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[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, independent thinking, shared success.

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[SPEAKER_02]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

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[SPEAKER_02]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.

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[SPEAKER_01]: Good afternoon fellow investors and welcome back to Invest Talk.

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[SPEAKER_01]: This is our Friday on October 3rd, 2025 edition of Invest Talk.

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[SPEAKER_01]: Yeah, we made it through another week and now we're solving into the fourth quarter and it's going to be an interesting fourth quarter when the midst of a government shut down, which

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[SPEAKER_01]: You would think would unroyal markets, but if you look back in history, you'll see that really doesn't have much effect, it's mostly political gainsmanship, those that are working or furlough, working without pay or furlough, they tend to get back pay, and so ultimately it doesn't really impact overall government spending, which

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[SPEAKER_01]: that's what drives liquidity and that's what drives asset prices liquidity.

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[SPEAKER_01]: So that's shouldn't be a shock to anyone that, you know, today's market was fine.

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[SPEAKER_01]: There was really nothing to write home about as we closed the day, although some, some stories underneath the surface, which we'll discuss in a little bit.

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[SPEAKER_01]: Now, it's not just about this fourth quarter or 2025,

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[SPEAKER_01]: helping you make better decisions with your money on a regular basis.

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[SPEAKER_01]: And we start with simple principles, not allowing your emotions to take over in your decision making process.

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[SPEAKER_01]: To build a reasonable thesis about why you might own a particular asset or asset class, understand the risks and rewards and how that impact your overall retirement picture.

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[SPEAKER_01]: or your broader goals, might not just be retirement, might be sending kids to college, might ping for a daughter's wedding, and might be a big trip for your family, might be the second home, can be a lot of things.

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[SPEAKER_01]: And all of the various goals that you might have require some sort of capital commitment, time commitment.

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[SPEAKER_01]: And so does this, this endeavor of investing and growing your wealth,

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[SPEAKER_01]: Also, it takes capital, so we're good savings as well as time commitment and discipline and data.

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[SPEAKER_01]: And that's where we're here to help you with.

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[SPEAKER_01]: So don't hesitate to give us a call.

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[SPEAKER_01]: You drive the topics on today's show.

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[SPEAKER_01]: I can sit here and blow V8 about whatever's on my mind.

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[SPEAKER_01]: But.

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[SPEAKER_01]: This show isn't about me, it's about you.

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[SPEAKER_01]: So give us a call at 8 to 899 chart.

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[SPEAKER_01]: Now, in just a bit, we'll talk about today's market performance and run down the show topics, but as usual, we'll tackle this color question first.

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[SPEAKER_07]: Hi, my name is Rasi from Maryland DC area.

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[SPEAKER_07]: I have a question regarding PRDO, Papar, Romeo, Delta, Oscar, what's your opinion and this company.

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[SPEAKER_07]: Thanks for what you guys did.

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[SPEAKER_01]: Looking at PRDO, which is Perdocio, Perdocio, education?

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[SPEAKER_01]: I'm not sure how to say it.

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[SPEAKER_01]: PRDO CEO is the symbol, and, sorry, the name of the company, PRDO is the symbol.

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[SPEAKER_01]: And it provides educational services.

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[SPEAKER_01]: through Colorado Technical University, the American Intercontinental University systems and the University of St.

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[SPEAKER_01]: Augustine for Health Services.

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[SPEAKER_01]: So it's for profit education.

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[SPEAKER_01]: But disciplines like Business Management, Nursing, Healthcare Management, Computer Science, Engineering, Information and Technology, Project Management, Cybersecurity, Criminal Justice, et cetera.

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[SPEAKER_01]: But in our instance, 1994,

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[SPEAKER_01]: So it's certainly some history to it.

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[SPEAKER_01]: And I like that it has a diverse set of programs.

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[SPEAKER_01]: And in any environment, more investing in your own education is certainly

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[SPEAKER_01]: a good way to go.

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[SPEAKER_01]: Especially if you're trying to advance your career and I think everyone for the most part is trying to do that.

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[SPEAKER_01]: And so this is a name that is consistently grown.

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[SPEAKER_01]: It's earnings minute $1.6 in 2018 and it's increased.

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[SPEAKER_01]: It's earnings per share.

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[SPEAKER_01]: Outside of 2020 to where dip slightly to 4%.

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[SPEAKER_01]: It's increasing.

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[SPEAKER_01]: It's earnings ever since 2023 is up 29% to 210.

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[SPEAKER_01]: then last year up, 9% to $2.28 in this year's so speed up, slightly but still to $2.33, and a $36 stock, it's about a 15 multiple, but what I like about it most of all is that it has a ton of cash on its balance sheet, about a half billion dollars in cash, and

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[SPEAKER_01]: What are they doing with that cash?

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[SPEAKER_01]: Well, they are buying back shares.

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[SPEAKER_01]: So certainly like that, they pay a little bit of a dividend, 15 cents a share, about a 1.5% dividend yield, and they just recently increased their dividend.

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[SPEAKER_01]: So I like this name, PRDO.

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[SPEAKER_01]: I like the profitability, I like the,

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[SPEAKER_01]: the area that it's in.

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[SPEAKER_01]: It's a small cap, namely 2.3 billion dollar market cap.

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[SPEAKER_01]: Now, it is a bit overbought in the short term, but this would be that type of name that I would probably add to on any dips.

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[SPEAKER_01]: So that was PR, DO, producer, education.

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[SPEAKER_01]: Once again, I'm not sure how to say it.

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[SPEAKER_01]: But I like it.

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[SPEAKER_01]: Now a lot of ground to cover over the next 45 minutes and type of meaning we'll get to all of it.

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[SPEAKER_01]: Our main focus point is about 18 US cities that don't tax your 401k or pension.

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[SPEAKER_01]: Look at cities, but it's mainly regions and in states and this can be a big leg up, especially if you're trying to

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[SPEAKER_01]: make the most of your retirements income from a pension or from your 401k and making a last longer.

