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[SPEAKER_00]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

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[SPEAKER_00]: Independent Thinking, shared success.

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[SPEAKER_00]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.

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[SPEAKER_00]: Here is KPP Financial Portfolio Manager, Luke Guerrero.

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[SPEAKER_08]: Good afternoon, fellow investors, and welcome back to another episode of Invest Talk.

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[SPEAKER_08]: My name is Lou Guerrero, today's Friday, February 20th, 2026.

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[SPEAKER_08]: As you all know, before we head off into the weekend, we certainly have some work to do.

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[SPEAKER_08]: We'll be going over some pretty important news that happened today.

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[SPEAKER_08]: Talking about all the themes that drove the market this week.

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[SPEAKER_08]: And of course, bringing you stories that matter the most and answering those finance investment questions that are burning in your minds.

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[SPEAKER_08]: With that being said, in just a bit, we'll talk about today's market performance and it run down those show topics.

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[SPEAKER_03]: Hey guys, what are your thoughts on Microsoft out here around the 200 week moving average?

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[SPEAKER_03]: Thinking about picking some up.

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[SPEAKER_08]: Microsoft certainly a name that has been in the news recently as we've seen a bit of a drawdown amongst software.

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[SPEAKER_08]: Of course, the company one of the world's largest companies by market cap.

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[SPEAKER_08]: really operating on a couple core segments.

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[SPEAKER_08]: They're intelligent clouds, so think of their server products.

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[SPEAKER_08]: Then they're productivity in business, so I think Microsoft 365 teams.

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[SPEAKER_08]: And then they're more personal computing, so your Windows products, your Xbox, and your search engine.

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[SPEAKER_08]: Recently, they've been doing a bit of an AI pivot, right?

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[SPEAKER_08]: They're one of the hyper-scalers spending hundreds of billions of dollars trying to win that AI race.

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[SPEAKER_08]: But after reaching an all-time high, about $555 a share, who, when was that?

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[SPEAKER_08]: That was back, I want to say in September.

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[SPEAKER_08]: bit on a bit of a downtrended with a little bit of a precipitous drop into 2026 as we've seen some of the improvements that these large language models have made and some of this what I like to say is overblown speculation about the effect it's going to have on software as a service.

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[SPEAKER_08]: And this is in spite of Zürt, they're they're beating heart of this company, having pretty solid

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[SPEAKER_08]: in Q2 fiscal year fiscal quarter two of 2026.

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[SPEAKER_08]: So this is phenomenal growth.

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[SPEAKER_08]: They had pretty solid earnings, most recently and they've started to improve their AI monetization.

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[SPEAKER_08]: Do I think that the software sell down as fully overboard?

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[SPEAKER_08]: No, I don't.

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[SPEAKER_08]: Do I think that large corporations who, and this is something that I actually said earlier today, when Justin and I were talking about this, is small businesses may be vibe coding things in the future.

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[SPEAKER_08]: They are a drop of the bucket in terms of revenue.

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[SPEAKER_08]: It's a rounding error.

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[SPEAKER_08]: Fortune 500 companies are never going to rely on a couple people in a division vibe coding software that truly matters for the core of their business.

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[SPEAKER_08]: And so that's why I think the software sell down a little bit over blown, especially for Microsoft who has that fortress, absolute fortress of revenue.

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[SPEAKER_08]: And so, you know, we have that as a name on our watch list.

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[SPEAKER_08]: Certainly it is a within target for one of our strategies.

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[SPEAKER_08]: We've been waiting to buy into it.

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[SPEAKER_08]: But I feel like it's getting pretty close to the point where you might want to open at least a little bit of a position and then DCA into it.

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[SPEAKER_08]: moving forward.

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[SPEAKER_08]: That is Microsoft Corporation.

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[SPEAKER_08]: Can't love them in with those other software companies.

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[SPEAKER_08]: Take your MSFT.

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[SPEAKER_08]: Thanks for the call.

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[SPEAKER_08]: We got a lot of ground to cover in the next 45 minutes or so and it all starts with my main focus point.

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[SPEAKER_08]: Just about behavioral finance and how your brain sometimes fights against what's best for your portfolio.

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[SPEAKER_08]: Markets are driven by math, right?

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[SPEAKER_08]: But investors are driven by emotion.

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[SPEAKER_08]: So we'll explore the most common citricological biases, like loss of virgin herd mentality, and how that might destroy wealth, and how you might want to automate your strategy to avoid them.

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[SPEAKER_08]: We'll also touch on two stories that I tried to bring you when we last met on Wednesday, one on copper, and another on software as a service.

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[SPEAKER_08]: And as always, we've got plenty of voice bank questions, including one on ally, financial, ticker, A, L, L, Y, and another on lift.

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[SPEAKER_08]: So I think we answered a question about that on Wednesday, but why answer another?

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[SPEAKER_08]: As always, we try to get to those questions from the comment section of the Invest talk YouTube channel.

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[SPEAKER_08]: And of course, I welcome your finance and investment questions now or any time throughout the show.

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[SPEAKER_08]: We are headed into our first break.

