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

[SPEAKER_05]: Independent Thinking, shared success.

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

[SPEAKER_05]: Here is KPP Financial Portfolio Manager, Luke Guerrero,

[SPEAKER_02]: Good afternoon, fellow investors, and welcome back to Invest Talk.

[SPEAKER_02]: I'm Lou Guerrero, and today's Friday, September 19th, 2025.

[SPEAKER_02]: As you can tell, as you can see, we are deep, deep into the month of September.

[SPEAKER_02]: There's only seven trading days left in the quarter.

[SPEAKER_02]: So, it's pretty easy to see.

[SPEAKER_02]: The fourth quarter is coming here very quickly.

[SPEAKER_02]: Now with regards to the market and your portfolio, understandably as we wrap up 2025, now is not the time to lose focus.

[SPEAKER_02]: And so Justin and I come and speak with you each and every day.

[SPEAKER_02]: Trying to fulfill our singular objective for this podcast for this radio program, and that's to help make you a better and more informed investor.

[SPEAKER_02]: Now in order to do that, we bring a mixture of educational items and actionable material to the table each and every day, but the most important part of this show is your finance and investment questions, because without you communicating with us directly, how do we know what you care about?

[SPEAKER_02]: And so, with that being said, before we talk about today's market performance and run down those show topics, let's tackle this call a question now.

[SPEAKER_07]: Anything messed up?

[SPEAKER_07]: Also, when you guys could give me your thoughts on Salesforce, stickers, CRM, does it look attractive at this price?

[SPEAKER_07]: And I'll listen on the show.

[SPEAKER_07]: Thanks, bye.

[SPEAKER_02]: Salesforce ticker CRM is a cloud software company and they specialize in you guessed guessed it customer relationship management IECRM.

[SPEAKER_02]: So they've sales cloud services cloud marketing cloud commerce cloud a whole bunch of cloud technology.

[SPEAKER_02]: You're today, they're down about 26.09% down 4.78% in the past three months down 7% in the past 52 weeks.

[SPEAKER_02]: Now, Revenue, we're going back about five years.

[SPEAKER_02]: Group pretty significantly about 17.3% on an annualized basis, but that's slow down considerably.

[SPEAKER_02]: Right?

[SPEAKER_02]: They've had about 17 billion in revenue in 2020.

[SPEAKER_02]: They're going to 34 billion doubling in about five years about four years.

[SPEAKER_02]: But then growth slow.

[SPEAKER_02]: It's projected to be 41 billion next year up from 37 billion.

[SPEAKER_02]: At the same time, margins kind of expanding a bit.

[SPEAKER_02]: Coming out of the pandemic, where their net margin was about 70 basis points, or really 5.5% in 2022 and 70 basis points, which are going to be 26.6% this upcoming year.

[SPEAKER_02]: So what's really driven them over the past couple months?

[SPEAKER_02]: Well, with the past six months, they've underperform, they've fallen pretty significantly.

[SPEAKER_02]: And that's in spite of a rather despite recording record revenues in Q2, 2026, improving margins.

[SPEAKER_02]: All of these things look pretty solid, but it's AI platform has been a bit lacking in a time where tech software cloud companies have only done well on the back of that secular driving theme.

[SPEAKER_02]: And so because of that, valuations have come down quite a bit from their highs.

[SPEAKER_02]: They're five year highs, 71.9.

[SPEAKER_02]: They're approaching their lows actually, sitting at about 20 times, price to 4 looking earnings, low about 18.8, the average 36.9, price to book value sits at 3.8, price to sales at 5.9, it's more reasonably priced than it has been in quite some time.

[SPEAKER_02]: But because of the drawdown, especially relative to its industry, it's underperforming the industry by 46.8%.

[SPEAKER_02]: It's been on a consistent downtrend since about November and it doesn't seem like it's

[SPEAKER_02]: Yes, it's cheap now, but from the looks of it, it might be a bit cheaper soon.

[SPEAKER_02]: So I'd still keep it on my watch list, wait for some sort of directional move here.

[SPEAKER_02]: Really, it's tough to fight against momentum, and I don't think it's suggest doing it here.

[SPEAKER_02]: That is a sales force to your CRM.

[SPEAKER_02]: Got a lot of ground to cover the next 45 minutes or so and here's a little bit of what we have planned for you all.

[SPEAKER_02]: My main focus point concerns this topic.

[SPEAKER_02]: Mortgage refinance in 2025.

[SPEAKER_02]: These tax breaks can boost your savings.

[SPEAKER_02]: When you refinance your mortgage in 2025, there are both tax implications, but also opportunities for deductions that can boost your savings.

[SPEAKER_02]: Also, keeping with this theme, obviously we all know the Fed started cutting rates of the first time this year, just last Wednesday, which is two days ago, so where do mortgage rates go from here thus far?

[SPEAKER_02]: The 10 year yields climbed.

[SPEAKER_02]: So what's going to happen next?