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[SPEAKER_01]: If you're on the edge and that tax savings can help in a big, big way.

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[SPEAKER_01]: So we'll dig into some of those states.

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[SPEAKER_01]: We'll also look at a few other topics.

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[SPEAKER_01]: One, which I think is top of mind for most people.

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[SPEAKER_01]: finally hit.

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[SPEAKER_01]: Now we did the AI webinar on Tuesday and there's a lot of winners to the AI capex boom.

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[SPEAKER_01]: But we also see the risks to the overall spend and build out and it's

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[SPEAKER_01]: Now, it's going to be minors, it's going to be major.

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[SPEAKER_01]: Is it going to be completely stopping it because they've built too much capacity?

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[SPEAKER_01]: It's really hard to know at this point, but clearly the ROI is not there, okay?

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[SPEAKER_01]: And so whenever any endeavor, any business endeavor is as negative ROI, it will eventually stop.

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[SPEAKER_01]: Because if it doesn't stop, these companies will go bankrupt.

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[SPEAKER_01]: I'm talking about the big hyperscalers, the Amazon's, the Google's, the meta's of the world.

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[SPEAKER_01]: And so, the, the, the, the, the, the, the, the, alphabet, all the hyperscalers.

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[SPEAKER_01]: And so far, this is,

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[SPEAKER_01]: How does negative, like I said, has negative ROI?

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[SPEAKER_01]: And what's keeping it going is the other businesses of the hyper-skillers.

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[SPEAKER_01]: That our cash flow positive, that do have positive ROI.

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[SPEAKER_01]: So at some point, it's kind of like a member of Meta crashed big time a few years back.

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[SPEAKER_01]: Why?

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[SPEAKER_01]: Because they decided to deploy billions of dollars into the Metaverse, which the market did not like, it turned their cash flow negative.

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[SPEAKER_01]: And it was terrible for the business.

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[SPEAKER_01]: and Wall Street revolted, and then they decided reverse course and say, you know what, let's go back to just running Facebook and Instagram and what's happened and focus on those core businesses.

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[SPEAKER_01]: And Meadow will be the metaverse will be a side project.

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[SPEAKER_01]: We'll put a little bit of money in but nothing too much, nothing too crazy.

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[SPEAKER_01]: And I think eventually you'll get to something

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[SPEAKER_01]: That says, not enough.

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[SPEAKER_01]: You are going overboard.

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[SPEAKER_01]: So we're going to look at this and what might precipitate the these companies to pull back and then.

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[SPEAKER_01]: Manufacturing productivity.

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[SPEAKER_01]: It's been declined.

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[SPEAKER_01]: So look at why that might be as well.

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[SPEAKER_01]: Who has a voice bank questions?

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[SPEAKER_01]: One is on selecting a mutual fund.

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[SPEAKER_01]: The others on Schneider Electric.

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[SPEAKER_01]: And we also have some comments that came in via the Invest Talk YouTube channel as well.

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[SPEAKER_01]: And of course, we welcome your finance and investment questions.

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[SPEAKER_01]: Right now, but we're heading to a quick break and on the other, remembering all any time.

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[SPEAKER_01]: Leave your question on the investment like boy spanking, listening via the live stream, or an AM1220 in the Bay Area, you can call right now at 8 a.m.

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[SPEAKER_01]: at 8 a.m.

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[SPEAKER_01]: at chart.

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[SPEAKER_01]: John from San Jose, hang on, you will be next.

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[SPEAKER_03]: Serious investors are certain to have, finance, and investment questions.

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[SPEAKER_03]: What do you think is a good price?

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[SPEAKER_03]: And the best person to ask your question in the right way is you.

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[SPEAKER_01]: I was wondering from your standpoint, if they're at downside, in buying fractional shares versus whole shares.

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[SPEAKER_03]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased dancers.

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[SPEAKER_01]: Okay, he is the simple, you like the business.

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[SPEAKER_01]: I will say we've trimmed it a bit and cut it as a lower waiting.

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[SPEAKER_00]: Now while gold is hitting these record highs, it's driven by the safe heaven demand by central bank buying across the board.

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[SPEAKER_03]: Your participation makes an invest talk better.

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[SPEAKER_00]: Hey, Justin and Luke, this is Josh and North Carolina.

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[SPEAKER_00]: This is Marlow from York City area.

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[SPEAKER_03]: Let's take a live call, Sam from San Jose.

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[SPEAKER_03]: So don't forget to call, Invest talk.

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[SPEAKER_03]: Great advice.

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[SPEAKER_03]: Thank you.

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[SPEAKER_03]: 888-99 chart.

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[SPEAKER_03]: millions of downloads have proved there's value in every invest talk podcast.

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[SPEAKER_03]: Call anytime, 24-7, invest talk, 888-99 chart.

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[SPEAKER_01]: Let's go talk to John and say, looking at C-A-I-E, which looks like the

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[SPEAKER_09]: that's it just incorrect okay and you are what's what's getting you interested in this name it's advertised it closer to 14% with reasonably sound downside protection that's how it was advertised and I was wondering it it sounds too good to be true to be honest but

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[SPEAKER_09]: That's why I wanted you as an expert opinion on that.

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[SPEAKER_01]: All right.

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[SPEAKER_01]: First off, you're, always go with your gut.

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[SPEAKER_01]: Okay.

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[SPEAKER_01]: When you see a 40% yield, does that seem like something that's safe?

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[SPEAKER_09]: I usually not.

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[SPEAKER_01]: Okay.

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[SPEAKER_01]: So why would this be any different?

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[SPEAKER_09]: If you look at what they are claiming and if you look under the hood, they are claiming to be having close to 40 percent downside protection on principle as well as the coupon payment.

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[SPEAKER_09]: And Kalamos is a very reputed house, I have dealt with them before, so I was curious.

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[SPEAKER_01]: So this is a very complex vehicle looks like.

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[SPEAKER_01]: It's only been around for a few months now.

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[SPEAKER_01]: And it's done fine.

