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[SPEAKER_08]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

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[SPEAKER_08]: Independent Thinking, shared success.

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[SPEAKER_08]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.

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[SPEAKER_08]: Here is KPP Financial Chief Executive Officer,

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

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[SPEAKER_02]: This is our Monday, September 29th, 2025 edition of the best talk.

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[SPEAKER_02]: And yet that's right, there's only one more trading day left in the third quarter.

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[SPEAKER_02]: What a year it's been.

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[SPEAKER_02]: Been year of twists and turns and ups and downs.

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[SPEAKER_02]: A lot of headlines.

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[SPEAKER_02]: That's for sure.

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[SPEAKER_02]: And really it's been.

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[SPEAKER_02]: a good year.

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[SPEAKER_02]: You have to, if to say that in general for equities, asset prices, you still have credit markets under control, you have banks lending, you have profits rising.

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[SPEAKER_02]: So, shouldn't be a shock that we are positive on the year, but we are heading into fourth quarter and then in the 2026.

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[SPEAKER_02]: So, every quarter is different every year is certainly different as well.

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[SPEAKER_02]: So, we'll

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[SPEAKER_02]: next year, very, very soon.

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[SPEAKER_02]: Now I'm Justin Klein.

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[SPEAKER_02]: The objective up-to-date show is to help you become a better investor.

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[SPEAKER_02]: Answering your finance and investment questions, giving you data and perspective that can help you make better decisions with your money.

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[SPEAKER_02]: It's simple as that.

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[SPEAKER_02]: So this hour is dedicated to your journey.

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[SPEAKER_02]: And in just a bit, I'm going to talk about today's market performance and run down the show topics for the hour, but as usual, we'll tackle this color question first.

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[SPEAKER_03]: Hi, how are you guys doing?

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[SPEAKER_03]: I have a question regarding a stock or company called Fox Factory Holding and just wanted to get your idea of its valuation at the moment.

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[SPEAKER_03]: Thank you very much.

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[SPEAKER_03]: That's all.

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[SPEAKER_02]: All right, looking at box factory holding company.

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[SPEAKER_02]: It's a small cap name, only about a billion dollar market cap, engaged in designing a doing manufacturing and marketing performance right dynamic products.

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[SPEAKER_02]: It has bicycles, side by side, on-road vehicles with offered capabilities, off-road vehicles, trucks, altering vehicles, et cetera.

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[SPEAKER_02]: So it's a business that's been around a long time.

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[SPEAKER_02]: See, is this the same Fox yet?

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[SPEAKER_02]: Yeah, Fox, Fox racing, Fox off-road.

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[SPEAKER_02]: So it's a business that is solid, consistent, relatively consistent, which I would say.

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[SPEAKER_02]: But as of late it hasn't been, that's the issue.

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[SPEAKER_02]: Is there in $5.49 in 2022?

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[SPEAKER_02]: It's one, everybody wanted,

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[SPEAKER_02]: off-road vehicles of some kind.

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[SPEAKER_02]: They were spending time outdoors.

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[SPEAKER_02]: They were mountain biking, et cetera.

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[SPEAKER_02]: And they were buying boxes of products.

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[SPEAKER_02]: But since then, earnings have started to come down at $395 in 2023, $333 last year.

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[SPEAKER_02]: And then, let's say $233, 2020, 2023.

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[SPEAKER_02]: Last year, $20, $333.

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[SPEAKER_02]: And then this year, a dollar, $171, earnings are supposed to bounce back.

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[SPEAKER_02]: That's the positive here.

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[SPEAKER_02]: You're seeing some sort of stabilization and based on that, if you look at next year's earnings of 243, you know, it looks on the cheap side.

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[SPEAKER_02]: take a look at the chart here.

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[SPEAKER_02]: This one of those names that, you know, the chart is certainly going to tell you a lot about the potential turnaround here.

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[SPEAKER_02]: And I will say, it does look like it has bottomed.

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[SPEAKER_02]: It did go above the tournament, average, back in July.

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[SPEAKER_02]: It's pulled back a little bit, but still within the consolidation range that it's been in,

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[SPEAKER_02]: Since the nice move higher in maim, assuming that was on earnings, revenue's last quarter at 8% earnings up 5%.

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[SPEAKER_02]: Take a look at their balance sheet.

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[SPEAKER_02]: You do have a decent amount of debt that worries me a bit, but the free cash flow is positive.

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[SPEAKER_02]: Excuse me, as a remain positive since 2022.

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[SPEAKER_02]: And

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[SPEAKER_02]: I like that.

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[SPEAKER_02]: I like that even though it's had some steps backwards short term, it's still Managing to remain cash flow positive, supporting the debt, and it's trading at a four looking EBITDA of eight and a half, that's pretty good.

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[SPEAKER_02]: So the enterprise is like EBITDA's the low end of its range.

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[SPEAKER_02]: No dividend, but it's a small cap name.

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[SPEAKER_02]: It should probably take that cash flow continuing to whittle down debt.

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[SPEAKER_02]: So it's probably what I would do with that cash flow, so that makes sense.

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[SPEAKER_02]: So I'm gonna say it's high risk because it's so small.

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[SPEAKER_02]: It isn't a consumer space, although the consumer balance sheet is pretty strong.

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[SPEAKER_02]: I understand while or why earnings were not that great in the last couple years, because there was a large pull forward in demand of 2021 and 2022.

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[SPEAKER_02]: Now, you're getting going to get back to kind of reasonable normal earnings, 2019, pre-pandemic, they were earning $2.71.

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[SPEAKER_02]: So, I like it.

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[SPEAKER_02]: I kind of like the chart a little bit.

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[SPEAKER_02]: It's starting to improve.

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[SPEAKER_02]: I like the business.

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[SPEAKER_02]: Historically, it's been profitable with good cash flow.

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[SPEAKER_02]: It's balance sheets.

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[SPEAKER_02]: Okay, not amazing, but okay.

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[SPEAKER_02]: So, I'm going to give it a thumbs up, mainly because I think it's good

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[SPEAKER_02]: factory holdings, FOXF is the symbol.

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[SPEAKER_02]: Now, we've log to ground and cover over the next 45 minutes, and our main focus point is about the sunk cost fallacy.