[SPEAKER_02]: Also, we'll touch on how markets are hitting fresh record highs as FOMO, just in effects, investors everywhere, and a story that we tried to touch on on Wednesday, but didn't quite have the time, but imports into Southern California and how that surges over, maybe we'll have time at the end of the show today.

[SPEAKER_02]: We also have some voice bank calls ready to play, including one on pro shares, ultra Bloomberg natural gas,

[SPEAKER_02]: As always, we have questions that came in from the comments section in the U.S.

[SPEAKER_02]: talking YouTube channel, and hopefully I hear from at least one of you live some time throughout the show.

[SPEAKER_02]: We're going to do a quick break, please remember you can call any time and leave your questions on the Invest.voysbank.

[SPEAKER_02]: If you're listening to your livestream, we're possibly on AM-1220 in the Bay Area, give me a call at 888-99-chart, but about today's market activity.

[SPEAKER_06]: Get ready for an all-new Invest talk with Webinar, beyond the Mag7.

[SPEAKER_06]: How to identify AI opportunities across sectors.

[SPEAKER_06]: Just in Klein and Lucarero are going to help you move past the familiar names to identify the key opportunities for investment in the real AI revolution.

[SPEAKER_06]: They'll be talking about the energy grid, data center infrastructure, and how AI is boosting profits in a wide range of industries.

[SPEAKER_06]: The All-New Investalk Wealth webinar, happening online, September 30th from 1 to 2pm Pacific Time.

[SPEAKER_06]: Seats are limited, so register now at Investalk.com.

[SPEAKER_06]: There's value in every Invest Talk podcast, so call in Vest Talk 888-99 chart.

[SPEAKER_06]: Luke Guerrero is here, and he's ready with answers to your financial investment questions.

[SPEAKER_06]: Call in Vest Talk 888-99 chart.

[SPEAKER_02]: Talk a little bit about the market before we move any further forward.

[SPEAKER_02]: U.S.

[SPEAKER_02]: stocks mostly higher across the board.

[SPEAKER_02]: The Dow up 37 basis points on the day.

[SPEAKER_02]: S&P 549 Nasdaq up 72.

[SPEAKER_02]: Small caps have an rough day after having a better week earlier down 77 basis points on the day.

[SPEAKER_02]: Overall, S&P Nasdaq down all hit fresh record highs bred though notably negative.

[SPEAKER_02]: The Equalweight S&P underperform can't be cap-weighted indexed by about 70 basis points today.

[SPEAKER_02]: Big Tech was mostly higher Tesla Apple.

[SPEAKER_02]: The leaders amongst that crowd, other Apple performers included personal logistics names, tech's hardware, insurance names, doing particularly well.

[SPEAKER_02]: But I'll green though under performers included home builders, small caps, semis, chemicals, energy, casual diners, and disc counters.

[SPEAKER_02]: On the bond side, treasuries continue to be a bit weaker than you saw some yield curve at steepening on the day while the dollar was up 30 basis points, gold finished up 70 basis points and crude oil settled down about 1.4%

[SPEAKER_02]: Interestingly enough, though, as the latest sanctions against Russia pretty underwhelming across the board, really though not much to what decided the directional drivers of trading today.

[SPEAKER_02]: Stocks finished higher for the third straight week.

[SPEAKER_02]: You did see the resumption of

[SPEAKER_02]: Fed easing a bit better economic data, particularly with retail sales and with initial claims, and overall still a fairly resilient AI trade among the, you know, key bullish drivers today and for the week overall.

[SPEAKER_02]: But there's still some worries, right?

[SPEAKER_02]: Fed policy complications from the tension around both goals.

[SPEAKER_02]: growth and inflation stretch evaluations, a worry that has been there for quite some time China, maybe stepping a little bit deeper into the AI competition with its warnings, it shots across the ballot and video, soft housing market and trade headwinds among you know, really some of the biggest areas of scrutiny this week.

[SPEAKER_02]: From a policy perspective, no surprise is the Senate failed to pass a stopgap measure that was approved by the House that would keep the government funded through November.

[SPEAKER_02]: Looking to head in next week, Big Macro highlights include flash PMIs for September, durable good orders, existing home sales and core PCE inflation.

[SPEAKER_02]: Let's take a look now at our first YouTube comment section question.

[SPEAKER_02]: And while you're running on YouTube, if you have a question, you can just leave it right there in the comment section rather than pick it up and dial in the phone and leaving a voicemail.

[SPEAKER_02]: This question is about FDS.

[SPEAKER_02]: It said, we'd love to hear your thoughts on FDS after this week's earnings.

[SPEAKER_02]: Is it a falling knife?

[SPEAKER_02]: Well, FDS is fact set data services.

[SPEAKER_02]: And for those of you who are watching our YouTube videos, you're pretty familiar with their product.

[SPEAKER_02]: They have the facts that platform.

[SPEAKER_02]: And so that's something that's used by wealth managers, by investment banks, by financial professionals across the board.

[SPEAKER_02]: It is a massive data aggregation system.

[SPEAKER_02]: That had a rough time down about 39.80% year to date down 31.97% of the past three months down 38.41% of the past 72 weeks down 4% today alone.

