[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is invest talk, independent thinking, shared success.

[SPEAKER_01]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

[SPEAKER_01]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.

[SPEAKER_00]: Good afternoon fellow investors and welcome back to Invest Talk.

[SPEAKER_00]: This is our Wednesday, January 7th, 2026 edition of Invest Talk and we are now one full week into the new year and markets and geopolitics are certainly moving and we will unpack it all during this hour.

[SPEAKER_00]: I'm Justin Klein and my objective each and every week days help you become a better investor.

[SPEAKER_00]: giving you perspective and data that you can take back to your own situation and make better decisions with your money.

[SPEAKER_00]: And in today's environments, you need a lot of that.

[SPEAKER_00]: You need a lot of data.

[SPEAKER_00]: You need a lot of perspective because we're in uncharted territory.

[SPEAKER_00]: And I knew this year would be

[SPEAKER_00]: more volatile than last year, but I was thinking more about markets being more volatile and I still think that's going to be the case, but geopolitics clearly is a lot more volatile, clearly President Trump is accelerating his agenda with the fear that the midterms will be lost and he'll have to seed some control.

[SPEAKER_00]: to Congress.

[SPEAKER_00]: And so that is, I think really what's driving all of this and, you know, it's not just Venezuela, what it looks like to be next will be Iran, we're already moving troops over there.

[SPEAKER_00]: So there's a lot to unpack, and as I always say,

[SPEAKER_00]: These are just the realities of the situation and you know the markets don't care about what you think or what I think or what we hope the world should be it only matters about what the world is and we are in a in a world that is very contentious and there are a lot of

[SPEAKER_00]: problems that continue to arise and are likely to impact flows of capital into various asset classes.

[SPEAKER_00]: We're already seeing that with precious metals in a big way, harder assets, like copper and aluminum and so many other metals that are out there.

[SPEAKER_00]: and obviously flows of capital towards different equity exchanges, fixed income markets, et cetera.

[SPEAKER_00]: And so that's what really, really, you're going to get into update you throughout this year.

[SPEAKER_00]: This is going to be one of the most insane years.

[SPEAKER_00]: I think we have seen in many, many decades, and we're already seeing that one week in.

[SPEAKER_00]: So,

[SPEAKER_00]: uh... buckle up and we're here to help you in every way we possibly can now just to be able talk about today's mark performance and run down the show topics for the hour but as usual will tackle this call a question first this is brett threats california and i was wanted to ask you guys your expertise on proctor and gamble on it for like ten years

[SPEAKER_09]: I wanted to add some more to these values.

[SPEAKER_09]: I don't know if it's a following knife or what's your analysis on it.

[SPEAKER_09]: I'm 59 years old.

[SPEAKER_09]: I wanted to just keep this in as a reliable long term type stock.

[SPEAKER_09]: If it's if you think it's a good move on that one, if you can give it to your analysis, and I'd be great.

[SPEAKER_00]: Thank you.

[SPEAKER_00]: All right, looking at Proctor and Gamble, I don't think I have to tell anybody what Proctor Gamble does.

[SPEAKER_00]: And this is a stock that is clearly in a long downtrend down 23% from its 52 week title.

[SPEAKER_00]: It doesn't seem like a lot before a name like Proctor and Gamble, it definitely is.

[SPEAKER_00]: And that's because earnings continue earnings are.

[SPEAKER_00]: expectations for this year and next year continue to come down.

[SPEAKER_00]: It's a very slow growth name and it's trading out still about 20 times forward looking earnings which frankly is not cheap for a name that isn't growing and I always say in an inflationary environment there are

[SPEAKER_00]: There are certain sectors that tend to not do very well, and consumer staples is usually one of them.

[SPEAKER_00]: Why?

[SPEAKER_00]: Because when inflation goes up, the raw materials that go into creating those products goes up and they eat a lot of that costs.

[SPEAKER_00]: And then on top of that, they need to get their products to the market, to stores, et cetera.

[SPEAKER_00]: And that usually goes up as well.

[SPEAKER_00]: Now, it's still certainly a solid business, but growth is certainly slowing and I don't think it should trade at this type of multiple going forward.

[SPEAKER_00]: And I think it's going to continue to go lower now.

[SPEAKER_00]: Is it cheap enough for me to buy a note because it does not a falling knife?

[SPEAKER_00]: Or sorry, it is a falling knife and I do not want to try to catch that.

[SPEAKER_00]: I think there's still a lot more potential downside to go.

[SPEAKER_00]: For example, in 2018, it's traded about 11 times and it applies value to even around it's about 15 times.

[SPEAKER_00]: So I think there's still another 20 to 30% down from here.

[SPEAKER_00]: I would want to wait till it gets below a hundred dollars per share and honestly, I think it's headed there.

[SPEAKER_00]: Now,

[SPEAKER_00]: I've said this before.

[SPEAKER_00]: I don't love these classic brands that everybody knows from your general mills and your Kelloggs and your Hines ketchup and

[SPEAKER_00]: Proctor and Gamble, I just think there's far, far, far, far better places to put your money than these consumer staples that most of them are in strong downtrends, the very capital intensive businesses.

[SPEAKER_00]: Obviously with geopolitics coming and done are there going to be embargoes on proctor and Gamble products going into unfriendly countries like a Russia, like a China, etc.

[SPEAKER_00]: That's a big question.

[SPEAKER_00]: geopolitics is playing into things like that.

[SPEAKER_00]: everyone knows these brands.