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[SPEAKER_08]: It's always a quick one.

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[SPEAKER_08]: Please remember, you can call anytime.

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[SPEAKER_08]: Leave your questions on the Invest talk, voice bank.

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[SPEAKER_08]: If you listening on our live stream or on AM1220 in the Bay Area, give me a call now at 888-99 chart.

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[SPEAKER_01]: When you tell your friends about Investor, and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investor Coast Justin Klein.

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[SPEAKER_01]: Parallel investing means Justin invests right alongside KPP financial clients.

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[SPEAKER_01]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.

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[SPEAKER_01]: There's no front running and no special treatment.

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[SPEAKER_01]: In this way Justin and KPP financials share the same risks and the same potential for success.

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[SPEAKER_01]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.

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[SPEAKER_01]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.

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[SPEAKER_01]: And you can learn more anytime at InvestTalk.com.

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[SPEAKER_01]: In the early days, in Vestock was Jerry Klein and Steve Peasley.

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[SPEAKER_01]: Now the torch has been passed and a new generation of hosts is on the job.

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[SPEAKER_01]: Justin Klein and Luke Guerrero.

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[SPEAKER_01]: So when you've got finance and investment questions, don't forget to call in Vestock.

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[SPEAKER_01]: 888-99-Chart.

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[SPEAKER_08]: 88899 chart is the number if you want to get your question in before this weekend, but until we answer some more questions, or rather before we move to answering more questions, I'll only talk a little bit about the market.

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[SPEAKER_08]: US stocks mostly higher the Dallup 47 S&P 569 basis points, Nasdaq up 90, small caps will underperformers on the day actually negative 5 basis points.

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[SPEAKER_08]: And so, with the week over, S&P NASDAQ, both logging modest weekly gains.

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[SPEAKER_08]: Big tech, mostly higher, while semis-fared, well, those software, again, a weeker on the day.

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[SPEAKER_08]: Our performers included tech components, copper and aluminum, trucking, airlines, and apparel manufacturers.

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[SPEAKER_08]: Under performers included cyber security, energy, waste, ad chemicals, auto suppliers, defense, and biotech.

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[SPEAKER_08]: Treasuries are a bit weaker, though, generally speaking across the curve.

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[SPEAKER_08]: It seemed a little changed.

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[SPEAKER_08]: Dollar index was down 20 basis points.

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[SPEAKER_08]: Gold finished up 1.7% silver and it up 6.1% and crude oil settled up 10 basis points.

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[SPEAKER_08]: Overall, a bit of a choppy end to the week.

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[SPEAKER_08]: We got the Supreme Court ruling on tariffs.

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[SPEAKER_08]: We got the president's comments that he is considering limited military strikes on Iran after a massive buildup in the Middle East.

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[SPEAKER_08]: We have a bit of a lack of follow-through for oil names.

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[SPEAKER_08]: We have big text out performance, softer growth slash hotter inflation data.

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[SPEAKER_08]: and a bit of a bearish curve-steepening, all thematically fitting in with what we saw this week.

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[SPEAKER_08]: A.I.

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[SPEAKER_08]: Disruption, continuing to dominate the headlights.

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[SPEAKER_08]: We have, you know, seen mixed takeaways from earnings and attempted pushbacks while software seems to still be back on the defensive following what was really just a shallow bounce last week.

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[SPEAKER_08]: diving in the deeper, the Supreme Court struck down the IEEPA tariffs as expected, while Trump said a new 10% across the board tariff is to be implemented on top of other existing tariffs in the next three days, though this bit of a difference on how those can come about, given that they are under different authorities, meaning that they must be ratified by Congress, else they are just active for 150 days.

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[SPEAKER_08]: Busy day of data included February flash PMI's, and maybe factoring and services PMI's both misses, both falling to their seven-month-of-lose, actually.

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[SPEAKER_08]: The report noted average impocaust rules sharply, an average selling prices increases by the biggest levels since August.

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[SPEAKER_08]: December Core PC E hotter than expected with 40 basis points month over month.

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[SPEAKER_08]: The highest level you've seen since February, while 3% year over years, the highest we saw since March of 2024.

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[SPEAKER_08]: We also got a first look at Q4, GDP of 1.4% well below that consensus of 1.9, obviously, most likely harmed by the government shutdown.

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[SPEAKER_08]: Finally, University of Michigan Consumer Sentiment Markdown, that the one-year inflation expectations was down 10 basis points to 3.4% the lowest level we've seen to the January of last year.

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[SPEAKER_08]: Looking ahead the next week, factory orders and Dallas Fed Manufacturing will be out on Monday, FHFA House Price Index, Richmond Fed Manufacturing Index, Conference Board Consumer Confidence Index, all those hit on Tuesday.

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[SPEAKER_08]: Initial claims will be released on Thursday while Friday brings PPI and construction spending.

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[SPEAKER_08]: Let's shift gears and dip in to the Invest Tongue YouTube comment section question bank.

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[SPEAKER_08]: For a question that came in earlier from Jimmy Gustafson.