[SPEAKER_02]: In spite of growth being about 9.2%, we're revenue perspective on an annual basis going back to 2019.

[SPEAKER_02]: That's a little lot, right?

[SPEAKER_02]: Down to about 5% less than 5% over the past year.

[SPEAKER_02]: margins that remain relatively stable if not improving.

[SPEAKER_02]: From a debt perspective, only $1.5 billion in debt on an $11 billion market cap company.

[SPEAKER_02]: Now, over the past three months, they recently reported earnings again, not great, adjusted EPS missed estimates, guidance for full-year revenue came in slightly below expectations as well.

[SPEAKER_02]: The name of the time you guide downward, there's gonna be a poor reaction from your stock price.

[SPEAKER_02]: Now, they do pay a dividend, no mention of whether or not they're going to be upgrading or downgrading that dividend moving forward.

[SPEAKER_02]: But really what you want to look for in the short term is, what is next quarter's guidance going to be?

[SPEAKER_02]: Can they raise the bar on revenue and margin productions?

[SPEAKER_02]: Can they regain some of that investor confidence?

[SPEAKER_02]: Are they going to continue to see improvement?

[SPEAKER_02]: in profitability.

[SPEAKER_02]: It's pretty stable now, EBITDA margin.

[SPEAKER_02]: It's been about 38 to 40 for the past five years.

[SPEAKER_02]: See a little bit of improvement there.

[SPEAKER_02]: And I was a client retention and subscription growth.

[SPEAKER_02]: That's been slowing a bit.

[SPEAKER_02]: How will AI, the analytical enhancements that they put in their platform, which I've seen and frankly, they've been a little bit lacking.

[SPEAKER_02]: How will that improve the system overall and not only retain clients, but grow their user base.

[SPEAKER_02]: So because of

[SPEAKER_02]: of its five-year range, it has some issues, certainly has some issues.

[SPEAKER_02]: Now, it's a name that we have owned on and off for clients in one of our strategies.

[SPEAKER_02]: The reason we bought it is because frankly, we use it a lot and we do like it a lot.

[SPEAKER_02]: For a long term perspective, it could be a good company to hold.

[SPEAKER_02]: We think it's still might be, but that doesn't mean in the short term there aren't a little bit of troubled waters.

[SPEAKER_02]: That is, FACCent Research System, TIGER FDS.

[SPEAKER_02]: Click, we got plenty of time with squeeze in another question.

[SPEAKER_02]: At least we'll listen to it before the break.

[SPEAKER_08]: Say, can I have your opinion on buying this ETF for a long term investment?

[SPEAKER_08]: Ecosm is V, E, G, I. Thank you so much.

[SPEAKER_02]: Veggie.

[SPEAKER_02]: This better be about vegetables.

[SPEAKER_02]: Let's see, the EGI is the I shares MSCI.

[SPEAKER_02]: You got it.

[SPEAKER_02]: Agricultural producers, ETF, ticker, veggie, VEGI.

[SPEAKER_02]: It's about a 40 basis point expense ratio.

[SPEAKER_02]: You know, for a specialized ETF, I would say that's not too outside of the realm of what you'd expect.

[SPEAKER_02]: I shares tends to have a

[SPEAKER_02]: a little bit lower priced ETFs across the board.

[SPEAKER_02]: So what Veggie does is it targets its exposure to the initial phase of commodity production within the global agricultural space.

[SPEAKER_02]: It looks at the Gix classification for far machinery, parts, package food, and meats.

[SPEAKER_02]: The exclude companies that mainly derive the revenue from the lower end of the value chain, like finished products, like confectionaries, and snacks.

[SPEAKER_02]: But it does include equity for both developed and emerging market.

[SPEAKER_02]: So you're a little international exposure there, only about 40% of the revenue comes in the United States, 5% from Brazil, 5% from China, so on and so forth.

[SPEAKER_02]: But 125 names, 60% of the holdings within the top 10 they are deer in company.

[SPEAKER_02]: The largest holding 25% of the portfolio.

[SPEAKER_02]: Overall, not too big of a fund, right?

[SPEAKER_02]: Only about 92 million under management net outflows over the year of about 23 million and it's been around for a while since 2012.

[SPEAKER_02]: You know what?

[SPEAKER_02]: I think overall there are better ways to attack this that are a bit cheaper that aren't just going to give you a quarter of an ETF that is exposed to deer and company.

[SPEAKER_02]: So, I think we have to pass on Veggie to your VEGI, the eye shares, MSCI, agricultural producers ETF.

[SPEAKER_02]: Thanks for the call.

[SPEAKER_06]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in, in Vestalk, 888-99 chart.

[SPEAKER_02]: My main focus point concerns a topic that I think is relevant to a lot of people that is given where rates are going, given the moves of the Fed,

[SPEAKER_02]: It's like about mortgage refinance in 2025.

[SPEAKER_02]: And namely, the tax breaks that can boost your savings.

[SPEAKER_02]: Refinancing a mortgage can reduce monthly payments.

[SPEAKER_02]: That's one of the main goals that can shorten the loan term.