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[SPEAKER_01]: It's also done fine during a good market environment.

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[SPEAKER_01]: And this is trying to, looks like it's trying to mirror the mere cube US large cap ball advantage.

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[SPEAKER_01]: Index.

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[SPEAKER_01]: Do you know much about that in the history of the performance?

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[SPEAKER_09]: I looked it up.

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[SPEAKER_09]: I have some idea and whatever is available as a public literature.

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[SPEAKER_09]: Yeah.

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[SPEAKER_09]: I'm somewhat familiar with that.

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[SPEAKER_09]: But underlying this is a swap with JP Morgan.

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[SPEAKER_09]: The question that I had is, if what they are claiming is true, why would other side take

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[SPEAKER_09]: get involved in this, where do they make money in this?

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[SPEAKER_01]: Well, once again, it's, this is very complex.

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[SPEAKER_01]: And remember, JP Morgan or Morgan Stanley, whoever's taking the other side, they're doing it for reason.

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[SPEAKER_01]: They're collecting some spread.

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[SPEAKER_01]: I'd have to dig into the details.

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[SPEAKER_01]: Obviously, this is very complex.

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[SPEAKER_01]: This is a very complex, you know, you're talking about autocolables as a ladder structure.

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[SPEAKER_01]: It's downside, vol, and all of that.

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[SPEAKER_01]: At a glance, it's hard for me to really say, hey, this is how it's set up and this is the risks and rewards, et cetera, because it's, it's, once again, it's, I don't know a lot about this particular sub-index and it's strategy and all of that.

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[SPEAKER_01]: So I wish I could give you more, but know that I'm looking at the index that it's trying to follow, okay?

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[SPEAKER_01]: year-to-date is up 9.6%.

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[SPEAKER_01]: One year, it's up 5%.

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[SPEAKER_01]: OK.

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[SPEAKER_01]: So that's not terrible.

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[SPEAKER_01]: Remember, when you have downside protection, you're paying for it with upside potential.

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[SPEAKER_01]: And that's great when there's downside protection to worry about.

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[SPEAKER_01]: But in this environment, with liquidity good, I wouldn't be quick to try to chase that.

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[SPEAKER_01]: Okay, so I don't see any reason to invest in this right now.

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[SPEAKER_01]: I would look at the history of it, watch it in down markets as well as that markets.

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[SPEAKER_01]: So I'm been around for three months.

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[SPEAKER_01]: It's not enough history.

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[SPEAKER_01]: So don't look at the yield, the yield doesn't matter.

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[SPEAKER_01]: It's always total return, especially these covered call ETFs, these complex ETFs that quote unquote, they're supposed to give you a yield.

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[SPEAKER_01]: It's giving you that a lot of times it's giving you that yield by returning capital to you.

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[SPEAKER_01]: So always look at the total return of the fund over an extended period of time and there's not enough time to make that judgment quite yet.

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[SPEAKER_01]: Now we're heading to a break.

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[SPEAKER_01]: Give me a call now at 8.98.

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[SPEAKER_03]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in.

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[SPEAKER_03]: Invest talk, 888-99 chart.

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[SPEAKER_01]: Let's take a look at the market today.

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[SPEAKER_01]: As I said at the top of the show, we closed, despite the government shutdown, we closed the day, modestly positive once again.

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[SPEAKER_01]: So for the NASDAQ NASDAQ was down about a quarter of percent, S&P up slightly the dials up about a half a percent there.

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[SPEAKER_01]: large cap growth definitely suffered the most on the day at a video in video down a bit meta down over 2% Tesla down about 1.4% and then companies like Google were down a little bit Amazon down 1.3 pounds here down 7.5% so pretty big reversal on that front.

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[SPEAKER_01]: Some strength

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[SPEAKER_01]: on the day.

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[SPEAKER_01]: Everything else was a bit mixed.

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[SPEAKER_01]: Now on the economic front, you certainly saw the lack of labor market data due to the shutdown was put more emphasis on the September ISM services index.

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[SPEAKER_01]: And this is what's important about government data, whether it's

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[SPEAKER_01]: Not being reported because of the government shutdown or their potential manipulation because of politics, whatever you want to call it, there's plenty of private data releases that tell you a lot about what's happening in the economy.

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[SPEAKER_01]: So you don't necessarily need that much government data.

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[SPEAKER_01]: And we looked at that on Wednesday, ADP had negative jobs growth, so most likely this would have been a week jobs number.

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[SPEAKER_01]: But we had the September ISM services index, and this is an extremely important release.

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[SPEAKER_01]: Because services member is about 70 plus percent of the overall economy.

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[SPEAKER_01]: Manufacturing, very small percentage.

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[SPEAKER_01]: And the ISM services came in at 50.

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[SPEAKER_01]: So anything above 50 is growth, below 50 is shrinkage.

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[SPEAKER_01]: So 50 means flat, neutral.

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[SPEAKER_01]: And Augusto is 52, so slight growth, narrowed down to 50.

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[SPEAKER_01]: And consensus was at 4 to stay at 52.

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[SPEAKER_01]: So certainly missed expectations.

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[SPEAKER_01]: New order index, theater main and positive territory from 56 down to 50.4.

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[SPEAKER_01]: So only slightly in that positive territory.

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[SPEAKER_01]: the employment index in contractionary territory for the fourth straight month to 47.2.

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[SPEAKER_01]: That was a bit better than the previous month, the 46.5, but still wants to get in contractionary territory.

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[SPEAKER_01]: And you would think with a weak report that the prices paid index would fall,

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[SPEAKER_01]: but it didn't, it actually ticked up from 69.2 to 69.4.

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[SPEAKER_01]: There's another one of those stagflationary reports.

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[SPEAKER_01]: Inventory fell into contraction and overall tariffs remain a recurring concern across various industries.

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[SPEAKER_01]: So that was the big news or economic news on the day.

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[SPEAKER_01]: Asset classes, you had the treasuries weaker with yields up about two to four basis points.