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[SPEAKER_08]: This is what he thoughts on American electrical power and southern company S.O.

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[SPEAKER_08]: If you had to choose, between both of these, which one would you choose?

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[SPEAKER_08]: If I'm not mistaken, these two companies are pretty comparable, right?

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[SPEAKER_08]: Well, let's take a look at both of these names.

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[SPEAKER_08]: The first being AEP, which is American electric power, it's one of the largest U.S. electric utilities, have about 5.6 billion customers across 11 states, primarily focused in the middle of the country.

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[SPEAKER_08]: and they actually own about 90% of some high-voltage transmission networks in the United States.

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[SPEAKER_08]: So it's a bit of a genuinely unique that 765 kilovolt high-voltage transmission network.

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[SPEAKER_08]: It's a bit of a unique hard to replicate infrastructure asset, which sets it apart from some other people, other companies rather than that space.

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[SPEAKER_08]: So other companies in a similar space, one of the premier regulated utilities in the South Eastern United States in terms of size, they're about similar AP of its smaller $67 billion market cap roughly compared to Southern companies, 100, and it's got a tough because

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[SPEAKER_08]: We actually hold both of these names for our clients.

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[SPEAKER_08]: They have both been the beneficiary, a piece certainly of data center load growth, a P of its transmission network dominance.

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[SPEAKER_08]: I mean, you've seen for a P at least Q42025 earnings was a beat.

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[SPEAKER_08]: Guidance was reaffirmed.

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[SPEAKER_08]: Valuation is a bit cheap, given its growth profile.

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[SPEAKER_08]: On the other hand, Southern Company, they've benefited from Georgia being an AI data center, epicenter.

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[SPEAKER_08]: They have had similar success in terms of their

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[SPEAKER_08]: revenue beats and they're continued guidance.

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[SPEAKER_08]: They have 24 consecutive years of dividend increases.

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[SPEAKER_08]: I mean, both are AI power demand plays right in this regulated utility framework.

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[SPEAKER_08]: And so the meaningful differences is that AEP has the more aggressive, contracted load pipeline and a bit of a cheaper valuation, but operates in a more geographically dispersed regulatory environment.

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[SPEAKER_08]: So they're company.

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[SPEAKER_08]: Cleaner catalyst because of this Georgia regulatory talent.

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[SPEAKER_08]: They both reported good earnings, Southern Company may be a bit better, a blowout in Q4, but it trades at a bit of a premium and it's dividend growth rate lags, it's peers.

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[SPEAKER_08]: I would say both are legitimately core utility holdings for the power demand cycle thesis.

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[SPEAKER_08]: And we old both of them, so it's kind of tough to choose, but amongst those two probably just because of their valuation,

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[SPEAKER_08]: I might lean towards AEP either way, with both of these names.

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[SPEAKER_08]: Can't go wrong.

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[SPEAKER_08]: Thanks for watching.

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[SPEAKER_08]: Now, I want to briefly mention the newest KPP premium newsletter, which will be distributed tomorrow.

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[SPEAKER_08]: And this week's KPP Insight section, we discussed tariffs, of course, the Supreme Court had a ruling today, the administration had a response,

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[SPEAKER_08]: There are going to be many companies that are demanding refunds.

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[SPEAKER_08]: And at the same time, price levels are still going to remain elevated.

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[SPEAKER_08]: So what does that all mean for the economy?

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[SPEAKER_08]: What should that mean for your portfolio?

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[SPEAKER_08]: The stock idea section, we mentioned a home builder and a truck manufacturer.

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[SPEAKER_08]: And the portfolio management section, we touched on evaluating companies via different metrics.

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[SPEAKER_08]: If you're interested in learning more,

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[SPEAKER_08]: Visit us at investalk.com and hit subscribe for all subscribers.

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[SPEAKER_08]: The newsletter will hit your inbox Saturday afternoons.

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[SPEAKER_08]: Well, we made it through yet another week, and we are well in, more than halfway in now, to Q1 of 20, 25.

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[SPEAKER_08]: But if you've been a long time listener, or if you're a new listener, I hope you've gleaned that no matter what the day on the calendar is the month, the quarter, our mission stays exactly the same to educate you, to answer your questions, to help make you a better and more informed investor.

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[SPEAKER_08]: Now we're going to a new break.

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[SPEAKER_08]: Up next, my main focus point on behavioral finance, we're going to talk about your brain, we're going to talk about your portfolio, we're going to talk about how you're emotions sometimes get in the way of both.

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[SPEAKER_08]: If you got that question that you want answered, give me a call at 888-99 chart.

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[SPEAKER_01]: Luke Guerrero is here, and he's ready with answers to your finance and investment questions.

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[SPEAKER_01]: Call in Vestock, 888-99, chart.

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[SPEAKER_08]: 888-99 chart is the number.

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[SPEAKER_08]: I'm getting a bit lonely, so so I'm going to pick up that phone and ask me your finance and investment question.

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[SPEAKER_08]: Till you do though, let's talk a little bit about behavioral finance.

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[SPEAKER_08]: It is I would say an area

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[SPEAKER_08]: where people often ignore what is happening.