[SPEAKER_02]: They can lock in a fixed rate, or it can provide you immediate cash.

[SPEAKER_02]: And given what the Fed has done, demand has searched

[SPEAKER_02]: In fact, the mortgage bankers' association reported the strongest week of refinancing demand in decades.

[SPEAKER_02]: Largerlands, led the way in average refinancing size, hit a 35-year record.

[SPEAKER_02]: Now, one form of refinancing cash out refinancing.

[SPEAKER_02]: Let's you as the homeowner tap equity tax-free, since the money is treated as borrowed funds and on income.

[SPEAKER_02]: The same applies to helox and home equity loans.

[SPEAKER_02]: So if you need cash immediately, without wanting the tax implications of selling from your investment portfolio, of selling other property loans, selling the house that you own, a cash at refinance helps achieve that goal.

[SPEAKER_02]: Now, beyond being tax-free, refise may unlock other sorts of deductions, especially around mortgage interest.

[SPEAKER_02]: Though the president's big beautiful bill permanently cap those deductions, at 750,000 for single and joint filers, there can still be a benefit.

[SPEAKER_02]: Should you choose to refinance?

[SPEAKER_02]: Now, cash out proceeds use for capital improvements may also qualify for deductions, upgrades like pools, new rooms, security systems.

[SPEAKER_02]: All of those may qualify if they enhance the properties value.

[SPEAKER_02]: If you find yourself in a situation where okay, the accessibility of my home doesn't really work for me or someone in my family, if you need to make improvements for medical reasons, well, I can also qualify for deductions under medical expense rules, adding a bit of another layer of potential savings.

[SPEAKER_02]: With these new rules, with these new laws, it is important to note that not all of the previously existing breaks survived.

[SPEAKER_02]: Clean energy credits for solar and other upgrades are being faced out under the new tax law.

[SPEAKER_02]: Ray by downs though, via discount points they do remain deductible.

[SPEAKER_02]: Interesting and important to note that often spreads itself over the life of the loan unless it's tied to substantial improvements in the main home.

[SPEAKER_02]: Points are essentially prepaid interest, right?

[SPEAKER_02]: Typically, costing 1% alone for a 25 basis point rate cut, and must be itemized on schedule A2 claim deductions.

[SPEAKER_02]: Rental property refinances also offer pretty broad tax advantages with deductions for origination fees, appraisals, mortgage insurance, and discount points often treated as a business expense.

[SPEAKER_02]: As always though, timing really does matter here with more than 80% of US homeowners already holding sub 6% mortgages.

[SPEAKER_02]: Refize only makes sense if rates fall significantly below

[SPEAKER_02]: Bottom line here, refinancing can offer financial relief as well as tax advantages, but navigating caps, rules, and exceptions is incredibly complex, making professional tax advice essential.

[SPEAKER_02]: Notice Friday, so I want to briefly mention the KPP premium newsletter, which we will be distributed tomorrow.

[SPEAKER_02]: The KPP Insight section we discussed the most recent Fed meeting, we break down who voted in what way would Jerome Powell said at the press conference and what that means for the path of rates moving forward, and how that might affect your portfolio overall.

[SPEAKER_02]: In the stock idea section, we mentioned an American shipping and logistics company,

[SPEAKER_02]: As well as a global leader in the equipment rental industry and in the portfolio management section, we touched on positioning your portfolio for lower interest rates.

[SPEAKER_02]: If any of that, if all of that sounds interesting to you, feel free to head over to investtalk.com where you can subscribe to our newsletter, newsletter subscribers, we'll get it delivered directly to their inbox on Saturday mornings.

[SPEAKER_02]: Now before we head to break, I wanted to give you yet another reminder that the latest invest talk wealth webinar will be happening on September 30th, from time to time, hopefully about once a quarter, Justin and I love coming together, creating a presentation, explaining something that matters directly to you.

[SPEAKER_02]: This quarter we will be talking about artificial intelligence, there's been a lot of

[SPEAKER_02]: But you can get exposure to it without investing in the massively priced in videos of the world.

[SPEAKER_02]: You can invest in the energy infrastructure, you can invest in the picks and shovels, you can invest in the industrial base that needs to be built, and the companies that will benefit it themselves.

[SPEAKER_02]: That will benefit from it themselves.

[SPEAKER_02]: All this, like I mentioned, will happen on September 30th,

[SPEAKER_02]: We'll be going over that presentation, talking a little bit about the market as well, and as always, our favorite thing to do, directly answering your questions.

[SPEAKER_02]: That sounds interesting, keep in mind that space is limited.

[SPEAKER_02]: Head over to investtalk.com, where you can register for our newest, wealth webinar.

[SPEAKER_02]: Reddit in New Break, when we come back, we'll answer more of your finance and investment questions.

[SPEAKER_02]: A couple more talking points.

[SPEAKER_02]: Maybe go over.

[SPEAKER_02]: those weekly numbers on this Friday.

[SPEAKER_06]: Investor, your questions are free, the answers are unbiased.