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[SPEAKER_01]: That was certainly of note.

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[SPEAKER_01]: I think a lot of that had to do with the prices paid in next.

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[SPEAKER_01]: The dollar index was off point.

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[SPEAKER_01]: 1% gold was up 1.1 to a fresh record high.

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[SPEAKER_01]: about 3,900 an ounce for the first time ever, just a bastion of strength.

20:05.397 --> 20:15.103
[SPEAKER_01]: And in this market, Bitcoin was up 1.4% in WTA crude, up 0.7%, but still down pretty significantly over the past week.

20:15.843 --> 20:22.987
[SPEAKER_01]: So that was the market as we closed this week and headed into fresh full week, the first full week of Q4.

20:24.757 --> 20:27.820
[SPEAKER_01]: Now, we made a focus point, concerns this story.

20:28.460 --> 20:29.581
[SPEAKER_01]: Top 18 U.S.

20:29.601 --> 20:43.794
[SPEAKER_01]: cities that don't tax your 401k for pensions and in various states, you can avoid state tax and any tax on 401k or pension withdrawals.

20:45.135 --> 20:48.258
[SPEAKER_01]: And this can help you stretch your retirement dollars.

20:50.180 --> 20:51.301
[SPEAKER_01]: So let's dig into this.

20:53.792 --> 20:54.933
[SPEAKER_01]: And we'll start by a region.

20:56.255 --> 20:59.118
[SPEAKER_01]: And let's say you want to stay in the Midwest, or you want to go to the Midwest.

21:00.179 --> 21:12.171
[SPEAKER_01]: You can look at state like South Dakota and they're plenty of small cities that have very low housing costs, or just cost living in general.

21:14.133 --> 21:16.896
[SPEAKER_01]: Then you have Iowa, place like Corning, Iowa.

21:19.277 --> 21:21.178
[SPEAKER_01]: The median home value there is only $117,000.

21:21.639 --> 21:33.447
[SPEAKER_01]: So not only are you not being taxed from a state perspective on your income, but your property taxes are very low as well.

21:33.787 --> 21:34.748
[SPEAKER_01]: And that's something to consider.

21:37.429 --> 21:46.876
[SPEAKER_01]: A lot of these states that have little or no stating come tax, they tend to have high property tax and high sales tax.

21:48.184 --> 21:56.452
[SPEAKER_01]: So you have to look at the full package here, and obviously the home value is very low, then your data, your property access is going to remain low as well.

21:57.312 --> 22:03.098
[SPEAKER_01]: So it's out to go to an Iowa or a couple of good places, Northeast, you have Pennsylvania, as well as New Hampshire.

22:03.118 --> 22:08.703
[SPEAKER_01]: Those are two places that don't tax your, or do you have no tax on state income.

22:10.191 --> 22:33.708
[SPEAKER_01]: or in any of Mississippi, Mississippi is another state in the South as well as Florida and Tennessee, other places where no taxes on pension and form a can come, and then in the South West, do you have Texas, mainly in the West, Washington, and Nevada, and the state that ranks number one at overall the Tax Foundation's 2025 Tax State competitive index,

22:34.692 --> 22:35.212
[SPEAKER_01]: Wyoming.

22:35.633 --> 22:39.315
[SPEAKER_01]: So if you're looking to avoid state taxes, Wyoming is the place to be.

22:40.096 --> 22:42.057
[SPEAKER_01]: Now we're heading into a final break.

22:42.517 --> 22:44.078
[SPEAKER_01]: It's a good final break, our mid break.

22:44.279 --> 22:45.720
[SPEAKER_01]: So give me a call now at 8 a.m.

22:45.780 --> 22:46.040
[SPEAKER_01]: in shark.

22:54.300 --> 22:59.809
[SPEAKER_03]: The more you learn about how the market works, the better your chances for success.

23:00.510 --> 23:03.896
[SPEAKER_03]: So don't forget to call, in Vestard, 888-99 chart.

23:11.530 --> 23:15.631
[SPEAKER_01]: Let me tell you about the new series that has debuted on our best talk.

23:15.691 --> 23:18.032
[SPEAKER_01]: YouTube channel is called Invest Talk Innovators.

23:18.452 --> 23:26.954
[SPEAKER_01]: And for our latest episode, I spoke with my good friend Anthony Katz, he's the visionary founder of Hyper-Eyes and he defined what it means to be an innovator.

23:26.974 --> 23:33.256
[SPEAKER_01]: And he tells how technology, including artificial intelligence is transforming the wellness in your industry.

23:34.096 --> 23:34.916
[SPEAKER_01]: Love this interview.

23:36.096 --> 23:37.637
[SPEAKER_01]: And I think everyone should go check it out.

23:37.697 --> 23:38.157
[SPEAKER_01]: He's a...

23:38.904 --> 23:48.549
[SPEAKER_01]: Brilliant mind that's done taking basically pioneered and it's a highly new industry and anybody.

23:49.050 --> 23:58.135
[SPEAKER_01]: I think we'll enjoy this interview and you can go check it out at the Invest Talk YouTube channel and look for the Invest Talk Innovators series.

23:59.055 --> 24:03.197
[SPEAKER_01]: Let's drop in another fresh listener question from eight to eight 99 chart.

24:03.918 --> 24:05.979
[SPEAKER_04]: Hey, this is Thomas in Santa Cruz.

24:06.179 --> 24:06.960
[SPEAKER_04]: I'm calling about

24:08.135 --> 24:17.060
[SPEAKER_04]: B. G. S. Y. Snyder Electric, I'm calling the ask if this is a breakout, as well as if you guys like the stock.

24:17.200 --> 24:20.702
[SPEAKER_04]: This would be a good entry point for potentially a long-term hold.

24:21.182 --> 24:23.484
[SPEAKER_04]: I understand this is a massive company.

24:23.984 --> 24:27.906
[SPEAKER_04]: I mean, our perception-living in California is PG&A's a big company.

