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[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

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[SPEAKER_02]: 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,

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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 Monday, October 27th, 2025 edition of Invest Talk.

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[SPEAKER_01]: Appreciate you all tuning in for this hour with me and I'm excited as usual to help you become a better investor as what this show is about each and every day.

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[SPEAKER_01]: I've shed some light on what's going on in the markets as well as individual companies, asset classes, sectors, et cetera.

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[SPEAKER_01]: And we help you mainly by answering your finest and investment questions.

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[SPEAKER_01]: But also bringing you news items, topics, data that we think are important for you to know about and incorporate in your thought process.

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[SPEAKER_01]: So,

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[SPEAKER_01]: This hour is dedicated to you and helping you take that next step in your own version of financial freedom.

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[SPEAKER_01]: So 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 first call-it question now.

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[SPEAKER_05]: Hey guys, this is Greg from New Orleans.

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[SPEAKER_05]: I'm just calling to get your take on general

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[SPEAKER_05]: This would be a long-term whole ten plus years as part of a pass of income strategy.

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[SPEAKER_05]: You think this is a good business to get into at this moment and what would be a good entry point of sale.

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[SPEAKER_05]: Anybody should give me?

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[SPEAKER_05]: Thanks.

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[SPEAKER_01]: All right, looking at general mills and this is starting to become a theme for me is looking at a lot of these old school package food businesses

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[SPEAKER_01]: kind of brands that have been around a long time that most people know that they see every day and their store shelves.

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[SPEAKER_01]: And these businesses seem, right, you can't go wrong.

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[SPEAKER_01]: You're talking about Jenna Mills here.

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[SPEAKER_01]: Cheerios, and, you know, a million other brands that people know, very well.

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[SPEAKER_01]: The problem is, is that a lot of these businesses have been run with thin margins, and they paid dividends throughout history.

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[SPEAKER_01]: But their dividends, frankly, have been sustainable.

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[SPEAKER_01]: or they're just not run very well.

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[SPEAKER_01]: And that has built up and Jonah Mills is kind of one of those.

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[SPEAKER_01]: And the debt giveaway here is just the performance.

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[SPEAKER_01]: Why is this just on a strong downtrend?

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[SPEAKER_01]: It peaked out back in, this was in 2023, just a couple years ago.

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[SPEAKER_01]: around $90 per share.

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[SPEAKER_01]: Now it's at $48, relative strength of 14 earnings, peak that at $4.30 cents.

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[SPEAKER_01]: Sorry, $4.52 and 20.24, fell 7% last year and another 13% this year.

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[SPEAKER_01]: So, where's the beef here?

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[SPEAKER_01]: What's the problem?

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[SPEAKER_01]: They're very profitable, 31% for you cash flow at about $2 billion, but they have about $15 billion in,

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[SPEAKER_01]: that long-term debt, and while it's not agreed just amount, it's preventing them from allocating cash flow and profits to shareholders.

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[SPEAKER_01]: And this is what you ultimately are when you buy this name.

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[SPEAKER_01]: And so I see no reason to pick this up until the business turns.

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[SPEAKER_01]: And the business is just simply

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[SPEAKER_01]: It's manufacturing decent profit growth, mainly through share buybacks.

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[SPEAKER_01]: It's true net income is not that great.

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[SPEAKER_01]: It's been on decline basically since 2022.

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[SPEAKER_01]: When I peaked out about 2.9 billion.

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[SPEAKER_01]: And so that's my issue with this.

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[SPEAKER_01]: I don't want to chase this potential value trap.

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[SPEAKER_01]: And once again, this is not just about general mills, there are many of these package food names when that's have a 5% dividend in this case.

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[SPEAKER_01]: And everyone's going to look at the 5% dividend and say it's General Mills, you're talking about brands like Cheerios and Betty Crocker and Czechs mix and cookie crisp and fiber one golden grams, kicks, hog and does, lucky charms, total raising brand, all of these are weedies all very well known brands, but they're just not in high demand anymore.

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[SPEAKER_01]: people want fresher foods and the people that bought into these brands, frankly, they're getting older.

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[SPEAKER_01]: These are the boomer generation brands.

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[SPEAKER_01]: And those are the jet.

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[SPEAKER_01]: That's the generation that is now, unfortunately, the older ones are passing away.

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[SPEAKER_01]: And the younger generation is just not buying up these type of products.

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[SPEAKER_01]: So I think these are where most of the value

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[SPEAKER_01]: Now if you're a lot of ground to cover over the next 45 minutes or so and are made focus point, it's about generative AI and finance in five ways to utilize it in your financial life.

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[SPEAKER_01]: Smeanly personal finance, we'll talk a little bit about its applications and investing as well.

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[SPEAKER_01]: We have other topics on the docket, which include levered ETFs.

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[SPEAKER_01]: There are now, I didn't even know this.

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[SPEAKER_01]: 700, sorry, 200, excuse me, 200.

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[SPEAKER_01]: Leverty ETFs that were launched this year alone.

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[SPEAKER_01]: And the total number is over 700 now.

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[SPEAKER_01]: That's crazy to me.

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[SPEAKER_01]: How many Leverty ETFs there are just a simply spec it because these are not good investment vehicles and I'll talk about why that is.

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[SPEAKER_01]: In addition,

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[SPEAKER_01]: job losses is AI creating so far.

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[SPEAKER_01]: We'll look at some of the payroll data and economic changes that are a foot.

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[SPEAKER_01]: And then lastly, speculative fever, not just in the equity markets, but across the economy.

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[SPEAKER_01]: And frankly, it is, it's a worrisome.

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[SPEAKER_01]: So we'll look at that story as well.

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[SPEAKER_01]: We also have voice bank calls.

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[SPEAKER_01]: One is on star surgical, SDAA, and then how to change taxes, tax debt.

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[UNKNOWN]: Okay.

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[SPEAKER_01]: We'll talk about that.