[SPEAKER_06]: Luke Guerrero is here now, 888-99 chart.

[SPEAKER_02]: We're looking to this topic.

[SPEAKER_02]: The retirement generation gap, boomers versus Gen X, will break down the contrasting retirement strategies and financial mindsets, baby boomers and Gen X, to uncover key lessons for your financial future.

[SPEAKER_02]: That's Monday.

[SPEAKER_02]: For now, I'm Luke Guerrero, and I am loving the fact that we got another voicemail to play right now.

[SPEAKER_09]: I am just in a loop.

[SPEAKER_09]: I'm looking at,

[SPEAKER_09]: I can find how much is the expense of racial and the CTF.

[SPEAKER_09]: But considering natural gas demand forecast is growing, what do you think?

[SPEAKER_09]: Is it time to buy?

[SPEAKER_09]: Now, please share your opinion.

[SPEAKER_09]: And thank you, and I will listen to the podcast.

[SPEAKER_09]: Bye.

[SPEAKER_02]: Boyle is the pro shares.

[SPEAKER_02]: Ultra, Bloomberg, natural gas ETF.

[SPEAKER_02]: It is a levered commodities fund.

[SPEAKER_02]: In fact, that I'm not seeing much information about this.

[SPEAKER_02]: Let me pull this up somewhere else.

[SPEAKER_02]: It does happen from time to time.

[SPEAKER_02]: Sometimes you can't get in the information and neither can I. All right, here we go.

[SPEAKER_02]: So, boil is a leverage ETF.

[SPEAKER_02]: It seeks two times the daily return of the Bloomberg natural gas subindex.

[SPEAKER_02]: In practice, effectively what that means is boil holds natural gas futures, maybe swaps.

[SPEAKER_02]: And if natural gas moves up 1% obviously moves up 2% right.

[SPEAKER_02]: That's what the leverage part of it is.

[SPEAKER_02]: Any time you're talking about a levered fund, you are talking about a trading vehicle.

[SPEAKER_02]: The reason why is because levered ETFs don't try and cannot try to mimic a long-term return.

[SPEAKER_02]: They are mimicking a daily return.

[SPEAKER_02]: Meaning that over a longer period of time,

[SPEAKER_02]: There will be a divergence between what the long-term return of natural gases and what this ETFs return is.

[SPEAKER_02]: And in fact, natural gas can be positive.

[SPEAKER_02]: While at the same time, this fund is negative.

[SPEAKER_02]: And so unless you are hedging some sort of exposure, unless you are a day trader,

[SPEAKER_02]: Leveraged ETFs are not suitable for long-term investment.

[SPEAKER_02]: In fact, that is not why they were created.

[SPEAKER_02]: They were created for daily trade.

[SPEAKER_02]: Because of that, I would not recommend investing in B-O-I-L as a long-term hold.

[SPEAKER_02]: Thanks for the call.

[SPEAKER_02]: Now, in Fridays, we generally make time to fit in a quick rundown of key benchmark numbers.

[SPEAKER_02]: So let me hit you with that list right now.

[SPEAKER_02]: The two-year treasure yield was at 3.582% today, two weeks ago that number was 3.517, and 194 weeks ago that number was 64 basis points.

[SPEAKER_02]: The 10-year yield was at 4.139% today, two weeks ago it was 4.088, and 192 weeks ago it was 1.762.

[SPEAKER_02]: Gold was priced at $3,681 per ounce today, and $88 increase compared with just two weeks ago,

[SPEAKER_02]: 7 weeks back then it was 33-48 and 186 weeks ago, and number was 18-06.

[SPEAKER_02]: Silver was priced at 42-98 per ounce per ounce today, a $2 increase compared with just two weeks back.

[SPEAKER_02]: 84 weeks ago that number was 22-80 and looking back at 178 weeks,

[SPEAKER_02]: 62-67 per barrel today, a 70 cent increase compared with two weeks back, 52 weeks ago then it was 67-79, 94 weeks back then it was 74-30, 193 weeks ago then it was 66-62.

[SPEAKER_02]: The national average for a gallon of regular gasoline is $3.20 that is no change from last week.

[SPEAKER_02]: 120 weeks ago that it was $3.566.

[SPEAKER_02]: 160 weeks back, it was 425.

[SPEAKER_02]: They're looking back 188 weeks.

[SPEAKER_02]: A gallon of regular gas cost $3.57.

[SPEAKER_02]: In California, gas was averaging 4.65 per gallon today.

[SPEAKER_02]: A five cent increase compared with just two weeks ago.

[SPEAKER_02]: 98 weeks back, then it was 532 and 174 weeks back, weeks back, then it was 587.

[SPEAKER_02]: For comparison, at Oklahoma, gas is averaging $2.73 per gallon today, it is $1.92 less than gas in California.

[SPEAKER_02]: Now, keeping with the theme,

[SPEAKER_02]: of our main focus point today.

[SPEAKER_02]: I want to talk a little bit about mortgage rates specifically, because many assume, as the Fed starts to cut rates, be it slowly or quickly, that that will translate to lower mortgage rates, but the connection between those two are a bit weaker than most people think.