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[SPEAKER_08]: Why is that?

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[SPEAKER_08]: People tend to ignore their emotions and don't understand how it affects their lives.

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[SPEAKER_08]: And when markets turn volatile, like they have following the tariff announcement last year

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[SPEAKER_08]: Certainly, towards the end of 2025, investor anxiety, it naturally spikes, even seasoned investors.

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[SPEAKER_08]: I can feel the urge to make seven portfolio changes during these turbulent periods.

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[SPEAKER_08]: The reality is though that many of our financial decisions are shaped less by logic and more by these built-in behavioral biases.

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[SPEAKER_08]: One of the strongest forces at work is negativity bias, our tendency to focus more intensely on dangers,

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[SPEAKER_08]: then opportunities, and that bias is understandable, right?

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[SPEAKER_08]: It evolved to protect us.

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[SPEAKER_08]: But in investing, it can distort how we perceive risk.

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[SPEAKER_08]: When markets dip, our brains often interpret temporary volatility as a lasting thread, and that reaction can push investors to sit on the sidelines or even sell out entirely, ironically, stepping aside during downturns, often means missing the recovery.

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[SPEAKER_08]: Because you don't know when that recovery is going to happen.

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[SPEAKER_08]: A major behavioral factory there is loss of version.

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[SPEAKER_08]: It's the idea that losses hurt more than the equivalent gains feel good.

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[SPEAKER_08]: So losing $10 tends to feel worse than gaining $10, even though the same $10.

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[SPEAKER_08]: In investing that means recent losses can overshadow years of strong long-term performance.

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[SPEAKER_08]: One of the ways to amplify this pain, checking your portfolio frequently.

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[SPEAKER_08]: It's a pattern known as myopic loss of version.

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[SPEAKER_08]: The more often you look, the more short-term losses dominate your emotional response.

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[SPEAKER_08]: Loss of version also contributes to this effect called the disposition effect.

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[SPEAKER_08]: Investors often hold onto losing positions too long because selling would meet admitting they lost.

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[SPEAKER_08]: At the same time, they may sell winners too quickly,

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[SPEAKER_08]: Another powerful force is our discomfort with uncertainty.

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[SPEAKER_08]: Faced with ambiguity, most people prefer a smaller, guaranteed outcome over a potentially larger but uncertain one.

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[SPEAKER_08]: During this turbulence, cash can feel psychologically safer than equities that preference for certainty may provide short-term emotional relief, but it can also limit your long-term growth.

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[SPEAKER_08]: Investors know risk.

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[SPEAKER_08]: is required to generate returns, that's what you're compensated for.

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[SPEAKER_08]: Yet ambiguity can override that understanding.

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[SPEAKER_08]: Present bias compounds the challenge.

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[SPEAKER_08]: We tend to value today's dollars, more than future dollars, even when the math clearly favors waiting.

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[SPEAKER_08]: Choosing this immediate gratification often feels better than committing to future rewards.

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[SPEAKER_08]: So in financial terms, that bias makes spending more appealing than saving and invest it.

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[SPEAKER_08]: It can also make abandoning a long-term plan feel justified in the moment.

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[SPEAKER_08]: The key to navigating volatility is recognizing these emotions and these emotional triggers rather than acting on them.

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[SPEAKER_08]: limiting how often you check your portfolio can reduce emotional overreaction to normal fluctuations, ensuring you have emergency savings and foundational protections in place can create psychological stability.

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[SPEAKER_08]: Automated investing in professional management can help maintain discipline when emotions run high.

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[SPEAKER_08]: That is at the core of it.

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[SPEAKER_08]: The primary job.

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[SPEAKER_08]: In my opinion of a financial advisor when it comes to your investments, you set these goals.

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[SPEAKER_08]: You as a person understandably have emotion associated with your savings and so you may do things that deviates from that plan.

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[SPEAKER_08]: They call it holding hands, it's there for a reason.

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[SPEAKER_08]: The ultimate investor edge in volatile markets isn't prediction.

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[SPEAKER_08]: It's the ability to stay rational

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[SPEAKER_08]: When your instincts are pulling you towards short-term sub-optimal decisions.

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[SPEAKER_08]: Looks like we got a little bit of time.

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[SPEAKER_08]: Let's see if we can fit in another question now.

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[SPEAKER_06]: Hey, guys.

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[SPEAKER_06]: It's Mike from Orange County.

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[SPEAKER_06]: I'm going to ask about Devon Energy.

20:51.650 --> 20:52.972
[SPEAKER_06]: That's DVN.

20:53.713 --> 20:56.016
[SPEAKER_06]: And I'm wondering if you could do some numbers on that.

20:56.096 --> 20:58.320
[SPEAKER_06]: And let me know what would be a good purchase point.

20:58.640 --> 20:59.061
[SPEAKER_06]: Thank you.

21:00.323 --> 21:08.899
[SPEAKER_08]: Let's talk a little bit about Devon EnergyTickerDVN, that is a name that we did used to hold for our clients.