24:27.926 --> 24:31.068
[SPEAKER_04]: This is, I mean, triple or even larger than that.

24:36.710 --> 24:44.457
[SPEAKER_04]: long-term, as well as if they would take advantage of any of the AI theme that we were talking about in the webinar.

24:44.597 --> 24:45.257
[SPEAKER_04]: Hope all is well.

24:45.277 --> 24:45.998
[SPEAKER_04]: Thank you so much, guys.

24:46.378 --> 24:48.921
[SPEAKER_01]: I'm looking at Schneider Electric.

24:49.201 --> 24:50.582
[SPEAKER_01]: Let me just pull up some data.

24:50.622 --> 25:02.212
[SPEAKER_01]: And yeah, they do benefit from a lot of the AI themes you talked about in the webinar, from energy management, industrial automation, and the like, and certainly

25:05.088 --> 25:05.588
[SPEAKER_01]: very well.

25:05.608 --> 25:09.510
[SPEAKER_01]: Let me pull up some, let's see if I can get some data on this.

25:09.610 --> 25:10.090
[SPEAKER_01]: There we go.

25:10.530 --> 25:17.132
[SPEAKER_01]: Yeah, earnings this year, so it's been $2.4 cents up from $1.72 last year, then up to $2.30.

25:17.452 --> 25:26.836
[SPEAKER_01]: Next year, it's out of France, and probably one of those names that's really underappreciated, and because it's a foreign name.

25:26.936 --> 25:29.757
[SPEAKER_01]: Now, the other good thing is money is flowing

25:31.281 --> 25:36.623
[SPEAKER_01]: away from the United States, you know, so you're seeing great out performance from foreign markets this year.

25:36.723 --> 25:41.985
[SPEAKER_01]: And Shidder is there's certainly on that bandwagon.

25:43.805 --> 25:47.667
[SPEAKER_01]: So let me just pull up some of your dad pieces of data to look at.

25:49.007 --> 25:50.988
[SPEAKER_01]: I was like to bring them up and

25:51.916 --> 25:54.059
[SPEAKER_01]: And really get a sense of what's happening.

25:54.079 --> 25:55.742
[SPEAKER_01]: Yeah, year to date, it's up nearly 20%.

25:55.822 --> 25:57.965
[SPEAKER_01]: You have to like that.

25:58.986 --> 26:06.417
[SPEAKER_01]: And let me look at $164 billion market cap out of 1% dividend yield and a good balance sheet.

26:07.298 --> 26:26.254
[SPEAKER_01]: So you certainly like that return on investor capital about 10.6 return on the equity around 15% which is kind of the higher end long term, but I think there's certainly tailwinds to their business that we'll continue for some time, although

26:27.718 --> 26:39.443
[SPEAKER_01]: You know, there is potential for capex to add a little bit in the medium term, and that could impact them, but what I like about it is that it's not trading at some agreed just multiple.

26:39.463 --> 26:42.224
[SPEAKER_01]: I mean, $2.30 next year, that's still a.

26:46.213 --> 26:49.495
[SPEAKER_01]: what a high 20% or a high 20, a P ratio.

26:49.975 --> 26:55.778
[SPEAKER_01]: That's elevated, that's above the work in average, but it's not a extreme, it's not 60 or 70, something like that.

26:56.378 --> 27:05.543
[SPEAKER_01]: So I like this as an exposure to foreign markets, exposure to AI CapEx, especially in foreign markets.

27:05.563 --> 27:09.025
[SPEAKER_01]: Let me look at their geographic revenue breakdown.

27:09.985 --> 27:24.896
[SPEAKER_01]: The 31% is here in AIDS dates, 12% is in China, 5.6% is in France, Germany's 5% and then give UK, Japan, India, Italy that kind of rounds out the top eight when it comes to it's revenue source.

27:24.916 --> 27:37.486
[SPEAKER_01]: So, I like that it's well diversified across the world and I would give this a thumbs up, but understand there are risks to capex, spends coming down in the medium term.

27:38.086 --> 27:44.209
[SPEAKER_01]: Don't forget, as we generally make time to fit in a quick rundown of today's or the end of the week.

27:45.124 --> 27:47.365
[SPEAKER_01]: Key benchmark numbers, let's do that right now.

27:47.385 --> 27:51.727
[SPEAKER_01]: The two year yield, 3.56% down from last week's 3.64%.

27:52.487 --> 28:04.213
[SPEAKER_01]: So nice little move on the two year and just continues to price in a Fed that will likely cut once or twice this year.

28:04.573 --> 28:06.874
[SPEAKER_01]: Well, this up, or for the rest of the year.

28:06.894 --> 28:11.216
[SPEAKER_01]: 94% chance of a rate cut at the end of this month and then another 84% chance,

28:14.457 --> 28:25.167
[SPEAKER_01]: in its December and so the market certainly liking that the market is the equity markets, liking the treasury market is pricing in and more diversified going forth.

28:25.207 --> 28:30.171
[SPEAKER_01]: Remember the two-year yield, that's typically follows the Fed funds rate.

28:30.191 --> 28:31.532
[SPEAKER_01]: 10-year treasury yield, 4.11%, also down,

28:34.875 --> 28:40.357
[SPEAKER_01]: from $4.17% last week, but not as much as the front end of the curb.

28:40.377 --> 28:44.818
[SPEAKER_01]: So the curb did steepen a bit on the week, gold price at $3884 an ounce up $123 compared to last week.

28:44.978 --> 28:46.558
[SPEAKER_01]: Once again, a new fresh record.

28:46.578 --> 28:46.618
[SPEAKER_01]: Hi.

28:53.080 --> 28:59.845
[SPEAKER_01]: Silver today was at $48 per ounce of $91 compared to last week.

28:59.945 --> 29:06.910
[SPEAKER_01]: So I think Silver will hit 50 and that is a good sign for the precious metal market overall.

29:07.731 --> 29:10.653
[SPEAKER_01]: Oil, $61 per barrel, $4 down $4.19 compared to last week on Central OPEC.