[SPEAKER_02]: So why is that?

[SPEAKER_02]: Well, the Fed sets short term overnight rates.

[SPEAKER_02]: We've spoken about this before.

[SPEAKER_02]: mortgages, track the 10-year treasure yield.

[SPEAKER_02]: The reason why is because, well, you have to somewhat match duration here.

[SPEAKER_02]: Most 30-year mortgages get refinance or paid off in about a decade.

[SPEAKER_02]: investors buying those treasuries and by extension mortgage bonds effectively set yields based on a long-term expectations, not just the Fed's latest move.

[SPEAKER_02]: And so that's where the inflation fears kind of come into play here.

[SPEAKER_02]: Fix payments years from now may lose purchasing power, so investors demand higher yields today in order to compensate.

[SPEAKER_02]: And so that kind of helps explain the odd pattern we see here.

[SPEAKER_02]: Like last year, for example, when the Fed cut rates by a half point, the 10-year-old rose and mortgage rates climbed by three quarters of a point.

[SPEAKER_02]: Today if investors believe inflation is under control, but the economy is weakening, they might accept lower yields.

[SPEAKER_02]: And that could bring mortgage rates down a bit, but some strategists,

[SPEAKER_02]: Note that history shows very little correlation between the Fed's target rates and mortgage rates in less the Fed surprises markets.

[SPEAKER_02]: And this was pretty well telegraphed for quite some time.

[SPEAKER_02]: Now the Fed does have tools beyond short-term cuts it can buy mortgage bonds.

[SPEAKER_02]: As I did during 2008 crisis, and that directly pushes down borrowing costs, but those are pretty extraordinary measures.

[SPEAKER_02]: And what you do if you happen to do that is you risk fueling inflation, or worse, rattling bond markets if the Fed's balance sheet expands a bit to aggressively.

[SPEAKER_02]: Now more moderate, more moderate steps exist as well the Fed could stop shrinking its mortgage-back securities portfolio.

[SPEAKER_02]: That would provide some support that nudges mortgage rates a bit lower.

[SPEAKER_02]: But it's not that easy, right?

[SPEAKER_02]: This hidden lever could prove a bit more effective than rate cuts in today's politically charged environment, but it doesn't necessarily mean that the Fed is going to have a direct effect on mortgage rates at all.

[SPEAKER_02]: You can take away here.

[SPEAKER_02]: Mortidrates are shaped by a lot of things, by global investors, by inflation expectations, and what bonds the Fed themselves hold.

[SPEAKER_02]: With a fed simply reducing a short term target rate, there's no guarantee that mortgage rates will follow.

[SPEAKER_02]: We got some time, so let's drop in another listener question now.

[SPEAKER_03]: I just had a question about one to purchase at the moment and not wanting to invest in technology or any of those things is now a good time to buy commodities or should a person wait for a while give a little breathing room to see if commodity prices come down in that purchase at that point.

[SPEAKER_03]: Thanks, Biden.

[SPEAKER_02]: But a great question.

[SPEAKER_02]: So I understand the hesitance to want to buy technology or other areas of the market that have had such a prolific rise over the past couple years and frankly some commodities fall into that category as well.

[SPEAKER_02]: But you have to understand what generally drives commodity prices and why it's a good idea to have some exposure regardless of the market cycle.

[SPEAKER_02]: One, inflation tends to be good for commodities.

[SPEAKER_02]: You seem precious metals like gold to particularly well as there's talks of Fed and Appendance being threatened.

[SPEAKER_02]: The dollar has fallen pretty significantly here today.

[SPEAKER_02]: Growth worries when people are afraid they tend to buy gold with demand of copper and the difficulty of bringing new supply online.

[SPEAKER_02]: Any growth in that can explode the price of copper.

[SPEAKER_02]: And so thematically it fits with what's happening.

[SPEAKER_02]: It also provides you a bit of diversification, the correlations between commodities and equities, broadly, can differ a bit.

[SPEAKER_02]: It can provide you further diversification in times when, if things are bad, bonds and equities tend to be a bit more correlated, especially in higher inflationary environments.

[SPEAKER_02]: So investing in commodities is always a good idea for risk-perfective.

[SPEAKER_02]: Now, if you're worried that, okay, there's been a bit of a run-up I get that.

[SPEAKER_02]: And that's what the benefit of dollar cost averaging is here.

[SPEAKER_02]: It's very difficult to time the market.

[SPEAKER_02]: And regardless of when you enter, there are benefits of owning commodities in your portfolio or very real.

[SPEAKER_02]: This is in Vestoc, let's make it two and a row from 80 to 99 chart.

[SPEAKER_04]: Hi, love what you do.

[SPEAKER_04]: Thank you again.

[SPEAKER_04]: My question is on Burke B. Sherr.

[SPEAKER_04]: And really just a general question and you're thought on placing the B. B. Sherr

[SPEAKER_04]: and a way to play value without or with being a little more tax-efficient without the dividend payout.