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[SPEAKER_02]: and why you just can't walk away.

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[SPEAKER_02]: It's a psychological trap that tricks rational investors in the throwing good money after bad.

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[SPEAKER_02]: So I'll break down this concept and frankly, I guarantee you, it applies in some way, shape or form, to every single one of you.

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[SPEAKER_02]: This is one of the most powerful psychological

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[SPEAKER_02]: tricks your mind plays on you and you're never going to fully avoid it, but as with everything, when you're conscious of your bias, you can at least attempt to address it and mitigate.

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[SPEAKER_02]: and ultimately we'll likely help you make better decisions across your life, not just in the finance world, not just in the investment world.

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[SPEAKER_02]: This really applies to every vertical of life.

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[SPEAKER_02]: So I love this topic and we'll talk about that in a little bit.

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[SPEAKER_02]: In addition, we'll discuss AI investments.

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[SPEAKER_02]: We have a big webinar coming up tomorrow and I'll give you a little preview and talk

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[SPEAKER_02]: like what that.

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[SPEAKER_02]: And then in New York, real estate, Manhattan is increasing.

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[SPEAKER_02]: It's a number of residential units, how well by converting old commercial properties.

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[SPEAKER_02]: So look at that story.

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[SPEAKER_02]: And what that might mean for the CNBS market, commercial mortgage back securities as well as obviously the housing market in New York City as well.

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[SPEAKER_02]: And if we have time, if we have time, we'll talk about some trends within private equity.

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[SPEAKER_02]: I love this topic, it's always interesting because I do think there's a lot of changes going on in the back rooms in the private equity industry and I think it does inform kind of the broader financial picture.

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[SPEAKER_02]: We also have voicemain calls, one is on paying mortgages versus investing, and then diamond back energy, F-A-N-G, and then some questions that came in via the investment hockey tube channel.

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[SPEAKER_02]: As well, of course, I welcome your finance and investment questions right now.

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[SPEAKER_02]: We're going to head into a quick break, please remember you can call any time and leave your question on the investor on voicemain.

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[SPEAKER_02]: If you're listening via our live stream, or on game 1220 in the Bay Area, you can call right now at 888-99 chart and up next, I'll comment on today's market activity.

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[SPEAKER_01]: It's happening tomorrow.

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[SPEAKER_01]: The All-New Investorque Wealth Webinar, beyond the Mag7, how to identify AI opportunities across sectors.

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[SPEAKER_01]: Just in Klein and Luke Guerrero are going to help you move past the familiar names to identify the key opportunities for investment in the real AI revolution.

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[SPEAKER_01]: They'll be talking about the energy grid, data center infrastructure, and how AI is boosting profits in a wide range of industries.

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[SPEAKER_01]: The All-New Investalk Wealth webinar happening online, September 30th from 1 to 2 p.m.

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[SPEAKER_01]: Pacific Time.

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[SPEAKER_01]: It's happening tomorrow.

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[SPEAKER_01]: Seats are limited, so register now at investalk.com.

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[SPEAKER_01]: There's value in every investor talk podcast.

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[SPEAKER_01]: So call in Vestalk, 888-99 chart.

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[SPEAKER_01]: In Vestalk, your questions are free.

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[SPEAKER_01]: The answers are unbiased.

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[SPEAKER_01]: Justin Klein is here now, 888-99 chart.

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[SPEAKER_02]: Let's go take a look at the market today.

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[SPEAKER_02]: It was overall a positive day, but not.

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[SPEAKER_02]: Not a big day.

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[SPEAKER_02]: That's the up about a quarter percent.

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[SPEAKER_02]: And as deck of about half a percent, there were certainly pockets of weakness.

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[SPEAKER_02]: And you, but you had strength as well.

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[SPEAKER_02]: Broadcom and Google, those were down.

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[SPEAKER_02]: You had in video up to percent, Apple, down slightly.

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[SPEAKER_02]: Microsoft only about half percent meta was flat.

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[SPEAKER_02]: Amazon up 1%, you had weakness out of the energy space, Chevron, Exxon, where week,

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[SPEAKER_02]: along with the other oil names as oil prices did pull back a bit after a strong week last week.

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[SPEAKER_02]: But if you look elsewhere, there's a lot of modest moves, really not a whole lot of movements, a really positive direction or negative, and

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[SPEAKER_02]: Not a shock as we head into quarter end, you get quarter end.

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[SPEAKER_02]: Window dressing tomorrow, so I don't expect a lot of market movements until we get two with a new quarter, and we have the jobs data coming up here later in the week.

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[SPEAKER_02]: We have the ADP number on Wednesday, and then we have the non-form payrolls number on Friday.

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[SPEAKER_02]: So certainly those will be market mover.

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[SPEAKER_02]: So when it came to economic news,

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[SPEAKER_02]: August penny home sales increased 4% month over month that consensus was that for its rise point 6% compared to the prior months point 4% decline so really nice bounce back here in sales driven really across the country except for the northeast that did decline but Midwest south and the west didn't increase.

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[SPEAKER_02]: 8.7, which was the consensus was before to be flat.

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[SPEAKER_02]: So that was a bit negative.

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[SPEAKER_02]: New orders came in at 8 versus negative 2.6, for which was expected.

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[SPEAKER_02]: Employment and next continue to drop 12 points, the negative 3.4, so the labor market continues to weaken a bit, not dramatically, but modestly.

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[SPEAKER_02]: and those were the big economic numbers for the day, you had other asset classes, the dollar was down 0.2 percent, gold was up 1.2 percent, gold was just continuing to set new records, new record high for gold, as I've been saying.

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[SPEAKER_02]: just continues to be the best performer in this market as geopolitical and economic risks continue to escalate Bitcoin features up 5% to nice bounce back there in Bitcoin.

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[SPEAKER_02]: It is something that I've been kind of watching the fact that Bitcoin prices have struggled to really

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[SPEAKER_02]: breakout, try to break out and know that August and failed around the higher on 123 and change, then recently dipped down to was a low ground 108 when a 7 and I said if we break below that 108 when a 7 level, then you have a downtrend and this recent bottom, it bombed at 109.