29:16.619 --> 29:18.561
[SPEAKER_01]: Supply increases in the month of November.

29:18.581 --> 29:20.523
[SPEAKER_01]: That's at least what the markets are reacting to.

29:21.263 --> 29:25.608
[SPEAKER_01]: Gasoline, $3.15 a one cent increase compared to last week.

29:26.328 --> 29:28.570
[SPEAKER_01]: And a lot that has to do with refining capacity.

29:28.590 --> 29:35.957
[SPEAKER_01]: I think there was a fire here locally last night in Southern California around a refineries, so that could impact some things.

29:36.678 --> 29:40.041
[SPEAKER_01]: But here in California, the average down the gas, $4.64, the same as last week.

29:43.407 --> 30:08.696
[SPEAKER_01]: Now let's pivot over and touch on the CapEx spend from AI and this is important to understand this perspective because we just did a webinar in AI and the second order winners from the AI boom and I think there are a lot of underappreciated second order winners there are

30:14.457 --> 30:21.640
[SPEAKER_01]: companies like HVAC producers, manufacturers, and those are doing very well.

30:24.361 --> 30:27.962
[SPEAKER_01]: Industrial equipment manufacturers.

30:29.723 --> 30:35.585
[SPEAKER_01]: There's just a lot that is getting already the tailwind from AI and the AI capex boom.

30:36.505 --> 30:38.926
[SPEAKER_01]: But the reality is, if you look at history,

30:39.932 --> 30:41.694
[SPEAKER_01]: There will be a bust over this.

30:42.454 --> 30:44.817
[SPEAKER_01]: That this will be an over-investment cycle.

30:47.439 --> 30:51.844
[SPEAKER_01]: Now you might hear that and say, well, he's bearish on AI.

30:52.344 --> 31:02.014
[SPEAKER_01]: No, what I am is just clear eyed about what history tells us about new technologies that emerge.

31:02.979 --> 31:10.241
[SPEAKER_01]: and how companies chase after those technologies for growth, and ultimately overspend on CapEx.

31:13.342 --> 31:16.083
[SPEAKER_01]: And AI stocks right now are in a bubble.

31:17.444 --> 31:26.967
[SPEAKER_01]: I will say that unequivocally, the vast majority of these names in the AI space will be much lower three to five years from now.

31:28.853 --> 31:30.013
[SPEAKER_01]: No one's that trigger, right?

31:30.033 --> 31:33.054
[SPEAKER_01]: They can continue to go up for three to five more months, right?

31:33.394 --> 31:34.515
[SPEAKER_01]: Maybe even other 12 months.

31:36.355 --> 31:37.935
[SPEAKER_01]: But probably not much longer than that.

31:39.496 --> 31:53.480
[SPEAKER_01]: And you're already seeing the classic signs of the bubble, such as circular financing, doing deals between themselves in video investing in what do you call it?

31:54.160 --> 31:54.840
[SPEAKER_01]: Open app, there we go.

31:56.474 --> 32:00.397
[SPEAKER_01]: They're buying each other's products and using Vendor Finance to sustain their growth.

32:01.658 --> 32:09.225
[SPEAKER_01]: Instead of going to a bank, right, saying, hey, well, we'll sign this contract with you and the Vendor's Finance.

32:09.245 --> 32:12.127
[SPEAKER_01]: The Vendor is taking on the risk of future payment.

32:13.308 --> 32:17.532
[SPEAKER_01]: This all echoes the capex booms of the past.

32:22.319 --> 32:30.845
[SPEAKER_01]: And I was there by starting this business when the last one major one happened that was in the late 90s around the telecom and internet boom.

32:34.307 --> 32:45.774
[SPEAKER_01]: But as I said on the webinar on Tuesday is this happened in railroads, electricity, radio, semiconductors, and obviously the internet.

32:46.595 --> 32:48.576
[SPEAKER_01]: So this is not new.

32:48.736 --> 32:50.177
[SPEAKER_01]: There's no thing new under the sun.

32:50.237 --> 32:51.578
[SPEAKER_01]: It just looks a little different.

32:54.035 --> 33:13.650
[SPEAKER_01]: and they're a catalyst to the bust, to be either regulation, crimping the growth, increase competition, or the buyers of the end product, unwilling or unable to keep the demand growth going.

33:17.333 --> 33:22.918
[SPEAKER_01]: And once any of those things happen, the lack of cash flow,

33:25.074 --> 33:26.135
[SPEAKER_01]: Suddenly feeds on itself.

33:28.477 --> 33:29.318
[SPEAKER_01]: Then what are you seeing now?

33:30.219 --> 33:33.883
[SPEAKER_01]: Europe is starting to regulate it of the European AI Act.

33:35.444 --> 33:44.633
[SPEAKER_01]: You're seeing competing models to open AI such as DeepSeek, in China and K2 and the UAE using a lot of this.

33:44.653 --> 33:45.374
[SPEAKER_01]: Can you pay power?

33:45.414 --> 33:49.378
[SPEAKER_01]: So maybe you don't need as much capacity that they're building out.

33:52.398 --> 34:07.112
[SPEAKER_01]: And most importantly, most impactfully is the tech industries cash flows are starting to dwindle and being squeezed because they are not getting the rest requisite ROI and they're just taking this cash flow from other businesses.

34:08.834 --> 34:16.381
[SPEAKER_01]: And ultimately they'll probably buybacks and undermine those share price gains and market valuations and that's where we'll get the major corrections.

34:17.235 --> 34:23.602
[SPEAKER_01]: And what's interesting about this is that most of these names actually saw a huge price to clients during what I call Tech Bubble 1.0.

34:24.923 --> 34:29.869
[SPEAKER_01]: Microsoft, that fell 65% from the peak in March of 2000 until it's bottom.

34:30.509 --> 34:31.030
[SPEAKER_01]: Apple was down 80%.

34:32.171 --> 34:39.159
[SPEAKER_01]: Oracle down 88% Amazon down 94% that's how much they were down from peak to trough in 2000 to their lows.