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[SPEAKER_01]: And then we have questions that came in via the Invest Talk YouTube channels.

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[SPEAKER_01]: Well, and of course I welcome your finance and investment questions.

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[SPEAKER_01]: Right now.

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[SPEAKER_01]: But before we head to a break, I think you is probably safe to say that you will be making several important investment decisions here in the fourth quarter and before you do so, I recommend you take a look at our new Comprehensive 2025 Q4 Economic and Market Outlook.

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[SPEAKER_01]: Report, which is free to read, but you do have to go to investtalk.com to download.

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[SPEAKER_01]: But we're moving into a break right now.

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[SPEAKER_01]: My phone lines are open for you at 88899 chart.

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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

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

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[SPEAKER_01]: But technically, right now, I like it.

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[SPEAKER_01]: I like the momentum.

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[SPEAKER_01]: But what's going to don't like those fundamentals?

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[SPEAKER_01]: Now, while gold is hitting these record highs, it's driven by the safe haven 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_05]: Colin asked about core in Maine.

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[SPEAKER_05]: This is Josh in North Carolina.

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[SPEAKER_05]: This is Marlow from George 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]: Hey, hey, hey, 99 chart.

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[SPEAKER_03]: If you've heard about Invest Talk Innovators, it's available now free on the Invest Talk YouTube channel, Justin Klein and Luke Guerrero, Interview Company Leaders, Founders and Visionaries.

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[SPEAKER_03]: So head over to the Invest Talk YouTube channel and look for Invest Talk Innovators.

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

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[SPEAKER_01]: It was a nice update on the back of news from, or at least the headline around optimism.

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[SPEAKER_01]: on the China and US trade deal and President Trump said they are poised to come away with some sort of a trade deal and that a final TikTok deal could be signed as early as Thursday.

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[SPEAKER_01]: And this is as they were in talks with trade negotiators over the weekend and that a preliminary consensus had been reached in places like X4 controls, fentanyl, and shipping levies.

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[SPEAKER_01]: This is

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[SPEAKER_01]: As we know, this is a demonstration that likes to promise a lot.

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[SPEAKER_01]: And what the actual route in the Granville B, I think we're probably soon find out.

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[SPEAKER_01]: But ultimately, the market was very happy with at least that sentiment.

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[SPEAKER_01]: OK. And

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[SPEAKER_01]: That was the overall positive.

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[SPEAKER_01]: You did have other news from individual companies that were in the midst of earning season.

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[SPEAKER_01]: So Amazon, they are, they're no longer, sorry, they are cutting as many as 30,000 corporate jobs, excuse me.

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[SPEAKER_01]: And they're trying to pair expenses and say they over-hire during the pandemic.

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[SPEAKER_01]: And it thinks it can avoid hiring another 160,000 people in the US, otherwise needed by 2027, and they're relying more and more in robots.

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[SPEAKER_01]: You have job cuts coming out of Target, 1800 corporate jobs, applied materials, 4% of the workforce, forced their laying off, rivian 4%.

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[SPEAKER_01]: So a lot of layoffs here in the corporate world.

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[SPEAKER_01]: Well, that up here.

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[SPEAKER_01]: Yeah, most of it was green, especially it was really driven by the AI names.

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[SPEAKER_01]: You have Qualcomm, a big, about 11% and that was on news that they're coming out their own AI chips, Apple over 2% and video 2.8% the rest of the market was a pretty mixed however.

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[SPEAKER_01]: So certainly not a broad-based rally, really large cap growth was the strong suit on the

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[SPEAKER_01]: what Amazon said as well as the deal coming out of China.

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[SPEAKER_01]: What it comes to other assets, you had the curve flatter.

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[SPEAKER_01]: So the tier auction,

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[SPEAKER_01]: tail slightly, and the five-year sale will stop through 0.1 basis point.

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[SPEAKER_01]: So not great treasury options to be honest with you.

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[SPEAKER_01]: The dollar index was down 0.1 percent, gold finished down 2.9 percent, Bitcoin up 4 percent, and WTA crude down 0.3 percent on the day.

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[SPEAKER_01]: So,

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[SPEAKER_01]: I'm still not very convinced that we're going to have this market.

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[SPEAKER_01]: I think there's a lot of positivity built into this price right now.

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[SPEAKER_01]: When it comes to the trade deal, often isn't around AI and the earnings season, and then, you know, we're not even talking about the government shutdown.

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[SPEAKER_01]: Okay, and then liquidity is my main worry here.

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[SPEAKER_01]: We're going to be starting to dry up in markets.

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[SPEAKER_01]: You've seen that with the regional bank issue earlier last week, and

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[SPEAKER_01]: I think we're set up by the end of this week, probably a disappointment in this breakout, but I could be wrong.

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[SPEAKER_01]: That's just my feeling, looking at the liquidity dynamics in markets.

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[SPEAKER_01]: Now, you probably know by now that we get questions from our YouTube channel, and this one came in, SSJ Balor says, thanks for the weekly wrap up, what do your thoughts on HIG always appreciate your thoughts?

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[SPEAKER_01]: HIG is the symbol, and this is Hartford group, and we like it, why because we own it, actually for

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[SPEAKER_01]: clients, actually in our cover call strategy, $35 billion market cap earnings, expected to build 15% this year, 11% next year, and analysts continue to upgrade those expectations.

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[SPEAKER_01]: That's all the way up from $20,000, $20,000, $18,000, $4 and $33,000.

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[SPEAKER_01]: So it's not an exciting business, but it's a consistent business.

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[SPEAKER_01]: It consistent business when it comes to it's cash flow about 5.7 billion dollars, which has been steady now for over a year near all time highs on a market cap of only 35 billion.

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[SPEAKER_01]: So very strong free cash flow yield here and what are they doing with that yield?

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[SPEAKER_01]: They're paying a little bit of a dividend 1.6% and a lot of people would say,

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[SPEAKER_01]: That's not that big, but they continue to raise that dividend, plenty of room for that dividend to go up as well.