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[SPEAKER_02]: So it's hanging in there, show we say, it's hanging in there and not giving

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[SPEAKER_02]: signal when it comes to liquidity as a whole.

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[SPEAKER_02]: So nice little bounce back for Bitcoin.

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[SPEAKER_02]: DemiTag crew settled down three and a half percent, as I said before.

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[SPEAKER_02]: And headline was another possible OPEC plus production hike for November.

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[SPEAKER_02]: We do have the looming government shutdown that is tomorrow.

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[SPEAKER_02]: President Trump is meeting with Democrats and GOP Congresswoman,

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[SPEAKER_02]: congressmen, men and women, this afternoon, so they're still unclear whether a shutdown can be avoided.

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[SPEAKER_02]: Kind of late to the game, and I think this will probably get a shutdown for a period of time, and there'll be panic around it, but as usual, these things tend to be a bit more headlines than actual events that move markets.

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[SPEAKER_02]: Now every day we see questions from the comment section of the best luck YouTube channel, Rich P says, EV is projected to grow bigger in the coming years.

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[SPEAKER_02]: What do you think about investing in companies involved in lithium mining like Album Merrill, A, L, B?

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[SPEAKER_02]: This is one of those sectors.

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[SPEAKER_02]: And this is one of the best lessons any investor can make.

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[SPEAKER_02]: As it's not just about demand, it's about supply as well.

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[SPEAKER_02]: It's the very first thing we learn in economics.

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[SPEAKER_02]: It's the very first thing you learn are supply and demand curves, the very first thing you learn because both matter and so many people talk about lithium and the demand for lithium without any any question about supply and how easy it is to supply lithium or not.

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[SPEAKER_02]: And the simple answer is Lithium is extremely abundant and not that expensive to pull out of the ground.

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[SPEAKER_02]: And this is why I'm saying for us for a number of years now, when this peaked out over $300 per share in 2022, that's at 86 and that's after a rally from a low 49.

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[SPEAKER_02]: So it's improving because it's going to no longer lose money next year, but it's absolutely not a great way to play the EV market out

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[SPEAKER_02]: They're moving in a break and ready for your calls now, eight to eight, ninety nine chart.

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[SPEAKER_01]: Invest talk.

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[SPEAKER_01]: Tell your friends they can listen live, download the free podcast, or watch invest talk on our YouTube channel.

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[SPEAKER_01]: And they can leave their finance and investment questions any time on 88899 chart.

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[SPEAKER_02]: That main focus point today is about the sunk cost policy and why you can't just walk away.

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[SPEAKER_02]: And I love topics that surround behavioral finance because it's so important for all of us to recognize our own humanity.

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[SPEAKER_02]: Gosh, they're self, but also in others, just for a cohesive society, really.

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[SPEAKER_02]: But also to make better decisions on a day-to-day,

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[SPEAKER_02]: And the Sun cost fallacy applies really to every part of life.

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[SPEAKER_02]: Because what it refers to is the loss of time, money or effort that you can't get back, that you've already put into some sort of endeavor.

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[SPEAKER_02]: Even when, and then you continue on with that decision, even when it's not in your best interest.

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[SPEAKER_02]: for something that maybe you have to show up for, maybe I've paid for a package.

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[SPEAKER_02]: Let's get example.

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[SPEAKER_02]: We've all bought a package of a service, whether that's a massage or a facial or some sort of whatever marketing package doesn't matter what it is.

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[SPEAKER_02]: Some sort of package that you might have purchased.

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[SPEAKER_02]: Then the first couple of experiences were not that great.

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[SPEAKER_02]: But because you paid for the package, you keep coming back despite the fact that it takes time and effort and you know you're not going to get what you want out of it.

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[SPEAKER_02]: So once again, this applies to both personal and business endeavors and it affects rational decision-making.

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[SPEAKER_02]: So it's a mindset of really continuing with a decision

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[SPEAKER_02]: passed the investment into it.

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[SPEAKER_02]: And it's really a flawed process of thinking.

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[SPEAKER_02]: And this happens most in business and government settings, because this is where large amounts of capital tend to be put in place.

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[SPEAKER_02]: I see this as well.

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[SPEAKER_02]: I'm a big MBA fan.

18:32.161 --> 18:34.882
[SPEAKER_02]: Tickets, these play basketball a lot.

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[SPEAKER_02]: And I see this with front offices.

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[SPEAKER_02]: Front offices, excuse me, they make a draft pick.

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[SPEAKER_02]: And they stick with that draft pick even though they're at that good and they have trouble cutting ties and oftentimes when a new front office comes in they kind of clean house and they get rid of the old bad decisions of the previous era.

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[SPEAKER_02]: And it's really about justifying that capital they put in.

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[SPEAKER_02]: Now, why is, what is this exists?

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[SPEAKER_02]: Well, first is loss of version.

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[SPEAKER_02]: Humans tend to feel pain of loss more than happiness of the game.

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[SPEAKER_02]: So it's hard for people to walk away and acknowledge the loss.

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[SPEAKER_02]: It often forces them to dig in deeper, pouring more resources into failing projects.

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[SPEAKER_02]: Then there's the commitment by us.

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[SPEAKER_02]: Once you make a decision, it's hard to go back on it.

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[SPEAKER_02]: And so we find ways to justify our actions, even though we know it's no longer good for us.

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[SPEAKER_02]: then there's the endowment effect.

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[SPEAKER_02]: They place a high value on objects, they own.

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[SPEAKER_02]: You bought it, you paid for it.

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[SPEAKER_02]: So it must be worth something.

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[SPEAKER_02]: So it means that if you walk away, your loss is larger than the actual loss of that value.

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[SPEAKER_02]: So what should you do to counterbalance this?

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[SPEAKER_02]: Now, the first is focus on future returns.

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[SPEAKER_02]: This happens in the equity markets in a big, big way.

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[SPEAKER_02]: You buy a stock, you're down on it, you people average down.

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[SPEAKER_02]: If they're a good money after bad.

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[SPEAKER_02]: And they focus on those past returns, and they say, well, it's cheap then, oh, it's now it's cheaper now, it's a better value.

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[SPEAKER_02]: And that can be true.

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[SPEAKER_02]: it isn't.

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[SPEAKER_02]: And then it's setting limits, for example, what's your loss limit on a particular position?