[SPEAKER_00]: I don't think they're very good investments at all, especially those that have a lot of debt.

[SPEAKER_00]: Now, the saving grace or proctor in gamble is that they don't have a lot of debt.

[SPEAKER_00]: Some of those other names that I talked about do have a lot of debt, you know, proctor gamble is about $30 billion in debt, free cash, about $15 billion, which is, you know, which is, you know, a still a good ratio and they're still fine.

[SPEAKER_00]: Another margins are still high,

[SPEAKER_00]: continues to go down.

[SPEAKER_00]: And so I wouldn't buy it yet.

[SPEAKER_00]: Like I said, I think there's still more downside to go from evaluation perspective.

[SPEAKER_00]: And yeah, I got to zoom out to a monthly chart before I get to a level that gets me excited.

[SPEAKER_00]: Yeah, some 195 in that range, that's where I'd pick it up.

[SPEAKER_00]: Now it's at 138.

[SPEAKER_00]: So I think there's still much more downside to go for projects.

[SPEAKER_00]: There were a lot of ground to cover over the next 45 minutes or so and time permitting we'll get to all of it.

[SPEAKER_00]: My main focus point is about the 2026 great rotation.

[SPEAKER_00]: We're talking, we're going to look at every sector in the market and kind of go over the pros and the cons, what could drive it for 2026 in the interesting rotation that happened kind of near the end of the year, which was old economies stocks started to perform the cyclical names.

[SPEAKER_00]: compared to the mag seven.

[SPEAKER_00]: And so is this a solid rotation or just a head fake?

[SPEAKER_00]: We'll dig into that story.

[SPEAKER_00]: In addition, we'll touch on a few other topics.

[SPEAKER_00]: What is the condo market?

[SPEAKER_00]: The condo market is not looking so hot and that usually pretends to the health of the broader housing market.

[SPEAKER_00]: So we'll look at those numbers.

[SPEAKER_00]: And then the car market, the auto market,

[SPEAKER_00]: what are automakers expecting for the year ahead and then if we have time for the winners and losers from the tariff regime as well as the one big beautiful bill so we'll get into that data as well and of course most importantly we'll be your live calls both recorded we have voice bank calls on portfolio management in clara and then

[SPEAKER_00]: your live calls.

[SPEAKER_00]: Your live calls are always number one, eight, eight, nine, nine, chart.

[SPEAKER_00]: It's how you get through and ask your question on today's show.

[SPEAKER_00]: We'll also hit on some questions that came in to the comment section over on the invest talk YouTube channel.

[SPEAKER_00]: But we're heading into a quick break and please remember that you can call any time.

[SPEAKER_00]: Leave your question on the invest talk voice bank.

[SPEAKER_00]: If you're listening via our live stream or possibly an AM1220 in the Bay Area, you can call right now at eight and eight, nine, nine chart.

[SPEAKER_00]: Hang on because I'll be talking about today's market activity in the next segment.

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

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

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

[SPEAKER_08]: fractional shares versus whole shares.

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

[SPEAKER_00]: But technically, right now, I like it.

[SPEAKER_00]: I like the momentum.

[SPEAKER_00]: But what's going to don't like those fundamentals?

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

[SPEAKER_08]: I'm calling to ask about core in Maine.

[SPEAKER_08]: This is Josh and North Carolina.

[SPEAKER_08]: This is my little firm George City area.

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

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

[SPEAKER_03]: Great advice, thank you.

[SPEAKER_03]: 888-99 chart.

[SPEAKER_03]: In the early days, in Vestock was Jerry Klein and Steve Peasley.

[SPEAKER_03]: Now the torch has been passed, and a new generation of hosts is on the job.

[SPEAKER_03]: Justin Klein and Luke Guerrero.

[SPEAKER_03]: So when you've got finance and investment questions, don't forget to call in Vestock.

[SPEAKER_03]: 888-99-Chart.

[SPEAKER_00]: Let's take a look at the market today.

[SPEAKER_00]: It was, it started off as a green day, but closed in the red overall.

[SPEAKER_00]: Large half growth did eat out slight games, held a NASDAQ up 0.16% on the day.

[SPEAKER_00]: The S&P lost about a third of one percent closing near the lows on the day.

[SPEAKER_00]: There was a lot of economic news that came out really around jobs.

[SPEAKER_00]: Yeah, the,

[SPEAKER_00]: December 80p number, which was up 41,000 month over month, but expectations were 47,000.

[SPEAKER_00]: So missed expectations, slightly November revised in negative 29,000 from negative 32,000.

[SPEAKER_00]: So a bit better, but still, we were having a labor market that continues to slow.

[SPEAKER_00]: And really, that is summed up in the Joltz data, the job openings and labor data, the expectations.

[SPEAKER_00]: We're for 7.7 million jobs available and posted and in a number number, which it is very lagged, but still it's a number that exists was 7.14 million.

[SPEAKER_00]: So a drastic, a drastic miss on that side.

[SPEAKER_00]: So it just shows you the jobs market continues to decline.

[SPEAKER_00]: month over month.

[SPEAKER_00]: So clearly not good.

[SPEAKER_00]: The hiring rate fell to 3.2% from 3.4%.

[SPEAKER_00]: and separation rate was unchanged about 3.2% layoffs and discharge rate little change at one point.

[SPEAKER_00]: One, so what you can see here is it continues to be a market with a lot of people getting fired, but job creation is poor.