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[SPEAKER_01]: And then they've also continuing to buy back shares over the past decade.

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[SPEAKER_01]: Share that standing.

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[SPEAKER_01]: We've gone from 400 million to 281 million.

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[SPEAKER_01]: So just consistently utilizing that free cash flow to 5x years, return equity 19% very strong and near and all time high.

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[SPEAKER_01]: And these are the type of businesses.

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[SPEAKER_01]: I think that are going to be able to utilize AI to make their business even more efficient.

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[SPEAKER_01]: These white color work.

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[SPEAKER_01]: And so we like Hartford Group.

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[SPEAKER_01]: It's one of our favorite names, and that's why we own it for clients.

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[SPEAKER_01]: Now I'm moving to a break still to come, my focus point, and more answers to your questions, and I encourage you to call right now on a Vestock at 8.98.

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[SPEAKER_03]: The Invest Talk phone line's never closed, and now, Justin Klein is here taking your calls live.

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[SPEAKER_03]: Invest Talk 88899 chart.

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[SPEAKER_01]: Our main focus point today is about how Jenner of AI can be used in the finance world, and use cases for AI have

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[SPEAKER_01]: been numerous since a long before you had things like chat to BT.

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[SPEAKER_01]: But now you can automate personalize and do a variety of operations that you can before.

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[SPEAKER_01]: So what kind of applications are now possible in the finance room?

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[SPEAKER_01]: The first thing you have to

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[SPEAKER_01]: an LLM or an AI tool can do something.

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[SPEAKER_01]: Doesn't mean that they can do it well.

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[SPEAKER_01]: Just because, remember, AI tools, they're confident by nature.

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[SPEAKER_01]: They're a process and they spit out some sort of an answer.

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[SPEAKER_01]: It's your job, though, to understand a, how they got there.

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[SPEAKER_01]: And then B does that make sense.

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[SPEAKER_01]: So that's what you always want to look at citations.

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[SPEAKER_01]: do due diligence to make sure that they're not just making up things, because chat GPT and many of these large language models are notorious for making factual errors, even hallucinating, entire fictional events.

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[SPEAKER_01]: So make sure whether that's the finance realm,

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[SPEAKER_01]: And when you're relying on these models that you are verifying, you're understanding where exactly they are getting that information.

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[SPEAKER_01]: And so know that these are tools, they are not answer machines, they're tools.

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[SPEAKER_01]: Just like anything, you can use a tool, well, or you can use a tool horribly.

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[SPEAKER_01]: Now, what can you use AI for as a tool?

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[SPEAKER_01]: Well, number one, creating a budget.

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[SPEAKER_01]: They still need to gather the data or at least point the AI tool in the right direction and feed that data in.

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[SPEAKER_01]: Things like expenses, income, debt obligations, assets, all of that.

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[SPEAKER_01]: That was you do that and you properly categorize it.

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[SPEAKER_01]: Well, then that can create a budget for you and it can even use certain types of rules.

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[SPEAKER_01]: There's things like the 50, 30, 20 rule or whatever mode of budgeting you want to create.

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[SPEAKER_01]: AI can kind of make sure you're a budget here's to those rules.

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[SPEAKER_01]: I think that's can be very, very helpful for the average person.

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[SPEAKER_01]: Number two is planning for the future.

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[SPEAKER_01]: Setting goals.

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[SPEAKER_01]: Not just a current budget, but what are near-term priorities, medium-term priorities, and long-term goals.

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[SPEAKER_01]: start to help prioritize each one and figure out how to tackle each problem specifically.

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[SPEAKER_01]: That is what we do for clients and there's certainly a human element to this.

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[SPEAKER_01]: As not going to know how to prioritize these perfectly and the wrinkles and the the UI, the user interface in order to see the big picture.

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[SPEAKER_01]: Now, we build financial plans for clients that obviously you're built on a very nice user interface.

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[SPEAKER_01]: And that is very helpful in zooming out once you have the data in getting that big picture, running things like Monte Carlo analysis, Rothconversions, Social Security Planning.

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[SPEAKER_01]: All of this AI can certainly help, but to put it in one package, that's going to take software.

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[SPEAKER_01]: And I think for most people, those are scenarios that's more complex in areas, it piece of software is probably better for it.

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[SPEAKER_01]: But the next one I really like, and that is about learning more about topics.

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[SPEAKER_01]: And once again, you don't want to use it as gospel, but

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[SPEAKER_01]: A can the point you in the right direction.

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[SPEAKER_01]: That's what I, I, that's the way to summarize how to use AI in general is it points in the right direction.

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[SPEAKER_01]: It helps you, maybe figure out things that you don't know.

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[SPEAKER_01]: One of my favorites, saying it's my grandfather was, you don't know what you don't know.

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[SPEAKER_01]: And A, I can at least help uncover things that you don't know you don't know.

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[SPEAKER_01]: And then point you that direction and it's up still up to you to do the thinking.

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[SPEAKER_01]: process.

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[SPEAKER_01]: It can replace some of the doing process, pulling data, finding the right source, all of that, but you still have to do the thinking.

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[SPEAKER_01]: And the more that they can help you learn about the basics of money and financial literacy in general, the further the more thinking you can actually do, as opposed to

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[SPEAKER_01]: learning all about, you know, what are specific words mean in concepts mean.

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[SPEAKER_01]: Okay.

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[SPEAKER_01]: And I like the last one, which is, if you aren't that, you're going to have to prioritize and then actually negotiate paying off certain loans, maybe you behind an credit card debt or whatever, that's a great use case as well.

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[SPEAKER_01]: So these are all great verticals, remember, anything AI related, make sure you're still doing

21:40.351 --> 21:41.192
[SPEAKER_01]: They're moving to a break.

21:41.313 --> 21:48.304
[SPEAKER_01]: My phone lines are open, ready for you at 8.99 chart.