[SPEAKER_04]: Just here's if you can treat this as almost like an ETF and maybe but 10 to 15 percent of a taxable count into Burke B shares.

[SPEAKER_04]: Love your opinion on this and I will listen on the podcast.

[SPEAKER_04]: Thank you so much.

[SPEAKER_02]: Burke B is the more affordable share class of Burke's

[SPEAKER_02]: Berkshire Hathaway, of course, the holding company that owns and casualty insurance, utilities, energy, freight and rail, financial exposure, consumer discretionary exposure, all sorts of exposure, Warren Buffett's company.

[SPEAKER_02]: Now obviously, Warren's stepping down at the end of the year, it'll be under new management, his partner, Charlie Munger, past either last year or the year before,

[SPEAKER_02]: And so a company that has had those to at the helm for so long, understandably is going to look a little bit different going forward.

[SPEAKER_02]: Now let's address the first part of your question.

[SPEAKER_02]: Is this a good name to hold in a tax wheel count?

[SPEAKER_02]: Absolutely.

[SPEAKER_02]: Why they do not pay a dividend.

[SPEAKER_02]: You're not going to get that income and be taxed on it.

[SPEAKER_02]: And so if you are going to hold it and you're not going to trade it, well then there's going to be no tax implications

[SPEAKER_02]: but can you treat it like an ETF?

[SPEAKER_02]: Well, owning just one stock is incredibly tax efficient because you decide when you incur taxes, right?

[SPEAKER_02]: And so in a way, yes, it's similar to an ETF which is tax efficient because you're owning an ETF share and you are taxed on that gain of loss, gain or loss of that share and nobody else's.

[SPEAKER_02]: But you're kind of missing the key part of an ETF which is diversification.

[SPEAKER_02]: ETFs generally offer you diversification because you have multiple companies in there and you're not exposed to singular eosyncratic business specific risk.

[SPEAKER_02]: That's not the case here.

[SPEAKER_02]: If you were to put 10-15% of your portfolio in Berkshire, Hathaway, that is a high high percentage.

[SPEAKER_02]: Now, somebody did that 30 years ago, and none pretty well.

[SPEAKER_02]: But just because the return is positive, doesn't mean that the risk wasn't real.

[SPEAKER_02]: And so for a risk mitigation perspective, I don't think I'd recommend putting 10 to 15% of your portfolio in any single company.

[SPEAKER_02]: That is, Berkshire Hathaway Inc.

[SPEAKER_02]: Take your BRKB.

[SPEAKER_02]: Thanks for the call.

[SPEAKER_02]: Let's keep it going, it's Friday, so let's do three in a row.

[SPEAKER_02]: Hey guys, I'm Beatrice Fathon and video.

[SPEAKER_04]: Take your symbol NVDA.

[SPEAKER_04]: I know I've said it's all time high right now pretty much, but looking to buy it and hold it for about 10 to 20 years.

[SPEAKER_04]: I'll be just off.

[SPEAKER_04]: Thanks.

[SPEAKER_02]: Nvidia took her in the DA the darling of the chip space had a heck of a run.

[SPEAKER_02]: Looking at 2023 up 238% 2024 up 171% up 31.6% thus far year to date, it is at the forefront of the artificial intelligence space because of how necessary its GPUs have been for a lot of these models.

[SPEAKER_02]: They used to trade at some pretty crazy valuations.

[SPEAKER_02]: Absolutely insane.

[SPEAKER_02]: Now it's trading a bit more reasonably 31 times for looking price to earnings.

[SPEAKER_02]: Press cash with 55 times, that's crazy high price to sales 26.2 times, also crazy high.

[SPEAKER_02]: Margin's though, stellar upwards of 45% for the past three years.

[SPEAKER_02]: Not margin pretty likely to be 53.5% this upcoming year.

[SPEAKER_02]: Pretty much no debt to speak of.

[SPEAKER_02]: It's got $9 billion of debt on a $4.3 trillion market cap company.

[SPEAKER_02]: They recently announced an investment in Intel to develop AI infrastructure and personal computing products.

[SPEAKER_02]: So they're going to invest $5 billion in Intel.

[SPEAKER_02]: One concern.

[SPEAKER_02]: is what we've seen out of China that has supposedly allegedly been encouraging Chinese companies to know in for demand there.

[SPEAKER_02]: What is that going to mean for revenue growth?

[SPEAKER_02]: Not sure, right?

[SPEAKER_02]: Revenue has been growing at 64.2% on an annualized basis.

[SPEAKER_02]: Get this, they had 10 billion in revenue in 2020.

[SPEAKER_02]: That 230 billion last year.

[SPEAKER_02]: They're projected to have 27 billion this year.

[SPEAKER_02]: This is some pretty crazy growth numbers.

[SPEAKER_02]: Now, could that happen?

[SPEAKER_02]: Absolutely.

[SPEAKER_02]: Companies are spending billions and billions and billions and billions of dollars in order to try to stay afloat in the A.I.

[SPEAKER_02]: race.

[SPEAKER_02]: Now, eventually, it's gonna stop if monetization of all this KFX doesn't manifest itself back in her at this company.