21:08.919 --> 21:11.564
[SPEAKER_08]: I don't think we, we don't, we don't hold it for our clients.

21:12.226 --> 21:21.684
[SPEAKER_08]: At the moment, but it's a leading U.S. independent oil and gas in P, meaning that it should like most likely have been doing pretty well over the past couple of months.

21:21.704 --> 21:22.365
[SPEAKER_08]: Let's take a look.

21:24.370 --> 21:39.007
[SPEAKER_08]: You did it up 21.18% and it's a pretty good 3 months up 26.25 over the past 52 weeks up 15.15, you know, they have really good exposure to the Permian Basin, which is a huge growth area.

21:39.047 --> 21:48.218
[SPEAKER_08]: They really, the pioneers of this fixed plus variable dividend model that became the EMP industry standard for returning cash flow to shareholders.

21:48.991 --> 21:52.235
[SPEAKER_08]: No, it's been driving the stock as a bit of a transformational story in 2026.

21:52.275 --> 21:58.462
[SPEAKER_08]: They had a huge merger with Cotera Energy, which is expected to close in Q2 oil price.

21:59.183 --> 22:02.567
[SPEAKER_08]: Obviously, it's the primary earnings driver, and it's been working against them.

22:02.787 --> 22:07.072
[SPEAKER_08]: Things may be looking up here, but free castle generation, still best in class.

22:07.092 --> 22:11.537
[SPEAKER_08]: If you're trying to get energy exposure, certainly should these synergies from the merger come through?

22:12.218 --> 22:15.842
[SPEAKER_08]: I actually have no problem with Devon Energy to cure DVA.

22:16.852 --> 22:23.632
[SPEAKER_08]: On the next invest talk, we will look into the story about Japan's political shift and why the Nikkei Index was surging.

22:24.173 --> 22:28.887
[SPEAKER_08]: That's Monday, but for now I'm Luke Guerrero ready to take your calls at 888-99 chart.

22:33.507 --> 22:39.978
[SPEAKER_01]: There are a few things that make KPP financial special, one of them is parallel investing.

22:40.379 --> 22:43.684
[SPEAKER_01]: This means they invest right alongside their clients.

22:44.165 --> 22:45.147
[SPEAKER_01]: Here's how it works.

22:45.688 --> 22:53.761
[SPEAKER_01]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.

22:54.282 --> 22:58.890
[SPEAKER_01]: On the same day, at the same price, and same percentage.

22:58.870 --> 23:01.535
[SPEAKER_01]: No front running, no special treatment.

23:02.116 --> 23:06.845
[SPEAKER_01]: Learn more about Parallel Investing at Investalk.com.

23:07.526 --> 23:12.735
[SPEAKER_05]: I have a fund that I had for a 1K which showed it was a Roth IRA or whatever.

23:12.816 --> 23:14.779
[SPEAKER_05]: I have a company that I worked for years ago.

23:14.799 --> 23:20.710
[SPEAKER_05]: It was with Principal and I rolled that over into a traditional IRA account.

23:21.179 --> 23:23.001
[SPEAKER_05]: on my TD Ameritrade platform.

23:23.282 --> 23:27.608
[SPEAKER_05]: The fund is S-A-G-P-X.

23:28.349 --> 23:29.991
[SPEAKER_05]: I don't know anything about this.

23:30.271 --> 23:30.932
[SPEAKER_05]: I'm curious.

23:31.593 --> 23:46.393
[SPEAKER_05]: Would you recommend me selling this fund maybe reinvesting this in some other ETFs or equities that would perform well because I know the environment has totally changed.

23:46.762 --> 23:51.591
[SPEAKER_08]: S-A-G-P-X is the principal-sam conservative growth portfolio.

23:52.052 --> 24:02.172
[SPEAKER_08]: It's a fund of funds managed by principal, so rather than buying individual stocks or bonds directly in an invest in a basket of underlying principal mutual funds at ETS,

24:02.152 --> 24:16.871
[SPEAKER_08]: Now, despite the name conservative growth, it looks like it actually sits in morning stars at global, moderately aggressive allocation category, which can be a bit confusing, but about 60% of its exposure target is brought to US equities.

24:16.891 --> 24:24.661
[SPEAKER_08]: 20% is MSCI, EA, FE, International Development Equities, about 20% Bloomberg, Hageria Bond Index.

24:24.681 --> 24:25.662
[SPEAKER_08]: Right now,

24:26.266 --> 24:36.338
[SPEAKER_08]: It's like roughly 56% of this portfolio's exposed to U.S. stocks, about 26 international stocks, so a bit overweight in the correct direction.

24:38.080 --> 24:45.969
[SPEAKER_08]: Now, here's a crazy one, you got a front load of 5.5% meaning you're giving up 5.5% of your investment at entry.

24:47.571 --> 24:51.936
[SPEAKER_08]: You have a back load of 1% meaning you're paying 1% to redeem.

24:54.059 --> 24:57.243
[SPEAKER_08]: Poorfully, I turn over as meaning for you low that's something that we certainly like here.