[SPEAKER_00]: And the job creation that is happening is really in the non-cyclical sectors.

[SPEAKER_00]: Education and health services, that was the biggest gain, leisure and hospitality of 24,000 second largest trade.

[SPEAKER_00]: and transportation and utilities up 11,000.

[SPEAKER_00]: In fact, services up six.

[SPEAKER_00]: So that's where the gains were.

[SPEAKER_00]: But job losses in professional and business services is that partly AI driven, that's a big question, as well as information, technology down 12,000 and manufacturing down five.

[SPEAKER_00]: So the whole,

[SPEAKER_00]: Teriffs are going to reshore manufacturing, that's not happening or it's going to bring jobs home, that's not happening, because manufacturing continues to lose jobs month over month.

[SPEAKER_00]: And in fact, you're now getting year over year declines in blue-collar workers.

[SPEAKER_00]: And so clearly, that's that side of the economy continues to struggle at least on the labor side and the labor side.

[SPEAKER_00]: What else did you have here?

[SPEAKER_00]: Yet treasuries were mixed.

[SPEAKER_00]: The curve was flattening a bit, which is obviously not the best sign.

[SPEAKER_00]: Use the client three to four basis points at the back end.

[SPEAKER_00]: Dollar index was a 0.1% gold finish down 0.8% silver added on 4.2% Bitcoin was down 1.9% and WTI finished down 2% continue to monitor that evolving situation in Venezuela.

[SPEAKER_00]: So you're getting a little bit of pullback today in some of those precious metals, but a lot of them rally kind of later in the day and closing the highs of the day as opposed to the broader market close near the lows of the day.

[SPEAKER_00]: When it came to individual names, you definitely saw some strength out of a video 1% who go up 2.4 Microsoft up 1, but mudded down nearly 2% on the day and you continue to see some red, a finance space certainly struggle, especially because looks like President Trump is trying to ban

[SPEAKER_00]: Some of the private equity firms from owning single family homes, so certainly that hit the black stones of the world, health it okay, but anything around manufacturing and industrials didn't do so hot caterpillar up down 4% on the day, G, Venerova, down 3.5% on the day.

[SPEAKER_00]: So very interesting day, a lot of tech names certainly were in the red KLA 10 core down two and a half percent text instruments down three percent.

[SPEAKER_00]: So more red than green on the day, even though the NASDAQ kicked out eight gains.

[SPEAKER_00]: So that was the markets.

[SPEAKER_00]: And let's put it back to an investor talk, the voice mail question right now.

[SPEAKER_06]: Hey, Justin, Luke, these Franks from all of Los Angeles.

[SPEAKER_06]: I have a question about portfolio management,

[SPEAKER_06]: I'm having a hard time figuring out the right allocation across equity, treasuries and corporate bonds, especially given the current micro environment.

[SPEAKER_06]: I was thinking about allocating 50% to treasury bond ETFs and the rest to just the value stocks, but I'm starting to think that I should probably allocate also something to corporate bonds, especially given how sticky inflation is.

[SPEAKER_06]: I'm 35 years old and I consider myself a value-oriented investor.

[SPEAKER_06]: especially in this environment, I don't think it makes sense to take much risk.

[SPEAKER_06]: Given this, it will be the ideal split across asset classes for somebody my age.

[SPEAKER_06]: Thank you very much and I'll be listening on the show.

[SPEAKER_00]: Well, the fact that junior 30s, that's a far too conservative portfolio, 50% in bonds, maybe even more in corporates.

[SPEAKER_00]: For the number one, for cash like holdings, I'm okay with treasuries.

[SPEAKER_00]: Short-term treasuries, we use that as a cash alternative, but as a longer-term investment, no, you don't want to be in treasuries, especially any long-duration treasuries, 10 years, 30 years, et cetera.

[SPEAKER_00]: So your your bond main bond exposure should be in corporates now shouldn't be a large percentage of portfolio especially if you're an aggressive investor it should be probably sub 20% of your overall portfolio the rest should be equities and I would lean on the value side of the market and you're starting to see that side start to out perform once again so hopefully I gave you a little perspective and feel free to schedule portfolio review with me now we're into a break you

[SPEAKER_03]: It's a new year, 2026 is here and so is Justin Klein.

[SPEAKER_03]: He's taking your finance and investment questions anytime, call in Vestock, 888-99 chart.

[SPEAKER_04]: Good day, they're Luke and Justin.

[SPEAKER_04]: Long time, listen, I'm your show here from the Midwest.

[SPEAKER_04]: Thank you guys for everything you teach us.

[SPEAKER_04]: Quick question.

[SPEAKER_04]: I have a very low almost no percentage of energy at it.

[SPEAKER_04]: I've been looking here at a stock EQNR is a ticker symbol or also a fund and ETFET.

[SPEAKER_04]: I was wondering if either one of them would be good selections and if that stock might

[SPEAKER_04]: Just wondering if those would be good choices or if I should keep on looking, thank you for your thoughts and help.

[SPEAKER_04]: I look forward to hearing it on the show, happy holidays.

[SPEAKER_00]: Well, thank you for the kind of words, and you're looking at two names that have some attract in this to them, but they have their own drawbacks, and we'll dig into a second, but you know, having a large exposure to the energy space, especially oil, I don't think that's really an issue.

[SPEAKER_00]: Now, I think there's some the upside and oil prices in the near term, because

[SPEAKER_00]: You know, I just don't see oil as a great place to be in the medium to long term.