[SPEAKER_02]: We've seen a bit of a tech rotation.

[SPEAKER_02]: There could be a bit of a pull-back here.

[SPEAKER_02]: But if you're looking for the long term here, if you're looking for 20, 30 years, I think having a little bit of an allocation in video mix perfect sense.

[SPEAKER_02]: That is NVDA in video corporation.

[SPEAKER_02]: As in Vestock, I'm Luke Graham.

[SPEAKER_02]: We have one goal here to help you achieve your financial freedom.

[SPEAKER_02]: Our work continues after our final break before the weekend.

[SPEAKER_02]: So get your questions in now at 888-99 chart.

[SPEAKER_06]: The best-talked phone lines never closed and now loop Guerrero is here, call the best-talk, 888-99 chart.

[SPEAKER_02]: It's good to build from Northern California.

[SPEAKER_02]: You've got a question about a new mont and listening on AM-1220.

[SPEAKER_02]: Hi, Luke.

[SPEAKER_00]: I just wanted to make a statement about myself.

[SPEAKER_00]: Um, and they fit into different categories in my mind if not, you know, separate from their stock reality.

[SPEAKER_01]: Yeah.

[SPEAKER_00]: As to how I approach them, you know, whether I just have, you know, like a base, a number of shares in a stock and then, um, trade around the, my base holding, you know, like if it gets up real high, trim some and then buy some back, if it goes down, if I still want

[SPEAKER_00]: Numa is one that I originally bought at least five, maybe five, six years ago.

[SPEAKER_00]: I liked the dividend and I thought, you know, gold is going up over time.

[SPEAKER_00]: And you know, after I became a little more proficient in my studying about the stock, a little more form, I just realized like some stocks like this are better as it

[SPEAKER_00]: within the same range, even if it's a broad range, over or over, more of the twice just an noise that crap out of me.

[SPEAKER_00]: And I bought this very low two, three years ago in the 40s and below.

[SPEAKER_00]: And I sold it to spring, you know, and the upper 55 to 57 range.

[SPEAKER_00]: And I think I held out for some for a little higher, like 60.

[SPEAKER_00]: I thought like, you know, gold has gone up, it's gone up and down, you know, I didn't understand why it went up and then dropped so much right before their election and then went down so far and it doesn't make any sense.

[SPEAKER_00]: Gold is going up and up and up the whole time.

[SPEAKER_00]: Can you make any stance out of that price move it and now why finally it's going up like

[SPEAKER_02]: Yeah, I mean, that's a great question, you know, one of the benefits of investing in gold miners versus investing in gold is you kind of have a leverage bet on the commodity here and so if gold is up, these things are up a lot.

[SPEAKER_02]: Now, if you would buy gold for different reasons, they buy gold to hedge against inflation, they buy gold as an insurance policy about the future, they buy gold because they're worried.

[SPEAKER_02]: Buy gold because there's a lot of uncertainty.

[SPEAKER_02]: So, what happens before an election?

[SPEAKER_02]: That is peak uncertainty.

[SPEAKER_02]: No one knows who's gonna win.

[SPEAKER_02]: No one knows who's gonna have it.

[SPEAKER_02]: No one knows what policies gonna look like.

[SPEAKER_02]: And especially in a election where the outcomes are pretty opposite in terms of policy, you have a lot of uncertainty.

[SPEAKER_02]: People are buying gold.

[SPEAKER_02]: What is the most certain day?

[SPEAKER_02]: The day after the election's called.

[SPEAKER_02]: And so if you look back historically, you can kind of see the path of gold price return in election years, kind of follow that way, right?

[SPEAKER_02]: And so when the demand for gold falls dramatically, a levered bet against it, who even falls a little bit, a levered bet against it like these miners are going to fall pretty significantly.

[SPEAKER_02]: And that's kind of the risk that you run here

[SPEAKER_02]: with investing in these miners.

[SPEAKER_02]: Now there are some benefits as well, right?

[SPEAKER_02]: They are companies, meaning that if there are times at which the demand for any commodity goes down significantly, they can pair back on overhead, they can cut costs, and they can react accordingly.

[SPEAKER_02]: But,

[SPEAKER_02]: You know, that is to say this is kind of the the the risk you run here with these types of businesses anytime they're small movements they're just going to be amplified in the return of the company that being said new months down really well it sounds like you are up a lot.

[SPEAKER_02]: We all hate when you hold on to something too long.

[SPEAKER_02]: and you round-trip it.

[SPEAKER_02]: That's why when you have profits like this, it's best to start trimming.

[SPEAKER_02]: Over time, locking some of those in, reallocating for the diversifying your portfolio.

[SPEAKER_02]: Thanks for the call, Bill.

[SPEAKER_02]: Hope you enjoy your weekend.

[SPEAKER_02]: In fact, I hope each and every one of you enjoys your weekend a well-deserved weekend.

[SPEAKER_02]: We are almost through the month of September and you've hung in.

[SPEAKER_02]: We're almost there.

[SPEAKER_02]: Just keep fighting.

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