21:54.314 --> 21:56.958
[SPEAKER_03]: 24.7 Rainer Shine.

21:57.419 --> 22:01.125
[SPEAKER_03]: There's always value in the Invest Talk podcast.

22:01.626 --> 22:03.709
[SPEAKER_03]: 8.8899 chart.

22:04.851 --> 22:05.832
[SPEAKER_07]: Hi, Justin Luke.

22:06.093 --> 22:07.455
[SPEAKER_07]: This is Mad and Miami.

22:07.958 --> 22:11.543
[SPEAKER_07]: I'm just calling in regards to a question about taxes.

22:11.563 --> 22:25.421
[SPEAKER_07]: I recently realized this past year that I overpaid my taxes considerably and have recently changed my holding from the W4 to the exempts to stop taking out taxes.

22:25.881 --> 22:33.932
[SPEAKER_07]: But it's made me realize that in the past maybe I've been given a government and interest-free loan by getting a tax refund every year.

22:34.182 --> 22:42.359
[SPEAKER_07]: So I was thinking about changing my future tax allocation to the next year to be exempt and just keeping that money and a high yield savings account.

22:42.660 --> 22:50.035
[SPEAKER_07]: I'm a pretty disciplined investor, so I wouldn't be worried about spending it or not having enough money to pay off my tax at the end of the year.

22:50.516 --> 22:54.925
[SPEAKER_07]: I'm married, but I file separately from my wife and I don't have any kids.

22:55.141 --> 22:59.648
[SPEAKER_07]: look forward to hearing your thoughts in the podcast if there's any pros or cons to this.

22:59.668 --> 23:00.008
[SPEAKER_01]: Thank you.

23:00.469 --> 23:06.377
[SPEAKER_01]: Something I think a lot of people have thought about over the years and I think the answer is there's a balance here.

23:06.918 --> 23:08.821
[SPEAKER_01]: You I think you're trying to go completely the other way.

23:08.861 --> 23:13.167
[SPEAKER_01]: You paid too much and you gave the government an HTTP loan and you don't want to do that.

23:14.024 --> 23:24.958
[SPEAKER_01]: But you also don't want to pay nothing and then get penalized because the IRS will penalize you if you're not paying a reasonable amount towards what you probably owe.

23:25.839 --> 23:36.933
[SPEAKER_01]: So I think a CPA, I'm not a CPA, but I do know that and it's something that you should probably speak to a tax advisor about and to make a final decision.

23:38.335 --> 23:42.040
[SPEAKER_01]: But I always try to make it so it's,

23:42.475 --> 23:57.555
[SPEAKER_01]: I don't have a huge refund or a lot because when you owe a lot, once again, I've been penalized where I underpaid and do my quarterlys, things like that and I was penalized because pay my taxes just like paid them kind of at the end and IRS doesn't like that.

23:58.176 --> 24:01.420
[SPEAKER_01]: So make sure that you find a balance.

24:01.440 --> 24:02.302
[SPEAKER_01]: I wouldn't go exempt.

24:02.462 --> 24:12.415
[SPEAKER_01]: I'd probably still claim one or two and get it to a point where you're not giving it

24:12.800 --> 24:13.361
[SPEAKER_01]: Thanks for the call.

24:13.903 --> 24:16.890
[SPEAKER_01]: Let's go talk to Sammy in San Francisco looking at Netflix.

24:18.093 --> 24:18.714
[SPEAKER_04]: Hi, Justin.

24:18.735 --> 24:19.677
[SPEAKER_04]: Thanks for taking my call.

24:20.358 --> 24:22.604
[SPEAKER_04]: I'd like to know your view on Netflix.

24:22.624 --> 24:23.727
[SPEAKER_04]: It's just a good price to get in.

24:23.767 --> 24:28.458
[SPEAKER_04]: Given that is actually it has come down from its recent high up 1300 plus.

24:29.040 --> 24:29.260
[SPEAKER_01]: Yeah.

24:29.421 --> 24:29.982
[SPEAKER_04]: What's your view?

24:30.822 --> 24:35.868
[SPEAKER_01]: Well, Netflix has always been an aim that's treated that fair bit of a premium.

24:36.008 --> 24:40.033
[SPEAKER_01]: I think that's fair because it's, it's something everybody has now.

24:40.514 --> 24:45.520
[SPEAKER_01]: Now, I think the price is starting to get, I don't, I don't think they have much room to keep raising the price.

24:45.540 --> 24:47.583
[SPEAKER_01]: I think it's for commercial free.

24:47.603 --> 24:49.025
[SPEAKER_01]: It's over $20 a month.

24:49.065 --> 24:50.907
[SPEAKER_01]: I think it's $25 a member correctly.

24:51.629 --> 25:01.482
[SPEAKER_01]: I was looking at my last bill, but 463 billion dollar market cap and it's trading at a pretty hefty multiple.

25:02.383 --> 25:10.012
[SPEAKER_01]: Even if you go based on next year's earnings of $32 per share, you're talking a high 30s multiple.

25:11.034 --> 25:12.135
[SPEAKER_01]: That's pretty expensive.

25:12.875 --> 25:17.663
[SPEAKER_01]: And if you look at things like enterprise, value EBITDA, that's around 16 times.

25:17.964 --> 25:24.675
[SPEAKER_01]: Over the last 10 years, it's traded around these levels a couple times, but certainly it isn't cheap at these levels.

25:25.436 --> 25:28.722
[SPEAKER_01]: It tends to be cheap when that gets closer to five.

25:29.403 --> 25:30.765
[SPEAKER_01]: And it's at 16.

25:31.437 --> 25:35.423
[SPEAKER_01]: So historically, this has gone through boombus cycles.

25:35.764 --> 25:39.429
[SPEAKER_01]: It's definitely one of those Mag7 type of names.