[SPEAKER_00]: Why?

[SPEAKER_00]: Because, you know, we're just able to, it would take note of technologies, able to find a lot of oil.

[SPEAKER_00]: And it's easy to transport around the world, generally, as long as supply lines are open.

[SPEAKER_00]: Now, that's the big question around it in the near term.

[SPEAKER_00]: But long term, I don't see a structural under supply in oil.

[SPEAKER_00]: But natural gas is a really the swing fuel now, especially as we're electrify so much of our auto fleet with electric vehicles, but also the demand for data centers and the light.

[SPEAKER_00]: And so, you know, ET is these are two very different companies.

[SPEAKER_00]: Equinoire is EQ and R is out of Norway.

[SPEAKER_00]: And it's the,

[SPEAKER_00]: It's the government sponsored oil company and they're more tied into the geopolitical instability of of not West, not WTI, but Brent crude right so Brent crude goes up because of problems in Europe and the Middle East you know it's going to do much much better so it's going to be more sensitive to oil prices whereas energy transfer it has a lot of

[SPEAKER_00]: as a high yield, it is a consistent performer, but it has a ton of debt.

[SPEAKER_00]: And that's the risk here is that if it shates go up, suddenly the cost of capital goes up, and that could, you know, that's kind of the bigger risk.

[SPEAKER_00]: And you don't have the upside of the move in natural gas and oil prices, like you do with Ecuador.

[SPEAKER_00]: And so it just kind of depends on what exposure you want.

[SPEAKER_00]: I would say energy transfers are going to be less volatile with some correlation to interest rates and bond prices in general because it's kind of bond like it's kind of a high yield bond really is what it is if you're thinking of it that way in keeping

[SPEAKER_00]: clipping those bad 8% yield, but then Equinoa is going to have once again more upside and downside to oil prices.

[SPEAKER_00]: I like both, but for different reasons.

[SPEAKER_00]: So adding maybe both makes sense, but I wouldn't go overboard with energy space at the current.

[SPEAKER_00]: Thanks for the call.

[SPEAKER_00]: The last answer to a YouTube comment question that came in says, what about the big four banks that failed on Friday,

[SPEAKER_00]: a lot of people keep talking about this and there's a lot of fear Margaret mongering out there and that's what this kind of is.

[SPEAKER_00]: It's talking about, oh, this, you know, they're going to have this big crash.

[SPEAKER_00]: It's abundantly clear.

[SPEAKER_00]: Anybody who's not, it's paying attention knows that, oh, it is not going to happen again, at least in that particular way.

[SPEAKER_00]: Okay.

[SPEAKER_00]: The risk in markets is not down.

[SPEAKER_00]: It's up.

[SPEAKER_00]: It's being underexposed to risk assets.

[SPEAKER_00]: It's clear whether that is the repo crisis in 2019, whether that's COVID in 2020, whether that's the Silicon Valley bank crisis, and was at 2023, and then most recently, the Fed coming in there and buying treasuries, T-Bills excuse me.

[SPEAKER_00]: Whatever it is, this is the M.O.

[SPEAKER_00]: of governments.

[SPEAKER_00]: They're going to do what it takes to keep the system inflating, because you see with those, you see with everything.

[SPEAKER_00]: They're not, there's nothing stops this train, as Lynn Alden once said.

[SPEAKER_00]: They're going to continue to spend, whether it's the right with his left, it does not matter.

[SPEAKER_00]: And so if the bank gets in trouble, they will help them.

[SPEAKER_00]: They will solve the problem.

[SPEAKER_00]: Now, the release valve, our precious metals, are there is the dollar, right, the dollar declining.

[SPEAKER_00]: There are release valves to this, and that's why you continue to see gold and silver go up because they are not going to solve the debt situation.

[SPEAKER_00]: They're going to inflate away the debt, just like every other government in history has done.

[SPEAKER_00]: Every government who can control their own currency,

[SPEAKER_00]: has never defaulted on their debt and it's not politically expedient to cut spending because it most likely causes a recession and no leadership wants to see a recession in under their watch.

[SPEAKER_00]: And so, that's what they continue to spend.

[SPEAKER_00]: And so, you need to ignore these things.

[SPEAKER_00]: You're gonna see these fear-mongering, because that was gonna crash.

[SPEAKER_00]: No, the risk is inflation.

[SPEAKER_00]: Not deflation.

[SPEAKER_00]: Oh wait, was deflation.

[SPEAKER_00]: Banks failing is deflation.

[SPEAKER_00]: That's not what's going to happen here.

[SPEAKER_00]: It is the opposite.

[SPEAKER_00]: It is an inflationary environment.

[SPEAKER_00]: It's the debasement trade.

[SPEAKER_00]: And that's how you have to look at that market today.

[SPEAKER_00]: Now on the next investment talk, we'll dig into this story.

[SPEAKER_00]: The yield curve, uninversion, the 10 year charge yield is finally pushing comfortably above the tube to your yield.

[SPEAKER_00]: We'll explain why this normalization is healthy, but often precedes a mid-cycle slowdown.

[SPEAKER_00]: That story tomorrow, but for now, I'm just inclined and ready to take your calls now, on 8-8, 9-9-9 chart.

[SPEAKER_03]: Now with 62 million downloads, in Vestark, 88899 chart.

[SPEAKER_00]: Now as we close the 2025, the old economy stocks started to outperform the new economy stocks.