34:40.694 --> 34:47.576
[SPEAKER_01]: and many of them took any between five and 16 years to get back to even after that big drawdown.

34:49.696 --> 34:51.077
[SPEAKER_01]: So once again, this is typical.

34:52.457 --> 35:01.819
[SPEAKER_01]: First, you have the bubble behavior to much catbacks and that's essential to broader adoption of a new technology.

35:04.000 --> 35:05.080
[SPEAKER_01]: And then when the bubble bursts,

35:07.097 --> 35:20.525
[SPEAKER_01]: that excess capacity doesn't go away, it actually allows other companies to come in, utilize that excess capacity at a cheap rate and build sustainable businesses on the back of that technology.

35:21.945 --> 35:27.909
[SPEAKER_01]: But those that invest laid in the cycle before that ultimate bust, they're the ones that lose the most.

35:29.370 --> 35:31.511
[SPEAKER_01]: Now how much impact will this happen in the overall economy?

35:31.551 --> 35:33.192
[SPEAKER_01]: Well, first is depends on

35:34.702 --> 35:36.562
[SPEAKER_01]: whether it's debt finance or equity finance.

35:36.962 --> 35:47.004
[SPEAKER_01]: The good thing right now is that this is mostly equity finance or finance by cash flow from other segments of the business.

35:48.184 --> 35:57.346
[SPEAKER_01]: So the good news, long term on AI, is that it almost guarantees that AI will be with us because this capacity will be utilized.

35:57.386 --> 35:59.106
[SPEAKER_01]: It's going to be theirs, not going away.

36:04.408 --> 36:05.528
[SPEAKER_01]: created destruction period.

36:07.809 --> 36:11.950
[SPEAKER_01]: So make sure you be very wary of holding these names long term.

36:11.990 --> 36:13.430
[SPEAKER_01]: This is a trading market.

36:14.050 --> 36:19.432
[SPEAKER_01]: You can stick with that trade, but what's going to happen is there will be an ultimate huge down day in these names.

36:20.772 --> 36:27.214
[SPEAKER_01]: Kind of like deep seek, but something that lasts a little bit longer, and that will be the sign that the top is in.

36:27.754 --> 36:28.954
[SPEAKER_01]: Now we may not be there yet.

36:28.994 --> 36:32.595
[SPEAKER_01]: We're not seeing those did that big reversal day, but I understand

36:34.507 --> 36:36.008
[SPEAKER_01]: We're getting closer by the day.

36:36.028 --> 36:39.930
[SPEAKER_01]: Now, let's keep things moving and put it back to the best thought voice bank and never close this.

36:39.970 --> 36:42.911
[SPEAKER_01]: So, call any time and eight, eight, eight, nine, nine, chart.

36:42.992 --> 36:55.538
[SPEAKER_08]: This question is from Northern California, and my question is regarding mutual funds and how to select a mutual fund.

36:55.558 --> 37:00.301
[SPEAKER_08]: I have a roll over IRA, and I'm wondering

37:04.796 --> 37:08.217
[SPEAKER_08]: when trying to invest some spare money that I have.

37:08.758 --> 37:11.679
[SPEAKER_08]: Look forward to hearing your response on the podcast.

37:12.079 --> 37:12.479
[SPEAKER_01]: Thank you.

37:12.499 --> 37:16.360
[SPEAKER_01]: Oh, that's a, it's a loaded question.

37:16.640 --> 37:24.663
[SPEAKER_01]: You know, I need to know more about your risk tolerance level, what your other holdings are, et cetera.

37:26.444 --> 37:27.805
[SPEAKER_01]: Now, how to analyze mutual fund?

37:27.825 --> 37:30.226
[SPEAKER_01]: It's something we used to do webinars on back in the day.

37:30.246 --> 37:31.206
[SPEAKER_01]: So I know a lot about them now.

37:32.529 --> 37:39.715
[SPEAKER_01]: Mutual funds have become a lot less prevalent in today's market as ETF flows of have taken over.

37:40.736 --> 37:44.258
[SPEAKER_01]: And mostly we're indexing, but there are great mutual funds that are out there.

37:45.159 --> 37:52.125
[SPEAKER_01]: Even actively managed ones, especially those in midcap, small caps, foreign stocks, bond funds.

37:52.705 --> 37:57.749
[SPEAKER_01]: In fact, all of those I just listed, you could probably find better mutual funds

38:01.295 --> 38:06.738
[SPEAKER_01]: You're looking in those spaces, don't throw out mutual funds if you're just looking at funds in general.

38:08.459 --> 38:12.041
[SPEAKER_01]: Now the first thing you have to look at is the comparison to the industry.

38:12.341 --> 38:23.947
[SPEAKER_01]: So you have to target a particular sector, or a particular style factor, whether that's large cap or growth or value.

38:25.632 --> 38:28.633
[SPEAKER_01]: And then you want to find the best in breed within that particular space.

38:28.813 --> 38:38.178
[SPEAKER_01]: Look at who he's morningstar.com, there are other tools out there to see which ones are the better performers with in compared to their peers, et cetera.

38:38.778 --> 38:41.439
[SPEAKER_01]: So it's hard for me to tell you, okay, this is what you should buy.

38:41.459 --> 38:47.502
[SPEAKER_01]: You have to start broader first with what type of risk you want to take and what your asset allocation should be right now.

38:47.662 --> 38:53.385
[SPEAKER_01]: And frankly, it should be leaning heavily on values out of the market as well as foreign stocks.

38:54.367 --> 38:57.109
[SPEAKER_01]: They were heading to a break, or final break, it's gonna be called now.