24:58.485 --> 25:00.788
[SPEAKER_08]: But G's, this expense ratio is 1.15%.

25:01.008 --> 25:04.713
[SPEAKER_08]: And that's the expense ratio of this fund.

25:04.813 --> 25:07.897
[SPEAKER_08]: That doesn't even take in a consideration the underlying funds as well.

25:09.398 --> 25:17.689
[SPEAKER_08]: So you are paying a crazy amount to get exposure, you can do yourself.

25:19.131 --> 25:20.893
[SPEAKER_08]: I wouldn't sell this because

25:22.527 --> 25:24.852
[SPEAKER_08]: the market dynamics have changed.

25:25.733 --> 25:30.483
[SPEAKER_08]: I would sell this because they're just charging a lot of fees for no reason.

25:31.204 --> 25:31.825
[SPEAKER_08]: Glad you called.

25:32.447 --> 25:34.390
[SPEAKER_08]: She get out of this one as soon as you can.

25:34.410 --> 25:35.853
[SPEAKER_08]: Thanks for the call.

25:35.873 --> 25:41.023
[SPEAKER_08]: On Fridays, we generally make time to fit in a quick rundown of key benchmark numbers.

25:41.104 --> 25:44.350
[SPEAKER_08]: So let me hit you with that list right now.

25:44.887 --> 25:52.618
[SPEAKER_08]: But to your treasure yield is at 3.482% today, last week that number is 3.42, 216 weeks ago, that number is 0.64.

25:52.638 --> 26:00.048
[SPEAKER_08]: 10 year though, 408, last week it was 406, 213 weeks ago, it was 1.762.

26:00.168 --> 26:13.206
[SPEAKER_08]: Gold, $40 higher than last week, finished the day at $5,071 per ounce, 29 weeks back,

26:13.810 --> 26:17.435
[SPEAKER_08]: It feels like a lifetime ago that number was 3348, 208 weeks back.

26:17.475 --> 26:18.336
[SPEAKER_08]: The number was 1806.

26:18.536 --> 26:24.484
[SPEAKER_08]: Silver, 82, 96, $5.5 higher than one week ago.

26:24.504 --> 26:28.810
[SPEAKER_08]: 106 weeks back that number was 2280 and 200 weeks back that was 2394.

26:28.830 --> 26:36.460
[SPEAKER_08]: Oil, 66, 31 per barrel that is $3.26 higher than last week.

26:37.857 --> 26:45.669
[SPEAKER_08]: 74 weeks ago that was 67, 79, 116 weeks back that was 74, 30 and 215 weeks ago that was 66, 62.

26:47.471 --> 26:55.984
[SPEAKER_08]: National average for a gallon of regular gasoline, let's two dollars a 93 cents per gallon, a one cent decrease compared to last week.

26:56.352 --> 27:08.232
[SPEAKER_08]: 142 weeks ago that was 356 190 weeks back that was 425 and 210 weeks ago all the way back 210 weeks ago almost four years a gallon of regular gas cost 357.

27:09.694 --> 27:20.132
[SPEAKER_08]: California for 59 today a three cent increase compared to last week still lower than 119 weeks ago it was 532 and 195 weeks ago it was 587.

27:20.433 --> 27:24.440
[SPEAKER_08]: for comparison in Florida, gas is $222 per gallon on average.

27:24.941 --> 27:28.307
[SPEAKER_08]: It is $1.67 less than gas in California.

27:29.109 --> 27:35.661
[SPEAKER_02]: Janik from Denmark, I have a question regarding META, META, META.

27:35.681 --> 27:36.402
[SPEAKER_02]: Is it too simple?

27:36.903 --> 27:42.373
[SPEAKER_02]: I have this talk on retirement account that I manage for my girlfriend.

27:42.995 --> 27:46.660
[SPEAKER_02]: I haven't at least 34 years span of time.

27:47.221 --> 27:50.145
[SPEAKER_02]: I know that it's not one of your favorite companies.

27:50.225 --> 27:51.406
[SPEAKER_02]: But I'd like to hear your opinion.

27:51.526 --> 27:52.368
[SPEAKER_08]: Thank you.

27:52.388 --> 27:55.111
[SPEAKER_08]: Mehta, Mehta used to be Facebook.

27:55.131 --> 27:58.115
[SPEAKER_08]: They decided to spend a bunch of money trying to make the metaverse a thing.

27:58.155 --> 28:00.518
[SPEAKER_08]: That didn't work out, but they decided to keep the name.

28:01.119 --> 28:03.923
[SPEAKER_08]: It is the world's most dominant.

28:03.903 --> 28:06.165
[SPEAKER_08]: dominant social media ecosystem.

28:06.185 --> 28:10.068
[SPEAKER_08]: So they got Facebook, Instagram, WhatsApp, messenger, threads.

28:10.128 --> 28:16.294
[SPEAKER_08]: They have 3.58 billion daily active people globally.

28:16.314 --> 28:17.014
[SPEAKER_08]: They're revenue though.