[SPEAKER_00]: The question is, was that a flash in the pan or an enduring trend?

[SPEAKER_00]: So we're going to look at all the different sectors and what is likely to drive performance for this year, and at the end, I'll tell you.

[SPEAKER_00]: what I think.

[SPEAKER_00]: Now, let's start off with communications services and this is really all about the evolution of AI.

[SPEAKER_00]: It's most important driver in this space, especially where AI can be applied.

[SPEAKER_00]: That is in the gaming industry.

[SPEAKER_00]: And think of all the time it takes to get a game to market and all the programmers necessary well AI is going to improve that development and probably improve margins for the video game industry in a big big way so I think that's probably the best theme within that sector overall the headwinds is really going to be those.

[SPEAKER_00]: Those big telecom companies think of the 18 team horizons of the world, higher long-term interest rates are weighing on that as well as just the mature market and basically the consumer struggling as well.

[SPEAKER_00]: So in a technology space, so close cousin to the communications industry and really semiconductors are the name of the game.

[SPEAKER_00]: here.

[SPEAKER_00]: Anything that's the picks and shovels around AI, graphics processors, high-speed memory, data centers.

[SPEAKER_00]: All of that, this is continues to be where the demand will be, and the question is, how much is really priced into the sector in different companies and will that?

[SPEAKER_00]: come to fruition in that magnitude is a big question that's why I think there's a lot of risk as well as a lot of opportunity in the tech space.

[SPEAKER_00]: And the bad side of tech is really software.

[SPEAKER_00]: We've talked about the cloud companies, anything that was CRM type of businesses like the sales

[SPEAKER_00]: Pay hundreds of $1,000 a month for this software that AI can build custom for you, and it would like to say we're doing that internally here at KPP, and then

[SPEAKER_00]: Industrials, industrials, I think that's where there's a lot of opportunity around heavy electrical equipment producers, anything around electrification of data centers, gas turbines, et cetera, I think that will continue to do well as well as OEM manufacturing around things like jet airplanes, all of that.

[SPEAKER_00]: So I think that's going to be an interesting space for 2026.

[SPEAKER_00]: even though the broader manufacturing industry is slowing, especially around building products, because the housing market is waning a bit.

[SPEAKER_00]: On the utility side, utility sector has been struggling recently.

[SPEAKER_00]: We're underweighted, I think that's because of longer-term interest rates, so the battle here between longer-term interest rates and the demand-side increasing due to data-centered build-outs, et cetera, and so the problem is that

[SPEAKER_00]: That's only the electric utilities in the Peta Power producers.

[SPEAKER_00]: And so if you're buying the utility sector as a whole, you're getting...

[SPEAKER_00]: water companies, gas companies, et cetera, that net won't necessarily benefit from this trends.

[SPEAKER_00]: And frankly, only specific companies, specific utilities in certain regions are really benefiting from the AI trends.

[SPEAKER_00]: So you'd be very selective within that space.

[SPEAKER_00]: Then there's energy as I talk a little bit earlier.

[SPEAKER_00]: I don't see this as a great place to invest unless you're investing around.

[SPEAKER_00]: Uranium, if you call that energy, some people call it, or energy, some people call it Uranium, it depends out to classified.

[SPEAKER_00]: Sorry, call it basic materials, or energy.

[SPEAKER_00]: But really, it's all about natural gas, the demand for natural gas.

[SPEAKER_00]: I think that still remains where the opportunities are, well, field services,

[SPEAKER_00]: as well to really bring on more and more gas supply, I think that should continue to be a good place to be.

[SPEAKER_00]: Material sector, golden silver, copper, obviously those trends, I think are durable.

[SPEAKER_00]: Sure, there's going to be volatility.

[SPEAKER_00]: You probably get a considerable pullback at some point.

[SPEAKER_00]: This

[SPEAKER_00]: This year, but could be from much higher prices than here, so I still think that is one of the best sectors to invest in for 2026.

[SPEAKER_00]: In the financial space, it's definitely a stockpickers market.

[SPEAKER_00]: I think certain aspects think of white-collar work.

[SPEAKER_00]: think of investment companies as well as insurance companies, trust title companies, things like that, that AI is really going to make those workforces a lot more efficient, it's already happening here internally for us at Cape P Financial.

[SPEAKER_00]: And I see this as a big, big opportunity for a lot of companies within the finance realm.

[SPEAKER_00]: commercial banks, especially those smaller commercial banks, the regional banks, if rates go up on the long end, that could hurt them as well.

[SPEAKER_00]: So I think you definitely have to be choose you within the finance sector, and then consumer discretionary, you know, there is that the tariff issue looks like the

[SPEAKER_00]: uh, scotius will shoot down the tariffs as unconstitutional now.

[SPEAKER_00]: President Trump has been known to kind of try to get around that, and he'll probably go back at it from different angle, and he'll probably go back to the Supreme Court, etc.

[SPEAKER_00]: But certainly that is some volatility that could play in 2026.

[SPEAKER_00]: But I think the best opportunities are in the discount retailers.

[SPEAKER_00]: Shoppers are becoming more value-oriented, bargain-hunting, especially with the labor market continue to slow that I still think there's a lot of value and opportunity within those.

[SPEAKER_00]: areas.

[SPEAKER_00]: And yeah, so that's that sector real estate.

[SPEAKER_00]: I think there's still a lot of risk around office.

[SPEAKER_00]: I still think that that is an area that's been overbuilt.