25:40.310 --> 25:46.720
[SPEAKER_01]: And when you see growths low down, that's when multiples really, really can track.

25:46.740 --> 25:50.225
[SPEAKER_01]: And so far, you haven't really seen that, especially in the revenue side.

25:50.846 --> 25:56.635
[SPEAKER_01]: But if you get this to start to desalery in its earnings, you'll see this,

25:56.935 --> 25:57.837
[SPEAKER_01]: come down dramatically.

25:57.937 --> 25:59.680
[SPEAKER_01]: I don't see this as a good value right now.

25:59.700 --> 26:00.862
[SPEAKER_01]: I still think it's very expensive.

26:01.283 --> 26:04.228
[SPEAKER_01]: And the technicals are already starting to weaken.

26:04.709 --> 26:09.398
[SPEAKER_01]: You know, a peek back in June, and is now in a downtrend.

26:09.999 --> 26:15.930
[SPEAKER_01]: And frankly, there's not supportants of like $890 per share, but I probably wouldn't touch this till 600.

26:16.270 --> 26:17.813
[SPEAKER_01]: It's 600.

26:17.962 --> 26:43.665
[SPEAKER_01]: It's a great buy, but and I do think it gets there in the next few years because I do see the there's there's economic sensitivity here and the consumers have a lot of other options from HBO Max to to Amazon to Warner Brothers Discovery all of that there's so many other options now and I don't think Netflix has that killer show that's going to keep people on paying 25 bucks.

26:43.645 --> 26:44.168
[SPEAKER_01]: a month.

26:44.329 --> 26:51.208
[SPEAKER_01]: So I don't think that this is, I think this is a downtrend that is the beginning of

26:51.998 --> 26:57.065
[SPEAKER_01]: a correction in its multiple, and 600 is the level out by that.

26:57.405 --> 26:58.006
[SPEAKER_01]: Thanks for the call.

26:58.787 --> 27:03.293
[SPEAKER_01]: Those Netflix and FLX now in a downtrend.

27:03.953 --> 27:04.514
[SPEAKER_01]: Pretty interesting.

27:04.995 --> 27:06.997
[SPEAKER_01]: Now below the 200 day moving average.

27:07.017 --> 27:14.547
[SPEAKER_01]: 899 chart 899 to 4278 and speaking of big exciting companies.

27:14.695 --> 27:15.557
[SPEAKER_01]: like Netflix.

27:15.838 --> 27:17.743
[SPEAKER_01]: So I got leveraged ETFs.

27:18.765 --> 27:21.753
[SPEAKER_01]: And this is a business that is booming.

27:21.793 --> 27:29.913
[SPEAKER_01]: It's booming because the average leveraged ETF costs about 1% annually.

27:29.933 --> 27:32.299
[SPEAKER_01]: So compare that to an active.

27:32.566 --> 27:42.844
[SPEAKER_01]: ETF usually about 30 basis points to 0.3% per year, an index fund is usually three or four or five basis points, maybe six, so very, very low in fees.

27:43.485 --> 27:50.497
[SPEAKER_01]: And so it's not a shock, it's not a shock that there are a lot of these fund families that are launching levered ETFs.

27:50.517 --> 27:53.302
[SPEAKER_01]: Now, you used to be indexed, levered to particular index.

27:53.943 --> 27:56.447
[SPEAKER_01]: Now, it's about individual companies.

27:56.798 --> 28:01.728
[SPEAKER_01]: at levered Netflix, levered Tesla, levered Google, levered meta, et cetera.

28:02.028 --> 28:09.383
[SPEAKER_01]: And there's now as a mid October, 40 billion dollars in assets in the single stock levered ETFs.

28:09.403 --> 28:10.385
[SPEAKER_01]: That is astonishing.

28:11.006 --> 28:12.589
[SPEAKER_01]: The first one was approved just in 2022.

28:12.990 --> 28:17.980
[SPEAKER_01]: Now I have to say the SEC I think is asleep at the wheel here.

28:17.960 --> 28:19.261
[SPEAKER_01]: Not a shock.

28:19.281 --> 28:22.724
[SPEAKER_01]: That CC's been sleeping the wheel at the wheel for many, many years now.

28:23.525 --> 28:28.990
[SPEAKER_01]: And I think it's horrible that they're allowing these to be launched, especially ones now.

28:29.030 --> 28:32.653
[SPEAKER_01]: They're talking about not just two times lever.

28:33.314 --> 28:36.737
[SPEAKER_01]: They're talking about up to five times lever ETFs.

28:36.757 --> 28:38.459
[SPEAKER_01]: That means if it drops 20%.

28:38.899 --> 28:41.301
[SPEAKER_01]: The underlying stock drops 20%.

28:41.802 --> 28:44.544
[SPEAKER_01]: The ETF is gone.

28:44.564 --> 28:45.225
[SPEAKER_01]: It's liquidated.

28:45.305 --> 28:46.566
[SPEAKER_01]: It's zero.

28:46.715 --> 28:50.740
[SPEAKER_01]: And I think if they would let those hit the market, that would be a catastrophe.

28:51.281 --> 28:54.866
[SPEAKER_01]: But there are still two and three times levered ETFs.

28:55.687 --> 29:00.754
[SPEAKER_01]: And over time, the problem is is that the losses pile up.

29:01.374 --> 29:09.465
[SPEAKER_01]: And the more volatile a name is, the more it veers from the return of the underlying stop.

29:09.783 --> 29:14.990
[SPEAKER_01]: For example, last November, there was a two ETFs links to micro strategy.

29:15.471 --> 29:19.056
[SPEAKER_01]: And they were soaring and investors were jumping in because they were chasing those returns.

29:19.616 --> 29:29.450
[SPEAKER_01]: But since then, micro strategies that about 28%, and the levered ETFs, like the Defiance Daily Target 2X Long MSTR ETF, that's down 65%.

29:29.590 --> 29:36.499
[SPEAKER_01]: Same to time period, same underlying security, but one is levered and one is not.