38:57.690 --> 39:02.234
[SPEAKER_01]: Bill from Northern California, hang on, you'll be next, but give me a call at 8-8-8-8-8-9-7-8-8-8-8-9-7-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-8-

39:15.244 --> 39:31.749
[SPEAKER_01]: Now let's briefly mention the newest KPP premium news that are which will be distributed to Maro in this week in the KPP inside section we discuss the effects of the government shutdown and in the stock idea section we mentioned a US-based personal security firm and a global research

39:33.750 --> 39:39.072
[SPEAKER_01]: Company on on the portfolio management section we touched on the bond market as an indicator.

39:39.092 --> 39:43.454
[SPEAKER_01]: And if you're interested in learning more, visit investtalk.com to subscribe.

39:43.474 --> 39:46.596
[SPEAKER_01]: The news that it will come to your inbox every Saturday night.

39:46.616 --> 39:53.779
[SPEAKER_01]: A bill from Northern California asking you about NTR listening on AM1220KDOW.

39:54.339 --> 39:56.720
[SPEAKER_01]: NTR bill, why are you looking at it?

39:57.161 --> 39:58.021
[SPEAKER_01]: What interests you about it?

40:03.003 --> 40:32.395
[SPEAKER_05]: You know, 10 years ago more and it was a pretty good dividend pair and you know it had ups and downs with the commodity and you know I became interested I think the other was a mosaic the company that it merged with to make this company and you know it just seemed like almost close to a monopoly and they have a commodity that's needed in pretty much all the agriculture.

40:32.875 --> 40:36.818
[SPEAKER_05]: So it doesn't mean they guaranteed profits or anything like that.

40:36.918 --> 40:42.843
[SPEAKER_05]: But it seemed like a very kind of more stable business and they pay a good dividend.

40:42.863 --> 40:57.355
[SPEAKER_05]: So I liked it for the dividend and I just, I looked for things like bargain shopping and I bought this last year between July and December and the mid to upper forties.

40:58.035 --> 40:59.517
[SPEAKER_05]: And so I've hold it for that time period.

41:00.415 --> 41:08.018
[SPEAKER_05]: Going forward, you know, the financial strength of the company and their dividend security, if you can add any insight to that, I appreciate it.

41:09.612 --> 41:20.777
[SPEAKER_01]: are looking at nutrient and TR is the symbol and this is in the it's in the fertilizer space and it's fairly large $29 billion mark.

41:20.877 --> 41:26.199
[SPEAKER_01]: Yeah, earnings are expected to be up 30% this year to $4.55, but that's still well down from the 2022 high, which is at $13.19, but well above the 2019 pre-pandemic level of $2.12, since.

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[SPEAKER_01]: Now, you say it has a monopoly.

41:37.406 --> 41:44.452
[SPEAKER_01]: Well, the problem is that very few monopolies have returned equity in the single digits.

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[SPEAKER_01]: And if you look long-term, that's what you have here.

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[SPEAKER_01]: You have a name that profitability is consistently positive.

41:54.007 --> 42:02.215
[SPEAKER_01]: But it's been up and down and it's the material space ultimately and in most materials here, price takers.

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[SPEAKER_01]: And while they may be one of the largest here in the US, there's fertilizer producers all over the world.

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[SPEAKER_01]: And then you have to look at,

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[SPEAKER_01]: other competitors, as well, like a CF Industries, that's a name that within this space, I would rather own.

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[SPEAKER_01]: They have higher profitability, which are at least 20% versus high-simple digits for a nutrient.

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[SPEAKER_01]: And historically, their profits, their profit growth has been more consistent.

42:39.186 --> 42:43.149
[SPEAKER_01]: In fact, in 2019, they made $1.92, and they're supposed to make $8.39.

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[SPEAKER_01]: So you can see even better when it comes to growth perspective than a nutrient.

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[SPEAKER_01]: Now I'm not good saying you should go buy CF, but,

42:52.341 --> 42:55.584
[SPEAKER_06]: Yeah, if I just wanted to be confident in the ticker.

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[SPEAKER_01]: Yeah, exactly.

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[SPEAKER_01]: See if industries.

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[SPEAKER_01]: Now, once again, I'm not saying you go buy a CF.

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[SPEAKER_01]: I'm just comparing two within the space.

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[SPEAKER_01]: And then you look at Mosaic, is another one, okay?

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[SPEAKER_01]: And that one is a more similar to a nutrient, should I be saying?

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[SPEAKER_01]: And then you look at their profitability.

43:16.182 --> 43:17.663
[SPEAKER_01]: It's also kind of high single digits.

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[SPEAKER_01]: Return equity.

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[SPEAKER_01]: So you have nutrient and mosaic with high single the degenerate equity with decent growth, but not amazing.

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[SPEAKER_01]: And then you have CF, which historically just has better more consistent profitability.

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[SPEAKER_01]: Now you're going to get a higher dividend yield that a nutrient 3.67 versus CF is 2.22.

43:41.792 --> 43:45.414
[SPEAKER_01]: But as I always say, you almost have to ignore that.

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[SPEAKER_01]: It's a very, it should be very low,

43:50.259 --> 43:51.021
[SPEAKER_01]: buying a company.

43:51.262 --> 43:55.554
[SPEAKER_01]: It's more about profitability, balance sheet, consistency of their business.

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[SPEAKER_01]: how they can defend their business from competitors and the rest of the market, etc.

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[SPEAKER_01]: And so I really take the lower yield and a better business than CF.

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[SPEAKER_01]: Now, I, in the material space, I would allocate to other areas, frankly, probably wouldn't buy in.

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[SPEAKER_01]: We don't own any of these for clients, such to say that.

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[SPEAKER_01]: And so, but if I'm comparing the bigger ones than the space, CF continues to be the top of the list.

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[SPEAKER_01]: Thanks for the call.

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[SPEAKER_01]: I'm Justin Klein, this completes another invest talk program and if that today's show made you think about your own picture and your strategy, but there you should have exposure to places like fertilizers or agricultural in general, or should you have more gold, and just real names, are you in too many overvalued AI plays that are subject to capex reversals, etc.

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[SPEAKER_01]: Well, any of those and more, I encourage you to head over to invest.com and schedule a no-cost portfolio review with myself and Luke.

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