[SPEAKER_00]: It's mean that best opportunity is going to be around senior housing.

[SPEAKER_00]: So you have to be very selected within the REIT space, especially if it shits go up because it does tend to weigh on the REIT sector.

[SPEAKER_00]: And then health care health care is really strong right now and a big reason for that is what is called the most favorite nation rule.

[SPEAKER_00]: So remember the whole rhetoric around that we spend the most on drugs and our drug prices are a lot higher than the rest of the world.

[SPEAKER_00]: Well, what's happened here from the Trump administration is they've actually pressured the drug companies not to lower drug prices here in a material way.

[SPEAKER_00]: but to increase prices abroad and overall that's going to be good for them because their average price is going up.

[SPEAKER_00]: Now it's bad for the countries around the world who were paying less, but it's in the eyes of the Trump administration that's more aligned with.

[SPEAKER_00]: you know, our prices and for for then they feel like that's a win and so that's been a positive for drug companies and then obviously the potential for AI to help with things like gene therapy and complex drugs bringing them to market and getting them approved and so I think there's still a lot of opportunity in healthcare and then lastly consumer staples consumer staples I don't think it's going to be a great place to be overall

[SPEAKER_00]: Why?

[SPEAKER_00]: Because as I said before, the Proctor and Gamble are just a lot of those companies have a lot of debt.

[SPEAKER_00]: They're exposed to inflationary environments, and I think geopolitics could potentially cause problems as well.

[SPEAKER_00]: So that's the broad overview of the, I think that.

[SPEAKER_00]: we're going over 11 sectors and I do think that the shift in the economy and the sickle names as we and exited the year is durable and I would continue to move money into that area and away from the the bits in the sky, shall we say.

[SPEAKER_00]: Now let's play another listener actually going through a live call and Tara is in San Jose looking at Frank and Nevada.

[SPEAKER_05]: So hi, yeah, so I picked up Frank or never a couple of years back when the goal process was down and my investment is was two goals like one investing in goal and some other precious metals as well as investing in the company.

[SPEAKER_05]: So as of now, I am in a profit, but I

[SPEAKER_05]: On the company front, the investment is still all through.

[SPEAKER_05]: It's a good company.

[SPEAKER_05]: I would like to hold it long term, it's possible, but if it's a good time to take profit and get in back again after some time.

[SPEAKER_05]: Yeah.

[SPEAKER_05]: I would love to hear your thoughts.

[SPEAKER_00]: Well, long-term, we still remain very bullish on golden silver.

[SPEAKER_00]: Now, it's a sector that a 20% drop in the price in, especially these gold miners or related names.

[SPEAKER_00]: is not uncommon.

[SPEAKER_00]: So right now it's at 217.

[SPEAKER_00]: Could this pull back to, you know, the 180, 160 range, wouldn't not shock me.

[SPEAKER_00]: Okay.

[SPEAKER_00]: So you have to be prepared for that type of volatility, even though it's still in that longer-term uptrend.

[SPEAKER_00]: Now we own franken about it.

[SPEAKER_00]: We've owned it for a long time.

[SPEAKER_00]: We bought it $700 per share right now.

[SPEAKER_00]: It's at 217.

[SPEAKER_00]: So we're up a lot as well.

[SPEAKER_00]: So we still really liked the name.

[SPEAKER_00]: So it's about all-time high in earnings at $7.25.

[SPEAKER_00]: Next year,

[SPEAKER_00]: And it's a $217 stock, the might seem expensive, but this is not your typical gold miners.

[SPEAKER_00]: This is actually a streamer, meaning what they do is they go by equity stakes in a lot of different minds around the world and they work with the actual miners to help finance that.

[SPEAKER_00]: And that kind of lowers the risk of the mining company, of bringing those minds online.

[SPEAKER_00]: But it's a really great consistent business and they get certain percentage of the revenue of those that comes out of those minds.

[SPEAKER_00]: That's what they continue to do.

[SPEAKER_00]: Well, we own it.

[SPEAKER_00]: We continue to hold it.

[SPEAKER_00]: I see no reason to get out of Frink and Nevada.

[SPEAKER_00]: You know, the bigger question is how much gold and silver exposure do you have of your overall portfolio?

[SPEAKER_00]: You know, if it's getting too hefty, maybe over 30% of your portfolio, maybe that's a reason to trim right now.

[SPEAKER_00]: But unless that's the case, I see no reason to sell Frink and Nevada.

[SPEAKER_05]: All right.

[SPEAKER_05]: Great.

[SPEAKER_05]: Thank you.

[SPEAKER_05]: Yeah.

[SPEAKER_05]: It's about like 5-7% at most.

[SPEAKER_00]: Is that all of your golden silver exposure, just this name?

[SPEAKER_05]: Yeah, yeah, it's all fake.

[SPEAKER_00]: Okay.

[SPEAKER_00]: Yeah, so you're under exposed to golden silver.

[SPEAKER_00]: You should have probably triple that for most likely exposure.

[SPEAKER_00]: So I'd be looking to find other name.

[SPEAKER_00]: I wouldn't buy more franken of that, but I would probably go and be have a watch list for other names within the space that I would buy in a pullback.

[SPEAKER_00]: All right, good.

[SPEAKER_00]: Thank you so much.

[SPEAKER_00]: Thanks for the call.

[SPEAKER_00]: Let's go play another listener question now.

[SPEAKER_07]: Hey guys, I opened a starter position and signet jewelers today.