29:36.580 --> 29:38.382
[SPEAKER_01]: This is what we call volatility decay.

29:39.023 --> 29:42.408
[SPEAKER_01]: And over a long periods of time, you're almost guaranteed to lose money.

29:42.768 --> 29:47.174
[SPEAKER_01]: Now to be fair, the fund managers will say, they should not be held for long periods of times.

29:47.574 --> 29:49.357
[SPEAKER_01]: These are trading vehicles only.

29:50.118 --> 29:52.621
[SPEAKER_01]: You own them for a day or two or three max.

29:53.702 --> 29:54.143
[SPEAKER_01]: Why is that?

29:54.243 --> 29:55.705
[SPEAKER_01]: Let's take a hypothetical example.

29:56.366 --> 29:56.987
[SPEAKER_01]: Use round numbers.

29:58.068 --> 30:04.917
[SPEAKER_01]: Let's say, in ETF,

30:05.487 --> 30:08.790
[SPEAKER_01]: at $10 per share, doesn't matter what the underlying stock is.

30:08.830 --> 30:11.754
[SPEAKER_01]: But they have the underlying stock drops 30%.

30:12.875 --> 30:18.681
[SPEAKER_01]: Well, that eats you have to go from $10 to $4.

30:18.741 --> 30:21.223
[SPEAKER_01]: That sounds 60% twice the performance.

30:22.425 --> 30:24.767
[SPEAKER_01]: But let's say stock has a good day.

30:24.907 --> 30:26.389
[SPEAKER_01]: Bounce is back.

30:26.409 --> 30:27.390
[SPEAKER_01]: It goes up 50%.

30:28.051 --> 30:29.192
[SPEAKER_01]: Now it's at $10.50.

30:29.652 --> 30:32.355
[SPEAKER_01]: You're up 5% net.

30:32.943 --> 30:35.827
[SPEAKER_01]: down 30 up 50, that is up 5% net.

30:36.749 --> 30:37.790
[SPEAKER_01]: Sounds weird, but that's the math.

30:38.672 --> 30:45.963
[SPEAKER_01]: If you had held the two x leverage ETF who go from 10 to 4, and then it would double.

30:46.644 --> 30:50.610
[SPEAKER_01]: This was up 50%, double that, 100%, but that only goes from 4 to 8.

30:51.211 --> 31:00.385
[SPEAKER_01]: So the underlying ETF is up 5%, or underlying stock is up 5%, but the leverage ETF is down 20%.

31:00.685 --> 31:08.938
[SPEAKER_01]: And that just shows you example of that volatility and why the volatility is killer in these liberty, to ask why you should hold them for a long period of time.

31:09.820 --> 31:17.492
[SPEAKER_01]: Frankly, I would say don't hold them in a, if you want leverage, go unmargin, not encouraging it, but better way.

31:18.053 --> 31:22.120
[SPEAKER_01]: And it's so obvious that there are hedge fund managers that are constantly shorting these names.

31:23.180 --> 31:27.527
[SPEAKER_01]: hedge friend manager, David Einhorn is one of them, so they're destined to fail.

31:28.208 --> 31:31.073
[SPEAKER_01]: And over time, they will bleed out all of their capital.

31:32.215 --> 31:32.676
[SPEAKER_01]: And that's true.

31:33.878 --> 31:37.884
[SPEAKER_01]: So the good news here is that investors are starting to pull out of many of these names.

31:38.525 --> 31:43.213
[SPEAKER_01]: In fact, over the last couple of quarters, investors have pulled

31:43.480 --> 31:46.384
[SPEAKER_01]: $5 billion from these funds according to Morningstar.

31:46.524 --> 31:49.969
[SPEAKER_01]: The first time this category has ever reported outflows.

31:50.791 --> 31:51.612
[SPEAKER_01]: So, it's starting to see that.

31:52.092 --> 31:52.994
[SPEAKER_01]: That's the positive here.

31:53.495 --> 31:59.583
[SPEAKER_01]: But still, there are still $40 billion invested in these ETFs.

31:59.603 --> 32:07.935
[SPEAKER_01]: So, I wanted to bring them up this up because it's important to understand how they work and why they are not investment vehicles, but simply trading vehicles.

32:08.717 --> 32:13.183
[SPEAKER_01]: That's what, visit, let's pivot back to the investment type voice bank for a listener question now.

32:13.855 --> 32:16.439
[SPEAKER_00]: Hello, hi, my name is Anan.

32:17.160 --> 32:23.008
[SPEAKER_00]: I have literally lived to you guys for almost 20 years to college anyhow.

32:23.428 --> 32:26.132
[SPEAKER_00]: My question is regarding star surgical.

32:26.713 --> 32:33.042
[SPEAKER_00]: It's a company I own as a glass wear, I was wondering what you think of the product.

32:33.062 --> 32:37.288
[SPEAKER_00]: And also, we think of the stock waiting here from you guys.

32:37.308 --> 32:38.489
[SPEAKER_00]: Thank you very much, Justin.

32:38.830 --> 32:39.070
[SPEAKER_00]: Bye.

32:40.653 --> 32:48.390
[SPEAKER_01]: Looking at star surgical STAA is the symbol, and this is an interesting one.

32:48.410 --> 32:54.764
[SPEAKER_01]: That they have an offer from Alcon to be bought out.

32:55.385 --> 32:58.071
[SPEAKER_01]: But the stock is starting to move again.

32:59.063 --> 33:03.370
[SPEAKER_01]: Usually what happens when you get a buyout, this was announced on August 5th.

33:04.351 --> 33:14.206
[SPEAKER_01]: And it moved from $18 all the way to about 27 where the buyout offer was kind of hung around that level, 27 and 28 bucks for a while.

33:15.348 --> 33:21.557
[SPEAKER_01]: And recently, over the past couple of weeks, it started to dip a little bit and then rally again.