21:10.054 --> 21:12.514
[SPEAKER_02]: Nobody's going to buy it the perfect time every time.

21:12.574 --> 21:14.515
[SPEAKER_02]: So, you know, sometimes you're down in a position.

21:15.155 --> 21:16.875
[SPEAKER_02]: But what is too much of a loss?

21:17.755 --> 21:19.276
[SPEAKER_02]: What is the market?

21:19.316 --> 21:23.536
[SPEAKER_02]: When is it that the market is signaling to you that your thesis is wrong?

21:24.776 --> 21:25.617
[SPEAKER_02]: You have to have that number.

21:29.864 --> 21:41.895
[SPEAKER_02]: And then, seek a third party, another opinion, see where you, your thesis could potentially be wrong by somebody that doesn't have skin in the game.

21:42.616 --> 21:46.059
[SPEAKER_02]: It doesn't have the sunk cost policy because it's not their capital.

21:46.099 --> 21:50.723
[SPEAKER_02]: They have a objective opinion of that project, of that investment, whatever.

21:53.297 --> 21:59.964
[SPEAKER_02]: So make sure that you don't fall prey to this every single time and understand that this is part of human psychology.

22:00.445 --> 22:00.805
[SPEAKER_02]: Guess what?

22:00.865 --> 22:03.208
[SPEAKER_02]: You're a human and it applies to you as well.

22:05.290 --> 22:10.035
[SPEAKER_02]: They're ready to go break and as you know, the best type voice bank never closes, so call me now.

22:10.536 --> 22:11.837
[SPEAKER_02]: Anytime and eight a day, nine a.m.

22:11.917 --> 22:12.318
[SPEAKER_02]: and share it.

22:25.932 --> 22:27.533
[SPEAKER_01]: It's happening tomorrow.

22:27.913 --> 22:33.555
[SPEAKER_01]: The All-New Invest Talk, wealth webinar, beyond the Mag7.

22:34.135 --> 22:38.496
[SPEAKER_01]: How to identify AI opportunities across sectors.

22:38.977 --> 22:43.558
[SPEAKER_01]: Happening online, September 30th, from 1 to 2 p.m.

22:43.658 --> 22:44.619
[SPEAKER_01]: Pacific Time.

22:45.119 --> 22:49.540
[SPEAKER_01]: Seats are limited, so register now at investtalk.com.

22:49.560 --> 22:54.042
[SPEAKER_07]: Hey guys, I had a question on interest rates for a home.

22:54.688 --> 22:57.290
[SPEAKER_07]: By the way, if I'm moving, we're one of the lucky ones too.

22:57.750 --> 23:00.092
[SPEAKER_07]: Got a 2% loan back in COVID.

23:00.813 --> 23:03.095
[SPEAKER_07]: Now, we took a couple of jobs in a different area.

23:03.175 --> 23:04.255
[SPEAKER_07]: We have to buy to house.

23:04.316 --> 23:07.078
[SPEAKER_07]: We have a 6% rate now as well.

23:07.098 --> 23:08.279
[SPEAKER_07]: We got free approved for.

23:08.999 --> 23:16.025
[SPEAKER_07]: And I'm just looking to see how you guys would prioritize putting extra payments on the mortgage versus investing.

23:16.385 --> 23:21.569
[SPEAKER_07]: We still plan on maximizing our jobs for our 401Ks each year.

23:23.190 --> 23:24.670
[SPEAKER_07]: still playing to have extra money.

23:25.151 --> 23:29.812
[SPEAKER_07]: So just looking to see how you would if I someone is a situation.

23:30.192 --> 23:34.593
[SPEAKER_07]: Obviously not knowing all the facts, but yeah, I just want to hear your guys stop and all this time and show up.

23:34.933 --> 23:35.613
[SPEAKER_07]: Thanks, Mike.

23:37.054 --> 23:37.874
[SPEAKER_02]: There's a great question.

23:38.154 --> 23:43.756
[SPEAKER_02]: And it's something that I was asked for, asked about for a long, long time.

23:44.176 --> 23:47.977
[SPEAKER_02]: And up until recently, it really didn't make sense.

23:48.017 --> 23:50.378
[SPEAKER_02]: Most people were paying two and a half, three, three and a half

23:52.623 --> 23:55.726
[SPEAKER_02]: Yeah, equities and even cash right now is earning much more than that.

23:55.786 --> 24:00.530
[SPEAKER_02]: But now, a 6% mortgage, it's a little different.

24:02.372 --> 24:04.634
[SPEAKER_02]: You're taking when you're paying off any debt.

24:06.235 --> 24:15.243
[SPEAKER_02]: And you're no longer incurring that interest rate and you're basically effectively guaranteeing that return on the money that you put into it.

24:17.872 --> 24:24.455
[SPEAKER_02]: Now, this is your mortgage, and the big questions are you itemizing is that mortgage interest, deductible in some way?

24:25.116 --> 24:26.356
[SPEAKER_02]: So that would be a factor here.

24:27.277 --> 24:36.902
[SPEAKER_02]: Now if it isn't deductible, maybe you just have the standard deduction, then I would start to say, pay down the mortgage.

24:37.462 --> 24:40.003
[SPEAKER_02]: Now it's always a conservative way to go.

24:41.824 --> 24:45.466
[SPEAKER_02]: Okay, cause you're giving up the potential of more return.

24:47.869 --> 24:49.750
[SPEAKER_02]: But once again, there's no guarantee of that.

24:52.492 --> 25:04.560
[SPEAKER_02]: So I would say I would work to pay that down, while still, as you said, maximizing a 401k, especially that match as well as your Roth IRA.

25:05.301 --> 25:15.548
[SPEAKER_02]: So as long as you're on track for those things, those long-term retire wrinkles, then I would start allocating money to hang down the mortgage.

25:17.164 --> 25:19.566
[SPEAKER_02]: Let's keep things moving and play tune a row from eight to eight.

25:19.606 --> 25:22.107
[SPEAKER_00]: Now you guys are high love the show.

25:22.368 --> 25:26.390
[SPEAKER_00]: I was calling from New Jersey, I'm calling about Fang F.A.

