'm already up to.

37:17.001 --> 37:19.764 [SPEAKER_07]: But I am no longer like their story.

37:20.784 --> 37:22.566 [SPEAKER_07]: And the stock code here you'll pay him.

37:23.107 --> 37:23.487 [SPEAKER_07]: Thank you.

37:25.729 --> 37:29.592 [SPEAKER_02]: All right, looking at John Deere, DE is the symbol.

37:30.373 --> 37:31.855 [SPEAKER_02]: And I guess they call it Deere in company now.

37:31.875 --> 37:32.855 [SPEAKER_02]: It's no longer John Deere.

37:33.396 --> 37:40.602 [SPEAKER_02]: But right when else out there, the manufacturer should be equipment used in agriculture, construction, forestry, and turf care.

37:41.283 --> 38:00.664 [SPEAKER_02]: So, one hundred thirty two billion dollar market cap historically a very solid business return equity is right around twenty two percent that is definitely down from its twenty twenty three highs and was that forty seven percent but over the long term this is kind of right near the long term average of its profitability so I like that I like that

38:01.625 --> 38:03.806 [SPEAKER_02]: you're not over earning at the current time.

38:04.246 --> 38:18.213 [SPEAKER_02]: Free cash flow is about four billion that is also down from its twenty twenty one higher on six billion, but still very, very robust, especially when you look at that market cap of four and thirty two billion and you're talking about a three percent free cash flow yield.

38:18.253 --> 38:22.675 [SPEAKER_02]: Not amazing, but okay, dividend yield one point three percent.

38:23.415 --> 38:30.039 [SPEAKER_02]: It's enterprise value to EBITDA right around sixteen, which is if it elevated and that's what worries me a little bit.

38:30.079 --> 38:30.599 [SPEAKER_02]: I do think

38:31.459 --> 38:37.444 [SPEAKER_02]: It's a bit too expensive for its growth.

38:37.944 --> 38:41.667 [SPEAKER_02]: You know, earnings are supposed to be down twenty-seveners in this year to eighteen dollars in fifty-nine cents.

38:42.168 --> 38:49.814 [SPEAKER_02]: And next year's is there in twenty dollars in seventy-nine cents, but both of those estimates for this year and next year are coming lower and I don't like that either.

38:49.834 --> 38:52.356 [SPEAKER_02]: They have a little bit of debt in their balance sheet.

38:52.916 --> 38:57.179 [SPEAKER_02]: Don't like that with the cost of capital going up and

38:57.920 --> 39:01.201 [SPEAKER_02]: The technical is you just had a bit of a drop here after earnings.

39:01.661 --> 39:04.282 [SPEAKER_02]: It fell in uptrend, but I just don't like the valuations here.

39:04.403 --> 39:08.624 [SPEAKER_02]: So, uh, something to keep on the watch list, but I'm passing on John Deere for now.

39:09.485 --> 39:10.745 [SPEAKER_02]: This is Invest.com, Justin Klein.

39:10.765 --> 39:12.586 [SPEAKER_02]: We have one goal here each every weekend.

39:12.646 --> 39:17.268 [SPEAKER_02]: It's helped you achieve your own version of financial freedom, and it will continue after this final break.

39:17.788 --> 39:19.168 [SPEAKER_02]: So, give it your questions in right now.

39:19.448 --> 39:20.689 [SPEAKER_02]: At eight and eight, nine year in chart.

39:29.513 --> 39:30.333 [SPEAKER_03]: Invest dog.

39:30.773 --> 39:32.854 [SPEAKER_03]: Tell your friends they can listen live.

39:33.314 --> 39:38.435 [SPEAKER_03]: Download the free podcast or watch Invest dog on our YouTube channel.

39:41.835 --> 39:56.018 [SPEAKER_02]: Now the Fed is set to cut interest rates for the first time this year next month and investors are excited about excited about the prospects of lower borrowing costs and

39:59.665 --> 40:04.166 [SPEAKER_02]: Certainly helping the optimism around the economic growth continuing.

40:06.587 --> 40:13.969 [SPEAKER_02]: But, should investors really anticipate lower borrowing costs beyond just short-term rates?

40:14.569 --> 40:17.069 [SPEAKER_02]: I'm talking about the ten-year treasury rate.

40:18.150 --> 40:27.432 [SPEAKER_02]: That tends to be the proxy for mortgages, loans on businesses, and paying extra on the national debt as well.

40:29.983 --> 40:39.626 [SPEAKER_02]: but research by data track found that the ten-year yield does decline when the Fed cuts policy rate.

40:40.246 --> 40:46.989 [SPEAKER_02]: But if the economy isn't in a recession, it's actually a more mixed picture.

40:48.369 --> 40:54.331 [SPEAKER_02]: There are nine periods since nineteen and nine when the Fed made a series of cuts to the Fed funds rate.

40:56.011 --> 40:57.412 [SPEAKER_02]: And the period's outside of recession,

40:58.718 --> 41:02.380 [SPEAKER_02]: Fifty-fifty chance that rates will go up or go down.