33:21.597 --> 33:23.580
[SPEAKER_01]: And it's back to about 28.

33:23.760 --> 33:28.227
[SPEAKER_01]: And there's rumors that there's another buyer,

33:29.776 --> 33:47.274
[SPEAKER_01]: Okay, and so this is, I don't know the details exactly, but they're going to get bought out whether that's from Alcon or it's from a competing bidder, especially in private equity, you could see that happening as well.

33:47.314 --> 33:50.057
[SPEAKER_01]: It's about a $1.4 billion market cap.

33:51.038 --> 33:58.365
[SPEAKER_01]: Not a crazy market cap to be honest with you for the coming like Alcon or even the private

33:58.413 --> 33:59.534
[SPEAKER_01]: They've a clean balance sheet.

33:59.834 --> 34:08.942
[SPEAKER_01]: Problem is, is that they've always kind of, they've had the tough time when it comes to their cash flow, their profitability, pre-cash flow is now negative.

34:09.903 --> 34:11.705
[SPEAKER_01]: And now what about the products?

34:11.925 --> 34:17.390
[SPEAKER_01]: I remember looking at this name a while ago back, I wanna say in 2020, and it was booming.

34:18.091 --> 34:22.515
[SPEAKER_01]: But it was just too expensive as trading at ridiculous prices around $100 per share.

34:23.135 --> 34:27.559
[SPEAKER_01]: And it was thought it was way too expensive.

34:28.433 --> 34:34.280
[SPEAKER_01]: The rate of their other customer satisfaction was very, very high.

34:35.681 --> 34:44.332
[SPEAKER_01]: They love the product and what they make is implants for your eyes, cataracts, gocoma, et cetera.

34:46.614 --> 34:48.416
[SPEAKER_01]: And I like that.

34:48.456 --> 34:55.825
[SPEAKER_01]: You know, you like companies that make products that their customers love because they're gonna tell their friends and family about,

34:56.311 --> 35:06.566
[SPEAKER_01]: You know, the surgery they had and how great it was, et cetera, and word spreads and doctors take notice and they walk it out comes for their patients.

35:06.586 --> 35:12.255
[SPEAKER_01]: And so this is a name that was growing in a big way, earnings up 149% in 2021.

35:12.555 --> 35:18.645
[SPEAKER_01]: But since then, the peak in 2022 earnings went from 123 down till losing money this year.

35:19.466 --> 35:20.267
[SPEAKER_01]: And that's my problem.

35:20.728 --> 35:25.575
[SPEAKER_01]: And that's why I never bought it because it was expensive

35:26.365 --> 35:27.809
[SPEAKER_01]: And then it was just an downturn since.

35:28.630 --> 35:32.821
[SPEAKER_01]: So it was an interesting name, but, you know, this is all about playing the buyer.

35:32.841 --> 35:37.933
[SPEAKER_01]: It's gonna get bought out if you wanna play and hold it longer to maybe see if it gets bought out for a higher price.

35:38.053 --> 35:44.509
[SPEAKER_01]: I have no problem with that because once again, we'll point 4 billion in this world, not that much, another way would buy out.

35:45.687 --> 35:49.133
[SPEAKER_01]: Now, from time to time, we'll receive questions via the web form over on the best talk.com.

35:49.153 --> 35:54.322
[SPEAKER_01]: So, using the came in earlier, John from CRQ's New York says, absolutely love the show.

35:54.762 --> 35:59.951
[SPEAKER_01]: It is one of my favorite resources that you use to keep up on the ever-changing markets.

36:00.492 --> 36:07.003
[SPEAKER_01]: Like, question is in regards to ticker, C-T-V-A, C-T-V-A.

36:08.384 --> 36:16.914
[SPEAKER_01]: Just picked up a good-sized position around 61, hoping to hold until the market tells me to sell, look forward to hearing your answers on the podcast.

36:16.934 --> 36:20.499
[SPEAKER_01]: C-T-V-A, okay, this is interesting.

36:20.519 --> 36:23.782
[SPEAKER_01]: This is in the Ag space, Cortiva.

36:24.403 --> 36:32.333
[SPEAKER_01]: Provide Ag goes for products that supplies, in the core and soybean and sunflower seed markets.

36:32.733 --> 36:35.877
[SPEAKER_01]: Interesting, okay, so agricultural operations,

36:36.447 --> 36:52.869
[SPEAKER_01]: And you kind of know what's happening with soybean products and the fact that China is buying from Brazil, soybeans, because of the tariffs, and so that's hurting our soybean farmers, and there's whole controversy around that.

36:54.171 --> 36:59.218
[SPEAKER_01]: So their core customer is struggling.

36:59.238 --> 37:02.222
[SPEAKER_01]: And so earnings estimates for this year next year are coming.

37:02.563 --> 37:02.843
[SPEAKER_01]: Yeah.

37:04.730 --> 37:10.855
[SPEAKER_01]: Free cash with a 2.5 billion, good balance sheet, pretty much no debt, $43 billion market cap.

37:11.296 --> 37:32.695
[SPEAKER_01]: So about a 5% free cash for a yield, if you're an equity around 6% historically, it's been in the mid-synchletage it's, you know, if you want to play this for a trade deal and the fact that maybe the sounds like there'll be some sort of deal with buying our soy beans, maybe you want to play that, but I don't love the business, I don't love the valuation, so I'm passing.

37:33.890 --> 37:56.421
[SPEAKER_03]: Running to a break, give me a call now at 8-8-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-9-

37:56.789 --> 37:59.634
[SPEAKER_06]: Yeah, a great show of guys, Mark's from San Diego.

37:59.974 --> 38:04.201
[SPEAKER_06]: I know you hate the two questions thing, but I'll throw it out here because it's pretty common stuff.

38:04.802 --> 38:06.204
[SPEAKER_06]: You know, both small positions.

38:06.405 --> 38:08.468
[SPEAKER_06]: One is Verizon DB.