25:26.611 --> 25:29.132
[SPEAKER_00]: and G. It's time and back energy.

25:29.533 --> 25:30.033
[SPEAKER_00]: I own it.

25:30.153 --> 25:31.814
[SPEAKER_00]: Just wanted to know what you guys think of it.

25:32.555 --> 25:33.435
[SPEAKER_00]: Be listening on a show.

25:33.555 --> 25:33.876
[SPEAKER_00]: Thank you.

25:34.296 --> 25:35.857
[SPEAKER_02]: We're looking at diamond back energy.

25:35.877 --> 25:37.838
[SPEAKER_02]: It's the name we've owned for a while.

25:37.858 --> 25:39.880
[SPEAKER_02]: And it was called Disponeckly Strategy.

25:40.515 --> 25:44.217
[SPEAKER_02]: And it's a large cap 41 billion dollar market cap.

25:44.798 --> 25:56.005
[SPEAKER_02]: One of the best run-shale producers here in the United States, and earnings peak debt in 2022, $24 and change, $18 and change in 2023, down to 15 and change last year.

25:56.045 --> 25:57.326
[SPEAKER_02]: This is bit $12 and $12 and $12 and $14 and earnings.

26:03.928 --> 26:04.328
[SPEAKER_02]: this year.

26:04.889 --> 26:10.611
[SPEAKER_02]: So you can see earnings have come down because oil prices and natural gas prices have come down as well.

26:11.672 --> 26:15.654
[SPEAKER_02]: So the bigger question is how much energy exposure do you want to have?

26:16.434 --> 26:21.397
[SPEAKER_02]: You know, we've owned this for a long time and it's a 2.8% dividend yield currently revenue growth is still good.

26:21.457 --> 26:26.059
[SPEAKER_02]: So you're still seeing a growth in their production.

26:26.739 --> 26:27.840
[SPEAKER_02]: And that's been really

26:35.909 --> 26:43.273
[SPEAKER_02]: That's what's kept it in a nice solid uptrend since 2021, despite this pullback since the middle of last year.

26:46.994 --> 26:51.156
[SPEAKER_02]: So we like it if you want oil and gas exposure.

26:51.276 --> 26:57.199
[SPEAKER_02]: We always have some exposure to different spaces, different sectors in each of our strategies.

26:57.980 --> 27:00.761
[SPEAKER_02]: So oil right now, we're not overweight.

27:02.612 --> 27:07.295
[SPEAKER_02]: So you don't have a ton of exposure to oil and natural gas.

27:07.896 --> 27:12.359
[SPEAKER_02]: But if you're going to have exposure to some degree, this is a solid name to do so.

27:13.660 --> 27:19.183
[SPEAKER_02]: Let's take a live call of James from New York, looking at C and C, which is Senteen.

27:20.684 --> 27:22.125
[SPEAKER_04]: Yeah, I'm looking at that name.

27:22.285 --> 27:25.768
[SPEAKER_04]: I always drop steeply during the summer and it's starting to,

27:26.450 --> 27:32.113
[SPEAKER_04]: climb up a little bit now, but if this is a good value here, I'm looking to get some exposure in the healthcare space.

27:32.314 --> 27:33.955
[SPEAKER_02]: When you say, is it a good value?

27:34.095 --> 27:35.355
[SPEAKER_02]: Why would you say it's a good value?

27:35.816 --> 27:54.107
[SPEAKER_04]: Well, I mean, I think that it was trading for much higher than it should have been for a period of time, but I think it's dropped down to a fair value, maybe in the high 20s or low 30 range, but I'm not sure if I'm looking at that right, maybe it's a value trap, I'm not sure.

27:55.252 --> 27:56.953
[SPEAKER_02]: Yeah, I think that's the biggest worry here.

27:56.973 --> 28:05.037
[SPEAKER_02]: Is Sentine is in the business of providing Medicare supplemental plans, mainly.

28:06.038 --> 28:11.721
[SPEAKER_02]: And do some changes to the Medicare sector.

28:12.601 --> 28:18.344
[SPEAKER_02]: From the government, their profitability is just drastically impaired.

28:19.165 --> 28:21.386
[SPEAKER_02]: They're in $7 and $16 last year.

28:21.426 --> 28:22.687
[SPEAKER_02]: So you might say, oh, based on $35 stock.

28:25.992 --> 28:29.093
[SPEAKER_02]: The problem is, is this year, they're only supposed to earn $1.73.

28:29.894 --> 28:31.394
[SPEAKER_02]: That puts it at a 20 multiple.

28:32.215 --> 28:34.796
[SPEAKER_02]: Now, next year earnings are supposed to bounce back to $3.00 in change.

28:35.876 --> 28:37.117
[SPEAKER_02]: What's that about a 10 multiple?

28:38.697 --> 28:42.799
[SPEAKER_02]: But expectations for this year and next year earnings continue to decline.

28:42.819 --> 28:46.681
[SPEAKER_02]: In fact, last quarter earnings were negative 16 cents.

28:47.261 --> 28:50.383
[SPEAKER_02]: And this quarter earnings are expected to be negative 14 cents.

28:52.950 --> 28:56.732
[SPEAKER_02]: And in the fourth quarter, it's just been negative, 85 cents.

28:59.874 --> 29:03.476
[SPEAKER_02]: So what does this level out at from the earnings perspective?

29:04.956 --> 29:16.622
[SPEAKER_02]: I might say, oh, they're writing things off, the kitchen sink, et cetera, but you're talking about three quarters of a row of earnings being negative.

29:19.244 --> 29:20.264
[SPEAKER_02]: It's extremely high risk.

29:22.533 --> 29:26.255
[SPEAKER_02]: health care exposure, that there's much better opportunities out there.

29:26.295 --> 29:36.262
[SPEAKER_02]: Now could this bounce back and find some semblance of stability and around three dollars of earnings?

29:36.682 --> 29:37.843
[SPEAKER_02]: Sure, it's possible.

29:38.483 --> 29:45.548
[SPEAKER_02]: But I'm not confident with the changes that have happened within the Medicare system that that's going to be the case.

29:46.769 --> 29:49.810
[SPEAKER_02]: I said this for a while that really since

29:51.558 --> 30:02.082
[SPEAKER_02]: The sustainability of profits within the healthcare space just made me, it's a healthcare insurance space, healthcare insurance space.