41:04.401 --> 41:06.482 [SPEAKER_02]: On average, the climb was ten basis points.

41:07.342 --> 41:08.403 [SPEAKER_02]: Point one percent.

41:08.423 --> 41:10.444 [SPEAKER_02]: That's in non-recessionary periods.

41:10.504 --> 41:13.746 [SPEAKER_02]: And right now, we're not in a recession, at least.

41:14.686 --> 41:15.146 [SPEAKER_02]: Seems like it.

41:16.127 --> 41:20.229 [SPEAKER_02]: Maybe it's gotten me slowing, et cetera, but overall, not in a recession.

41:23.609 --> 41:30.771 [SPEAKER_02]: The two times that it went up when the Fed cut rates were innate to any eight, think.com, bubble one point out.

41:31.912 --> 41:35.393 [SPEAKER_02]: And last year, still in the midst of the eye craze.

41:36.873 --> 41:47.756 [SPEAKER_02]: And so just because the Fed will cut rates, maybe even start a series of rate cuts does not mean the ten year yield will go down, which means your mortgage rates won't necessarily go down.

41:50.097 --> 41:52.678 [SPEAKER_02]: And number of seventy percent about standing treasury debt,

41:54.196 --> 41:55.697 [SPEAKER_02]: are longer, longer dated.

41:55.717 --> 41:59.958 [SPEAKER_02]: So I'm going to write non-teabills.

42:02.979 --> 42:07.881 [SPEAKER_02]: Now, Net Davis research says the tenure rate typically declines ahead of the Fed rate cut.

42:12.623 --> 42:22.927 [SPEAKER_02]: The median decline of the tenure over the sixty-three trading days, so that's within this window, before the Fed cuts rates is actually thirty-one basis points.

42:26.573 --> 42:31.615 [SPEAKER_02]: That's so far this month, rates are down, kind of anticipating that rate cut.

42:34.516 --> 42:39.498 [SPEAKER_02]: So this isn't a clear cut case of, you know, the Fed's the ten years going to go one way or the other.

42:40.998 --> 42:45.199 [SPEAKER_02]: What was telling you was that in a non-sessionary period, it's kind of a crap shoot.

42:45.340 --> 42:47.880 [SPEAKER_02]: And, you know, I would lean on rates actually going up.

42:47.980 --> 42:48.261 [SPEAKER_02]: Why?

42:48.341 --> 42:52.202 [SPEAKER_02]: Because A inflation, we haven't had this inflation since the seventies.

42:54.130 --> 42:58.853 [SPEAKER_02]: like this kind of, inseparately, inseparation that we're feeling, right?

43:01.956 --> 43:03.757 [SPEAKER_02]: And so that's one aspect.

43:03.777 --> 43:09.901 [SPEAKER_02]: And then there's this the national debt, the total debt that we have, which we haven't seen since really the nineteen forties and fifties.

43:12.643 --> 43:20.129 [SPEAKER_02]: And so with that backdrop and a non-recessionary environment, I would lean

43:21.298 --> 43:23.559 [SPEAKER_02]: That rates on the tenure will actually rise.

43:23.599 --> 43:25.441 [SPEAKER_02]: No, does that mean they have to rise dramatically?

43:25.821 --> 43:26.021 [SPEAKER_02]: No.

43:27.522 --> 43:34.166 [SPEAKER_02]: But it wouldn't give relief to the national debt, that picture, right?

43:34.667 --> 43:47.795 [SPEAKER_02]: The interest on the debt, which that's something obviously present Trump is trying to manufacture is a pressure on the Fed to cut rates and get borrowing costs down and reduce the cost of the overall debt.

43:51.474 --> 43:56.697 [SPEAKER_02]: But unless the treasury just wants to issue on the short end, which they certainly could do, right?

43:56.717 --> 43:57.598 [SPEAKER_02]: It's happening right now.

43:57.658 --> 44:04.401 [SPEAKER_02]: They're issuing very little longer dated securities and issuing mainly on the short end.

44:04.902 --> 44:12.306 [SPEAKER_02]: And so as those mature consistently, and the Fed cuts rates, that will lower the cost of the debt.

44:12.386 --> 44:14.687 [SPEAKER_02]: But that's just on that short term.

44:15.008 --> 44:19.130 [SPEAKER_02]: Usually short terms about twenty five and a group to thirty percent of our debt is now on

44:19.665 --> 44:22.928 [SPEAKER_02]: a T-bills stuck in one year or less in maturity.

44:24.490 --> 44:28.314 [SPEAKER_02]: But that means like I said, seventy percent is longer dated.

44:28.834 --> 44:35.320 [SPEAKER_02]: And so, just a Fed Raekut does not necessarily translate into lower mortgage rates.

44:35.821 --> 44:37.723 [SPEAKER_02]: Or other are rates across the economy.

44:38.984 --> 44:39.765 [SPEAKER_02]: I'm Justin Klytis.

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