38:08.929 --> 38:15.840
[SPEAKER_06]: I have been hanging onto the sky for many years and it seems to be dead in the waters so I take it's time to let it go, your opinion.

38:15.900 --> 38:21.109
[SPEAKER_06]: The other one is CIBI, the energy company.

38:21.157 --> 38:27.848
[SPEAKER_06]: I once been down, I know oil and general have been down, I do have other exposure to oil products and stuff.

38:27.868 --> 38:29.951
[SPEAKER_06]: So I would be doing a hang on to it.

38:30.151 --> 38:38.625
[SPEAKER_06]: If you think it'll come back with a little oil rally, hopefully around the corner, maybe it's time to dump it, or would you say add to it?

38:38.645 --> 38:41.750
[SPEAKER_06]: Anyway, you're talking both right and see how you do that.

38:41.770 --> 38:42.591
[SPEAKER_06]: Thank you very much.

38:43.027 --> 38:47.512
[SPEAKER_01]: All right, looking at Subitus and Verizon, let's start with Verizon, huge company.

38:48.593 --> 38:52.258
[SPEAKER_01]: And someone called about AT&T last week, I think it was.

38:53.239 --> 38:56.462
[SPEAKER_01]: And I kind of echo the same sentiment with AT&T.

38:56.482 --> 38:58.705
[SPEAKER_01]: It's just, AT&T is performing a bit better.

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[SPEAKER_01]: Verizon, but very both have the same issue, which is a lot of debt.

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[SPEAKER_01]: And they have a third competitor that's taking share.

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[SPEAKER_01]: from them.

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[SPEAKER_01]: Verizon's revenue last quarter was up 5% team mobile was up 9% and 18T was up 2%.

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[SPEAKER_01]: So that's the issue is you're getting market share taken away by team mobile and they do a based on price.

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[SPEAKER_01]: It's hard to compete.

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[SPEAKER_01]: It's a very capital intensive business.

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[SPEAKER_01]: That's why they have

39:35.575 --> 39:45.948
[SPEAKER_01]: Interates have been going up and this did plum plummet to really a really tough place in 2023 down to $3 per share on those higher rates.

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[SPEAKER_01]: And so I think it's helped them recently is the bounce back is the fact that the rates have come down and they're carrying costs that debt has become a bit easier.

39:57.262 --> 39:59.545
[SPEAKER_01]: However, is that going to stay that way?

39:59.745 --> 40:00.386
[SPEAKER_01]: Probably not.

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[SPEAKER_01]: I think over time rates are going to work their way higher.

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[SPEAKER_01]: I think there's just better opportunities.

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[SPEAKER_01]: That's something everybody has to pass to understand.

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[SPEAKER_01]: It's you have a, you have an opportunity cost for every dollar that you spend or invest, excuse me, and you could take this money and put it elsewhere.

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[SPEAKER_01]: And frankly, I think there's better places to be in than,

40:26.875 --> 40:34.804
[SPEAKER_01]: low-growth businesses that are highly capital-intensive, that have a lot of debt, and that's in a very competitive marketplace.

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[SPEAKER_01]: So I just see much better place at the allocate capital than Verizon or AT&T.

40:39.850 --> 40:40.250
[SPEAKER_01]: So there's that.

40:40.931 --> 40:42.653
[SPEAKER_01]: Then you get to Savitas.

40:42.753 --> 40:44.835
[SPEAKER_01]: Obviously, very different name, much smaller.

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[SPEAKER_01]: They're dividend fluctuates.

40:46.617 --> 40:50.622
[SPEAKER_01]: So AT&T and Verizon, they're going to kind of keep their dividend as long as they possibly can.

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[SPEAKER_01]: and work through debt down, et cetera.

40:53.341 --> 40:55.704
[SPEAKER_01]: So beat us, they're dividend will fluctuate.

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[SPEAKER_01]: They say that, okay.

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[SPEAKER_01]: So understand that that's what you are going to get.

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[SPEAKER_01]: That dividend that looks like 7% it's not going to stay that way, because they say in their earnings report that dividend will fluctuate based on cash flows on earnings, et cetera.

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[SPEAKER_01]: And they're kind of a state relatively steady.

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[SPEAKER_01]: I think it's a good value.

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[SPEAKER_01]: They do have a lot of debt.

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[SPEAKER_01]: But they're going to try to work that debt down over time.

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[SPEAKER_01]: So it's a high risk, high reward situation.

41:28.097 --> 41:32.462
[SPEAKER_01]: I do think there's some upside to oil prices, but there's also limited upside.

41:33.323 --> 41:39.390
[SPEAKER_01]: Meaning, I think from here, there's some upside, but you have OPEC that's trying to maintain their market share.

41:39.450 --> 41:41.112
[SPEAKER_01]: They're not going to want

41:41.783 --> 41:50.414
[SPEAKER_01]: Oh, prices to really stream higher, because they don't want the shale names to be profitable.

41:50.454 --> 41:51.916
[SPEAKER_01]: They want to put those out of business.

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[SPEAKER_01]: They want to maintain their market share.

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[SPEAKER_01]: And you know, $60 oil is kind of in the sweet spot for them.

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[SPEAKER_01]: Where it's not really economical for a lot of shale plays to continue to invest in CapX, but it's enough for them to not go bankrupt, right?

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[SPEAKER_01]: And to maintain market share.

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[SPEAKER_01]: And I think that's what will continue to do.

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[SPEAKER_01]: I would probably sell Savitas on rallies.

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[SPEAKER_01]: Thanks for the call.

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[SPEAKER_01]: I'm Justin Clientin.

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[SPEAKER_01]: This days show me anything about your own financial picture anyway, your investments, taxes, retirement.

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[SPEAKER_01]: Or anything money related, I encourage you to head over to InvestTalk.com and schedule a portfolio of view with myself or Luke and we can help bring clarity and confidence to your overall plan.

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