30:02.642 --> 30:05.383
[SPEAKER_02]: Made me crazy.

30:06.863 --> 30:10.965
[SPEAKER_02]: I did not, in this happened with United Health, United Health was a big winter for a long time.

30:11.445 --> 30:13.766
[SPEAKER_02]: Senteen was kind of an offshoot of that.

30:14.926 --> 30:16.327
[SPEAKER_02]: These healthcare companies,

30:17.556 --> 30:27.983
[SPEAKER_02]: found new bulls, found ways to manufacture profits within the rules, but clearly the rules were written for that.

30:29.544 --> 30:31.606
[SPEAKER_02]: And health care is always very political.

30:32.346 --> 30:35.368
[SPEAKER_02]: And at some point, this was all going to change.

30:38.530 --> 30:42.333
[SPEAKER_02]: Timing of it, you never know, but clearly it has changed.

30:42.933 --> 30:45.295
[SPEAKER_02]: And frankly, I think it's a bipartisan issue.

30:47.098 --> 30:51.221
[SPEAKER_02]: And eventually we get to some sort of single payer or government option or something like that.

30:52.402 --> 30:56.184
[SPEAKER_02]: And it's going to greatly impair the profitability of a lot of these companies.

30:56.844 --> 30:58.826
[SPEAKER_02]: And I think we're just starting to see the beginning of this.

30:59.786 --> 31:03.449
[SPEAKER_02]: Now, once again, could there be some sort of stabilization at some point?

31:03.629 --> 31:06.070
[SPEAKER_02]: Sure, but I don't love the risk versus reward.

31:08.632 --> 31:09.673
[SPEAKER_02]: Thanks for the call.

31:11.494 --> 31:15.836
[SPEAKER_02]: Let's talk about AI data centers, AI data centers,

31:18.238 --> 31:25.943
[SPEAKER_02]: Well, those of you, and it's one of the costliest building sprees in world history.

31:29.925 --> 31:47.196
[SPEAKER_02]: In fact, the leading tech firms have committed so much capital that's going to cost more to build these data centers than to build the entire, sorry, the entire interstate highway

31:48.593 --> 31:49.654
[SPEAKER_02]: That took four decades.

31:50.374 --> 31:51.795
[SPEAKER_02]: This is adjusted for inflation.

31:52.736 --> 31:53.576
[SPEAKER_02]: Think about that.

31:54.717 --> 31:56.318
[SPEAKER_02]: Think about that building's spree.

31:58.620 --> 32:06.325
[SPEAKER_02]: Now, the big problem here is that no one really knows if they'll get their investments back or went.

32:09.887 --> 32:12.669
[SPEAKER_02]: There's a lot of worries that there's an echo of the 1990s

32:17.500 --> 32:26.146
[SPEAKER_02]: Remember, fiber optic cables, they're being built everywhere, they're being laid everywhere, to bring internet into the home.

32:28.668 --> 32:45.319
[SPEAKER_02]: Well, that was great for search engines, like Google, but you had names like Global Crossing and WorldCom and 360 networks all go bankrupt because they spend a lot with without a real understanding

32:46.964 --> 32:54.289
[SPEAKER_02]: What the payback period was, or if at all, so growth, just for growth, sake, is not always a great investment.

32:55.710 --> 32:58.491
[SPEAKER_02]: Endeavor, in fact, it's often not.

32:59.632 --> 33:01.994
[SPEAKER_02]: And you look at some of these companies like OpenAI.

33:03.935 --> 33:11.780
[SPEAKER_02]: Sam Alman has said, it requires at least a trillion dollars in data center investments to get where they wanna go.

33:14.831 --> 33:22.593
[SPEAKER_02]: They recently committed to pay Oracle $60 billion a year for a service in data centers nationwide.

33:23.653 --> 33:27.254
[SPEAKER_02]: In the coming years, a 10 year deal $60 billion a year.

33:28.475 --> 33:33.676
[SPEAKER_02]: You want to know how much revenue AI open AI has this year?

33:33.696 --> 33:37.077
[SPEAKER_02]: 13 billion.

33:37.097 --> 33:37.477
[SPEAKER_02]: 13 billion.

33:43.647 --> 33:46.349
[SPEAKER_02]: Best just revenue, that's not profits, that's not cash flow.

33:46.849 --> 33:48.090
[SPEAKER_02]: That's just revenue.

33:51.132 --> 33:59.057
[SPEAKER_02]: So today's numbers, when it comes to Kpex are way larger than the.com bubble.

34:04.620 --> 34:08.283
[SPEAKER_02]: And Sequoia estimates that the money invested in AI infrastructure in 2023 and 2024 alone.

34:11.042 --> 34:26.090
[SPEAKER_02]: Require consumers and companies to buy roughly $800 billion in ad products over the life of the chips in order to produce a positive return.

34:30.152 --> 34:30.872
[SPEAKER_02]: Now think about that.

34:32.973 --> 34:37.376
[SPEAKER_02]: What's the life of a typical micro processor?

34:41.602 --> 34:43.043
[SPEAKER_02]: Computer is five years old.

34:45.305 --> 34:47.226
[SPEAKER_02]: Would you say that it's kind of at a date?

34:51.209 --> 34:51.689
[SPEAKER_02]: Let's say yeah.

34:53.390 --> 34:57.913
[SPEAKER_02]: Most of these ships have a three to four year life to them.

34:58.694 --> 35:00.435
[SPEAKER_02]: And then they're old, they're too slow.

35:00.455 --> 35:06.019
[SPEAKER_02]: They can't really be used for the new models, software.

35:11.130 --> 35:17.873
[SPEAKER_02]: So they're going to bring in $800 billion over four years when right now, they're bringing in a fraction of that.

35:20.115 --> 35:26.818
[SPEAKER_02]: Bain and company, estimated the way that AI infrastructure spending will require $2 trillion in annual AI revenue by 2030.

35:26.858 --> 35:33.201
[SPEAKER_02]: $2 trillion, that is more.

35:40.169 --> 35:56.518
[SPEAKER_02]: Then they combine 2024 revenue of Amazon, Apple, Alphabet, Microsoft, Meta, and Nvidia, and more than five times to size the entire global subscription software market today.