[SPEAKER_07]: I'm curious what you guys think of the fundamentals and the technical setup and if it's something that's possibly worth adding to or perhaps maybe just keeping it as a small position.

[SPEAKER_07]: Thank you much.

[SPEAKER_00]: a signate jeweler is engaged the retail of diamond jewelry and I think there is this interesting one because there's some headwinds to it as well as some tailwinds.

[SPEAKER_00]: So the headwinds are diamond prices are plummeting especially as more people are adopting lab grown diamonds that are much cheaper.

[SPEAKER_00]: You don't have to deal with a blood diamond on your hands or anything like that.

[SPEAKER_00]: So that's bringing prices down generally for jewelry.

[SPEAKER_00]: And so, you know, their margins are, let's see over their margins, 8% operating margins are still higher than they were kind of pre COVID, but they have come down from their higher on the 11% now it's around 8% But the tailwind is gold right golden silver prices people want to own kind of

[SPEAKER_00]: If you're going to buy gold and silver as well, you know, buy a necklace or buy a bracelet or buy some earrings or whatever, right?

[SPEAKER_00]: And so I think that's still overall positive.

[SPEAKER_00]: They did have a good amount of debt for a while and I think they've whittled that down yet was about 2.6 billion and 2020 now it's down to 858 billion.

[SPEAKER_00]: Sorry, million.

[SPEAKER_00]: And so that they've kind of resolved that the return equity though isn't really that intriguing is down on eight percent and pre COVID it was closer to around 15 percent.

[SPEAKER_00]: And so.

[SPEAKER_00]: I don't love the kind of change in the profitability profile of the name and that's what worries me overall and then if you look at a chart, it's gone kind of nowhere since the end of 2021.

[SPEAKER_00]: So you're not really getting much, you're getting a 1.4% dividend yield.

[SPEAKER_00]: You're not getting a ton of earnings growth, frankly earnings in 2022 is $12.27 since

[SPEAKER_00]: In 2025, they're nearly $9.00, supposed to earn $9.30 this year and $10.54 next year.

[SPEAKER_00]: So it looks cheap on a PE multiple basis, but that's because it's not really growing.

[SPEAKER_00]: And so if people are moving away, once again, from buying your big expensive diamonds and more towards lab grown diamonds and just simple gold and silver chains, et cetera, I don't think their business is gonna do so too hot.

[SPEAKER_00]: you know, I don't hate it, but I think there's a lot better opportunities out there in the market than it's significant.

[SPEAKER_00]: SIG is the symbol.

[SPEAKER_00]: Now let's pivot over and do we have any other calls?

[SPEAKER_00]: Oh, we do.

[SPEAKER_00]: Okay, let's do one more call.

[SPEAKER_08]: Hey, Luke and Justin, Matt and Softboard.

[SPEAKER_08]: I want to call it a get your opinion on Bay Matcha.

[SPEAKER_08]: Pick your single P.A.1.

[SPEAKER_08]: You guys compete with companies like

[SPEAKER_08]: payment sold in beyond companies like PayPal, some more specific companies.

[SPEAKER_08]: Again, ticker symbol, PAY looking for your opinion on a three to five-year-old.

[SPEAKER_00]: Thank you.

[SPEAKER_00]: All right, looking at Paymentus, holdings, PAY is the symbol.

[SPEAKER_00]: And this is an interesting one.

[SPEAKER_00]: It went public back in 2021 when money was cheap and everyone was trying to buy these high-flying growth names.

[SPEAKER_00]: And this is a name that certainly is growing

[SPEAKER_00]: Revenue growth last quarter, it was, let's see, 234%.

[SPEAKER_00]: However, that's down considerably from end of 2024, when it was growing 56% in the fourth quarter of 2024.

[SPEAKER_00]: So growth is slowing there, earnings up 49% last year, especially up to only 16% this year.

[SPEAKER_00]: And that's kind of the worry here.

[SPEAKER_00]: And I think that's why the momentum certainly had slow.

[SPEAKER_00]: So this bottom,

[SPEAKER_00]: in 2023 around $7 and then it's recently hit a high around $40 but it's chopping in this range between 30 and 40 and frankly, I think the momentum is waiting in a big big way and then if you look at the the multiples that it's trading at, it's pretty expensive.

[SPEAKER_00]: Enterprise value around 32.

[SPEAKER_00]: Now for looking around 20, they don't have much debt which is good but the free cash

[SPEAKER_00]: which is a very very low free cash flow yield to turn equity is only 11% and if you're looking on for looking earnings of 76 cents and $30 stocks so you're talking about about a 40 times forward looking earnings.

[SPEAKER_00]: And I just don't think that this company is worth it.

[SPEAKER_00]: I don't like the momentum, which is once again continuing to wane.

[SPEAKER_00]: A relative's trick that was only 38.

[SPEAKER_00]: So, the past year, it's just been a bit of a dog, especially compared to the broader market.

[SPEAKER_00]: You're not getting a dividend.

[SPEAKER_00]: The best thing you can say about it is it has no debt, but yeah, not a name that I would be buying.

[SPEAKER_00]: I think you have much better opportunities with your Apple.

[SPEAKER_00]: That was paymentous.

[SPEAKER_00]: EAY is the symbol.

[SPEAKER_00]: That was the best thought.

[SPEAKER_00]: I'm Justin Klein.

[SPEAKER_00]: We have one goal here.

[SPEAKER_00]: Each every week.