28:17.455 --> 28:33.268
[SPEAKER_08]: Almost entirely advertising, 98% with a small and chronically lost generating segment called reality labs, which

28:33.451 --> 28:37.296
[SPEAKER_08]: It's roughly a $2.3 trillion market cap.

28:37.757 --> 28:46.928
[SPEAKER_08]: Coming actually, it's falling down to about $1.7 billion market cap, trading at 655 per share.

28:47.910 --> 28:54.058
[SPEAKER_08]: You're today down 67 basis points over the past 52 weeks down 5.64% in the past three months.

28:55.099 --> 28:58.243
[SPEAKER_08]: Up about 11.29%.

28:59.185 --> 29:05.075
[SPEAKER_08]: Now revenue growth has been solid about 18 and a half percent on an annual basis going back the past five years.

29:05.135 --> 29:23.286
[SPEAKER_08]: One of the things that's really been alarming people, understandably, is just how much money they have been spending, $26k guidance, $115 to $135 billion double the $72.2 billion that they already spent last year.

29:23.890 --> 29:26.453
[SPEAKER_08]: Now, their ad business is firing on all cylinders.

29:26.553 --> 29:29.656
[SPEAKER_08]: AI is a bit of an accelerant as well.

29:29.696 --> 29:32.900
[SPEAKER_08]: I think they have one of the cleanest AI ROI stories in tech right now.

29:32.940 --> 29:41.910
[SPEAKER_08]: So this AI driven content recommendation is really keeping people on the platform longer, which drives more ad impressions, which drives more revenue, and so on, and so forth.

29:42.390 --> 29:48.677
[SPEAKER_08]: So why we've seen Facebook ad clicks up 3.5% ad impressions up 18% is certainly something that is good for this.

29:48.757 --> 29:49.678
[SPEAKER_08]: But,

29:49.861 --> 29:51.984
[SPEAKER_08]: This is a bit of a moonshot here, right?

29:52.004 --> 29:53.567
[SPEAKER_08]: This is the dominant conversation.

29:53.587 --> 29:58.795
[SPEAKER_08]: They're essentially doubling their already record infrastructure spend in a single year.

29:59.256 --> 30:06.488
[SPEAKER_08]: And the bulk is going to data centers GPUs, third party cloud, $10 billion data center breaking ground in Indiana.

30:07.068 --> 30:14.701
[SPEAKER_08]: And I mean, they're framing it as frontloading compute capacity in order to position meta for this breakthrough towards personal superintelligence.

30:14.761 --> 30:15.582
[SPEAKER_08]: But,

30:15.562 --> 30:32.001
[SPEAKER_08]: the end of the day it's just a lot a lot of money and the open question is whether these AI models meta is building their llama model and their meta super intelligent labs whether really even creates a durable competitive advantage or whether the spend is ultimately just destroying margins.

30:32.723 --> 30:47.761
[SPEAKER_08]: Now, they've had a bit of growth on social media as well, threads, which is the response to Twitter, hit 400 million users and began rolling out this global ad inventory, but it's a rounding air in terms of the revenue.

30:47.781 --> 30:49.843
[SPEAKER_08]: There's also regular toy risk, legal risk.

30:50.003 --> 30:51.265
[SPEAKER_08]: It's real, and it's escalating.

30:51.285 --> 30:56.571
[SPEAKER_08]: The FTC is appealing its anti-trust loss on the Instagram WhatsApp acquisition case.

30:56.551 --> 31:02.617
[SPEAKER_08]: multiple child safety trials for scheduled for 2026 in the US that may ultimately result in material losses.

31:02.857 --> 31:10.905
[SPEAKER_08]: You scrutiny on ad targeting and data privacy, Russia blocking WhatsApp, Germany ordering a $36 million payment.

31:10.925 --> 31:19.693
[SPEAKER_08]: I mean, they're manageable individually, but collectively it presents meaningful litigation regulatory terrorist that's really hard to quantify.

31:19.713 --> 31:21.215
[SPEAKER_08]: Now the bull cases straightforward.

31:21.275 --> 31:22.356
[SPEAKER_08]: Meta has

31:23.365 --> 31:25.788
[SPEAKER_08]: half the plan to earth in daily users.

31:26.509 --> 31:34.139
[SPEAKER_08]: So it's the most targeted ad platform, most powerful targeted ad platform in history, but this capex is just getting too crazy for me.

31:34.520 --> 31:35.541
[SPEAKER_08]: Getting absolutely crazy.

31:35.561 --> 31:39.787
[SPEAKER_08]: It's still trading at 21 times price to forward looking earnings, about its average over the past five years.

31:40.988 --> 31:45.434
[SPEAKER_08]: I gotta see something for the money that's being spent here, and thus far, all I'm seeing is margins falling.

31:45.494 --> 31:47.857
[SPEAKER_08]: So for now, I'm gonna stay away from meta.

31:49.199 --> 31:49.980
[SPEAKER_08]: Thanks for the call.

31:50.838 --> 31:53.445
[SPEAKER_08]: Why don't we talk about copper?

31:55.531 --> 32:03.815
[SPEAKER_08]: New research suggests that the US may not have a copper supply problem, but rather a bottleneck in processing.