35:59.200 --> 36:00.060
[SPEAKER_02]: 23 is not that far away.

36:00.321 --> 36:00.701
[SPEAKER_02]: We're almost in 226.

36:00.781 --> 36:03.903
[SPEAKER_02]: And he's got the two trillion.

36:08.765 --> 36:16.732
[SPEAKER_02]: says that last year there was about $45 billion tied to revenue for AI products, $45 billion.

36:17.092 --> 36:21.356
[SPEAKER_02]: So it's going to go from $45 billion last year to $2 trillion in 2030.

36:22.998 --> 36:23.658
[SPEAKER_02]: I don't think so.

36:24.899 --> 36:25.520
[SPEAKER_02]: I don't think so.

36:28.182 --> 36:31.225
[SPEAKER_02]: Most consumers use the AI, use the free version of AI.

36:36.541 --> 36:46.688
[SPEAKER_02]: And yes, it's growing fast and a lot of people will say, you know, uh, nine percent of the world's population about 700 million people are currently using chatGPT.

36:48.149 --> 36:49.870
[SPEAKER_02]: It's up from 500 million in March.

36:50.370 --> 36:50.950
[SPEAKER_02]: But it's growing.

36:52.772 --> 36:54.833
[SPEAKER_02]: So the addressable market is much larger.

36:55.173 --> 36:55.954
[SPEAKER_02]: Yes, that's true.

36:58.855 --> 37:03.959
[SPEAKER_02]: What are you going to go from 45 billion to two trillion in five years?

37:04.819 --> 37:05.600
[SPEAKER_02]: The justify this?

37:11.365 --> 37:19.288
[SPEAKER_02]: The $400 billion that the hyperscalers will spend on capital investments this year, that's more than the Apollo Space Program.

37:20.388 --> 37:20.908
[SPEAKER_02]: Think about that.

37:23.890 --> 37:30.252
[SPEAKER_02]: And then you have the problem of circular business models.

37:31.272 --> 37:32.153
[SPEAKER_02]: Come, is that core weave?

37:33.033 --> 37:34.834
[SPEAKER_02]: Who got investments from Nvidia?

37:35.834 --> 37:37.054
[SPEAKER_02]: And then what does core weave do?

37:37.274 --> 37:38.575
[SPEAKER_02]: Will they go and buy Nvidia chips?

37:40.437 --> 37:42.577
[SPEAKER_02]: And then they need money, what do they do?

37:42.617 --> 37:45.478
[SPEAKER_02]: Well, they get it more investment from Nvidia.

37:48.879 --> 37:52.920
[SPEAKER_02]: And this is happening more and more across the space.

37:54.880 --> 37:58.701
[SPEAKER_02]: Nvidia making investments in companies that just simply buy more and more of its chips.

38:02.582 --> 38:07.743
[SPEAKER_02]: So, the simple answer is this is very much like 1989.

38:11.007 --> 38:14.068
[SPEAKER_02]: Now, could we be a 97, and there are two more years of this, sure?

38:17.330 --> 38:20.611
[SPEAKER_02]: But there are going, there's going to be economic ramifications to all this.

38:20.711 --> 38:24.693
[SPEAKER_02]: You have names like Blackstone coming in and privately financing a lot of this.

38:26.453 --> 38:33.116
[SPEAKER_02]: And, there are going to be bankruptcies and massive consolidations and projects that are giant waste of money.

38:34.536 --> 38:38.678
[SPEAKER_02]: And so, something we're going to talk about tomorrow on our webinar, it's really about who are the big winners?

38:38.718 --> 38:40.539
[SPEAKER_02]: Well, it's probably going to be the second order.

38:43.680 --> 38:46.066
[SPEAKER_02]: impact that will be the best of us.

38:46.086 --> 38:47.228
[SPEAKER_02]: Now we're heading to a break.

38:47.449 --> 38:47.930
[SPEAKER_02]: Give me a call now.

38:47.970 --> 38:48.411
[SPEAKER_02]: It did it.

38:48.451 --> 38:49.012
[SPEAKER_02]: Now you know, I'm sure.

38:52.833 --> 38:54.374
[SPEAKER_01]: It's happening tomorrow.

38:54.795 --> 39:00.440
[SPEAKER_01]: The All-New Invest Talk, Wealth webinar, Beyond the Mag7.

39:01.000 --> 39:05.384
[SPEAKER_01]: How to identify AI opportunities across sectors.

39:05.864 --> 39:11.489
[SPEAKER_01]: Happening online, September 30th from one to two PM Pacific Time.

39:12.009 --> 39:15.953
[SPEAKER_01]: Seats are limited, so register now at InvestTalk.com.

39:16.233 --> 39:18.675
[SPEAKER_06]: All right, Justin and Luke.

39:18.915 --> 39:20.877
[SPEAKER_06]: Thanks again for all you do on the show.

39:21.348 --> 39:24.850
[SPEAKER_06]: calling in about target ticker TGT.

39:25.370 --> 39:26.711
[SPEAKER_06]: Just would love your opinion on it.

39:26.731 --> 39:32.555
[SPEAKER_06]: It's been on my watchlist for quite a while and is well below a lot of the moving averages.

39:32.595 --> 39:44.602
[SPEAKER_06]: So just curious if it is a value trap and there's more room for it to fall or if this is a good spot to start accumulating to a full position for a long-term hold.

39:45.002 --> 39:46.343
[SPEAKER_06]: Thanks again, no listen on the podcast.

39:47.876 --> 39:53.719
[SPEAKER_02]: All right, looking at target TGT is a symbol and simple answer is, yeah, we started picking up recently.

39:54.160 --> 40:04.125
[SPEAKER_02]: We think it is a great value down here that it's kind of that the low end of its potential earnings.

40:05.326 --> 40:14.371
[SPEAKER_02]: Remember, the consumer is through a balance sheet strong and target has, you know, they have their issues.

40:16.686 --> 40:17.846
[SPEAKER_02]: They have a lot of strengths as well.

40:18.906 --> 40:22.147
[SPEAKER_02]: They cover, let's say 85% of U.S.