[SPEAKER_00]: It's helped you achieve your own version of financial freedom.

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

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[SPEAKER_10]: You can just go from Philadelphia here, calling about typical KLAR, or in a group, it is a by now pay over time platform that IPO a few months ago.

[SPEAKER_10]: And I'm interested in that market.

[SPEAKER_10]: I think a lot of these tech companies are implementing them with the amount of debt that prices going up.

[SPEAKER_10]: I find it to be a good business, and we'd like to get your opinions on Farna to see if it's a a good buy to kind of do it my toes into right now, and we would love to hear what you guys think.

[SPEAKER_00]: Thank you.

[SPEAKER_00]: Well, first off, Clerna is a recent IPO, and I tend to not like those.

[SPEAKER_00]: It's an IPO in September, and around $50 per share, and it's been in the client ever since.

[SPEAKER_00]: So the current trend is not great.

[SPEAKER_00]: Now, I'm sitting on $31 in change, and I'm not sure what the lock up period is, but typically it's six months.

[SPEAKER_00]: We're not even there yet, and that's usually when

[SPEAKER_00]: More insiders can kind of sell their shares and increase the amount of shares in the flow to that usually pushes prices down So not a name that I would not not set up that I really like I even outside of what the business looks like And there's still starting 51 cents this year on a 31-dollar stock at 60 times forward-looking earnings and Growth is slow in fact earnings growth is actually negative as of lately and Remember

[SPEAKER_00]: this is still a new type of business and they're actually losing money as of the last quarter they'll 13 cents per share and so this is far actually I think it's a good short to be honest with you.

[SPEAKER_00]: I hate this business I think it's a terrible yes there's the man but

[SPEAKER_00]: You know, if I, if I'm giving away dollars for 90 cents, I'm going to have a lot of demand, right?

[SPEAKER_00]: And so there's just not a good business.

[SPEAKER_00]: And so I would stay far, far away from this.

[SPEAKER_00]: It's a bad business to be in, even if there's high demand.

[SPEAKER_00]: There's high demand because as much love it, because it's effectively a free loan.

[SPEAKER_00]: But it,

[SPEAKER_00]: There's a lot of defaults, and it's just really bad for shareholders.

[SPEAKER_00]: So 100% pass on Klarna.

[SPEAKER_00]: Now, lastly, let's talk about the condo market in September and October.

[SPEAKER_00]: Condo prices fell 1.9% from a year earlier, the biggest decline since 2012.

[SPEAKER_00]: Really driven by higher HOAs, insurance premiums, and maintenance costs.

[SPEAKER_00]: And it's really giving a lot of buyers a pause.

[SPEAKER_00]: And now more than one in 10 condos had a lower estimate of value in November than their most recent sales price according to Zillow.

[SPEAKER_00]: And in nine metro areas, it's far worse.

[SPEAKER_00]: More than 25% of condos were estimated to be worth less than the most recent sale price.

[SPEAKER_00]: And this is in areas like Austin, Texas, Austin, and San Antonio, Texas.

[SPEAKER_00]: There's a glut of supply there, Florida markets, like Cape Corral, Miami, etc.

[SPEAKER_00]: They're having

[SPEAKER_00]: insurance costs and hurricane risks that are really pushing buyers back.

[SPEAKER_00]: And in San Francisco and Portland, prices just reflected the decline in demand for downtown districts.

[SPEAKER_00]: And so since the pandemic, and so there's just a lot weighing on the condo market in November.

[SPEAKER_00]: single family homes continue to hold their value generally.

[SPEAKER_00]: Only four and a half percent of single family homes were estimated worth less than their sale price.

[SPEAKER_00]: Mainly because they don't really have that HOA risk nearly as much insurance risk because of their locations and usually away from major

[SPEAKER_00]: flooding or any problems like that.

[SPEAKER_00]: So, you know, buyers are just blocking at the high cost of a barring money, the high cost of insurance, especially after the Surfside Condu collapse in Florida in 2021 that can 98 people.

[SPEAKER_00]: Lenders are pulling back in a big, big way, a lot of these HAAs don't have enough money in their coffers to cover a lot of the maintenance, and so they just

[SPEAKER_00]: they just can't be lent on.

[SPEAKER_00]: And so this is really, I think the start of the correction usually how the condo market goes and eventually feeds into the single family market.

[SPEAKER_00]: And I think this is the year where that will happen.

[SPEAKER_00]: I do think generally for the country, we'll see the decline in prices, not in a dramatic way, not in a way, it's not a way, but be a single, low to mid-signal digital decline in,

[SPEAKER_00]: Housing prices in general I think is in the offing 420.6 and the weakness in the condo market is a signal for that.

[SPEAKER_00]: Well, I'm Justin Klein and today's show I made you think that your own financial picture

[SPEAKER_00]: keep that condo that you have, that home that you have, that you maybe think about selling, that rental, etc.

[SPEAKER_00]: These are things that we talk about on our free portfolio reviews.

[SPEAKER_00]: What about your portfolio strategy?

[SPEAKER_00]: Are you overweight?

[SPEAKER_00]: Treasuries, for example, should you be more in corporate?

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[SPEAKER_00]: Or maybe you don't have enough tech who knows?

[SPEAKER_00]: These are all things that we go over in our no-cost portfolio reviews, and you can schedule yours behavior to investtalk.com.

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[SPEAKER_00]: Independent thinking, shit's excess, it's the best stock.

[SPEAKER_00]: Good name.

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