40:22.187 --> 40:29.049
[SPEAKER_02]: population, and they have scale, like not a lot of retailers do.

40:29.869 --> 40:33.370
[SPEAKER_02]: Ben and Walmart, maybe Costco, just only handful them out there.

40:33.410 --> 40:43.252
[SPEAKER_02]: And if you look at the valuations, this is trading at about six and a half times enterprise value to EBITDA, which is really, if you go back, let's see,

40:44.415 --> 40:46.457
[SPEAKER_02]: Last time it traded this low was 2017, okay?

40:48.899 --> 40:55.225
[SPEAKER_02]: And it just has a strong balance sheet, it's about $3 billion for cash flow.

40:55.845 --> 40:56.786
[SPEAKER_02]: Once again, that has come down.

40:57.407 --> 41:02.011
[SPEAKER_02]: But it's profitability, return equity is around 26, which is where it was pre-pandemic.

41:02.812 --> 41:08.777
[SPEAKER_02]: It was just kind of returned to pre-pandemic profitability and it was a better balance sheet.

41:10.507 --> 41:12.388
[SPEAKER_02]: So we like to talk it down here.

41:12.548 --> 41:18.891
[SPEAKER_02]: It looks like it's trying to make a double bottom here around 80, 70, 88, and that range is up nicely to death.

41:18.911 --> 41:20.172
[SPEAKER_02]: I want a little over 1%.

41:20.412 --> 41:24.094
[SPEAKER_02]: So I think it's a great value down here.

41:24.114 --> 41:25.435
[SPEAKER_02]: Now you got time?

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[SPEAKER_02]: For one more, so let's drop in.

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[SPEAKER_02]: Another question.

41:29.277 --> 41:30.978
[SPEAKER_05]: Hi, this is Christopher Massachusetts.

41:31.078 --> 41:33.759
[SPEAKER_05]: Just calling to see what you think about silver in general.

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[SPEAKER_05]: This is second to that.

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[SPEAKER_05]: What you think about silver minors.

41:36.881 --> 41:38.542
[SPEAKER_05]: I guess they're to that A, C.

41:39.322 --> 41:43.424
[SPEAKER_05]: in specific, again, thicker simple, A, G. Thank you.

41:45.446 --> 41:49.528
[SPEAKER_02]: First majestic silver AG, yes, this is a solid name.

41:50.829 --> 41:54.411
[SPEAKER_02]: AU, it's the, sorry, AG has the symbol.

41:55.451 --> 42:00.994
[SPEAKER_02]: AU is the, the number on the periodic table for silver.

42:01.675 --> 42:04.036
[SPEAKER_02]: But yeah, first majestic was our 19th since this year,

42:08.277 --> 42:15.260
[SPEAKER_02]: You know, didn't really have good growth in output and profits.

42:16.940 --> 42:21.962
[SPEAKER_02]: You know, the recent move on revenue simply just because of our silver prices.

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[SPEAKER_02]: So is this the best silver name out there?

42:27.605 --> 42:34.107
[SPEAKER_02]: Probably not, probably not, not the top of my list, but it is certainly a good silver company.

42:36.529 --> 42:39.830
[SPEAKER_02]: Yeah, wouldn't be a top my list, but I like silver minors overall.

42:40.730 --> 42:42.051
[SPEAKER_02]: Thanks for the call.

42:43.351 --> 42:59.616
[SPEAKER_02]: Now lastly, let's talk a bit about Manhattan real estate and pretty interesting is that there is about 4.1 million rentable square feet being converted from office to residential in Manhattan.

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[SPEAKER_02]: And there's about 8 million square feet of proposed

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[SPEAKER_02]: more conversions across 25 different properties in Manhattan.

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[SPEAKER_02]: Those interesting thing is that this used to be mainly in downtown in Wall Street area where the conversions were happening.

43:19.074 --> 43:20.094
[SPEAKER_02]: Now it's happening mid-down.

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[SPEAKER_02]: About 55% of all conversions are happening around time square, grand central station, et cetera.

43:30.197 --> 43:31.577
[SPEAKER_02]: And he's sort of flat iron building.

43:32.498 --> 43:36.262
[SPEAKER_02]: is also set to be converted to luxury condominiums.

43:37.182 --> 43:40.906
[SPEAKER_02]: And the former Pfizer headquarters in Midtown, also in the process.

43:41.086 --> 43:46.070
[SPEAKER_02]: And will be the largest conversion in New York City's history when it is completed.

43:47.312 --> 43:52.196
[SPEAKER_02]: So very interesting to see, these are the finally happening.

43:52.757 --> 43:57.541
[SPEAKER_02]: But it also goes to show you what's happening in the broader commercial real estate market.

43:59.433 --> 44:02.415
[SPEAKER_02]: You know, New York has historically had a housing shortage.

44:02.475 --> 44:08.460
[SPEAKER_02]: And so it's easy to find use cases for these buildings by trading them into residential.

44:09.380 --> 44:11.802
[SPEAKER_02]: But around the country, this is not always the case.

44:12.843 --> 44:16.505
[SPEAKER_02]: So it's a microcosm of what is happening in the commercial market, that's a security market.

44:17.106 --> 44:22.730
[SPEAKER_02]: What you have to be still guarded when it comes to that space and exposure within your portfolio.

44:24.104 --> 44:36.568
[SPEAKER_02]: Well, I'm Justin Klein, and if today's show made you think about your own financial picture in any way, your investments, taxes, retirement planning, whatever that is, you help with a Roth conversion strategy with your Social Security strategy.

44:37.068 --> 44:45.531
[SPEAKER_02]: All of this is what we do for clients along with building the investment strategies that fit your goals and your risk tolerance levels.

44:46.431 --> 44:48.432
[SPEAKER_02]: So I encourage you to head over to BestTalk.com.

44:49.552 --> 44:52.393
[SPEAKER_02]: Let's get a really no-cost portfolio review with myself, Aleuk.

44:53.074 --> 45:05.441
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45:05.461 --> 45:09.543
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45:09.944 --> 45:15.187
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45:19.129 --> 45:19.389
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45:23.095 --> 45:30.706
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45:31.086 --> 45:35.292
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45:39.337 --> 45:43.760
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45:44.100 --> 45:51.864
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