32:04.557 --> 32:06.282
[SPEAKER_08]: Benchwork mineral intelligence.

32:06.717 --> 32:13.023
[SPEAKER_08]: A group of analysts says that America has access to more than enough raw copper to meet domestic demand.

32:13.103 --> 32:23.712
[SPEAKER_08]: In fact, combining domestic minds scrapped overseas supplies tied to US interests, the country can cover roughly 146% of its annual needs.

32:25.014 --> 32:30.539
[SPEAKER_08]: Compare that to China, which only can meet about 40% of its copper demand through its own supply channels.

32:31.459 --> 32:34.362
[SPEAKER_08]: And therefore, the issue with copper,

32:34.949 --> 32:35.930
[SPEAKER_08]: in the United States.

32:36.892 --> 32:37.633
[SPEAKER_08]: Why is downstream?

32:37.653 --> 32:44.483
[SPEAKER_08]: We're limited smelting and refining capacity prevents raw copper from being converted into usable cathode domestically.

32:45.685 --> 32:50.912
[SPEAKER_08]: As there is all the American mine copper and scrap are often exported, frequently to China for processing.

32:52.414 --> 33:00.366
[SPEAKER_08]: Meanwhile, Washington is pursuing about $12 billion in terms of its stockpiling effort and pushing for more mine ownership abroad.

33:01.493 --> 33:05.806
[SPEAKER_08]: Moving some analysts to say, well, you're missing the real constraint here.

33:05.866 --> 33:10.440
[SPEAKER_08]: It's not that you don't have minds, it's that you can't process them.

33:11.956 --> 33:18.683
[SPEAKER_08]: Now, so argue that stockpiling rot or offers a little benefit without expanding midstream processing capacity at home.

33:18.743 --> 33:31.578
[SPEAKER_08]: And so copper prices, because the supply isn't coming online, if surged, about 40% since October amid these supply disruptions and rising demand tied to data centers and grid expansion.

33:31.618 --> 33:34.781
[SPEAKER_08]: And certainly it doesn't seem like any of that is going to slow down anytime at all.

33:36.223 --> 33:40.107
[SPEAKER_08]: China, the same time they've aggressively built out their melting capacity.

33:41.470 --> 33:42.991
[SPEAKER_08]: But their problem is on the consumption side.

33:43.812 --> 33:51.460
[SPEAKER_08]: And that over capacity in Chinese smelting has also pressured margins complicating the economics of building new facilities elsewhere without government backing.

33:52.761 --> 34:03.371
[SPEAKER_08]: So if U.S. policy makers truly want mineral self-sufficiency, the research suggests that the strategic focus should shift from digging and more to refining at home.

34:04.332 --> 34:07.275
[SPEAKER_08]: Let's finish one more a call or question before the break.

34:07.880 --> 34:15.289
[SPEAKER_07]: This is Daniel in Tennessee, and I had a question for you about how I financial ticker symbol is A-O-L-I.

34:15.910 --> 34:24.741
[SPEAKER_07]: But just curious to get your take on whether now was a good time to buy or if I should change my mind.

34:25.602 --> 34:34.173
[SPEAKER_07]: You know, everything looked good to me and, you know, just on the financial analysis, but just wanted to get your take on it as the experts.

34:34.593 --> 34:37.617
[SPEAKER_07]: I'll listen for your answer on the show.

34:38.187 --> 34:42.979
[SPEAKER_08]: Let's take a look at ally financial, understandably.

34:42.999 --> 34:49.114
[SPEAKER_08]: You could have guessed their financial company, so I would think automotive financing and insurance services.

34:49.135 --> 34:54.508
[SPEAKER_08]: 13.1 billion dollar market cap, so

34:54.640 --> 34:57.085
[SPEAKER_08]: safely and securely in the midcap range.

34:57.887 --> 35:11.215
[SPEAKER_08]: Trading about 7.7 times price to forward looking earnings, which is their average over the past five years price to book sitting at about one price to cash flow, sitting at about 3.6.

35:11.482 --> 35:12.283
[SPEAKER_08]: Turn on equity.

35:12.423 --> 35:21.457
[SPEAKER_08]: Kind of all over the place it was 19.3% in 2021 that had dipped down all the way to 4.8% in 2024, projected to be 10.9% in 2025.

35:21.477 --> 35:27.046
[SPEAKER_08]: And you're to date, they've had a bit of a rough year.

35:29.089 --> 35:34.757
[SPEAKER_08]: Down a 7% year to date and spite being up 12.11% in the past three months.

35:37.281 --> 35:38.603
[SPEAKER_08]: And so what's going on here?

35:39.562 --> 35:54.917
[SPEAKER_08]: Well, if we look at revenue, revenue growth is kind of all over the place here, meaning you have steady growth for some of this locked-in period from 10 billion to 15.2 billion when you grew it about 7.3% in an annualized basis.

35:54.997 --> 36:00.162
[SPEAKER_08]: But I mean, that certainly slowed down pretty significantly.

36:01.343 --> 36:02.324
[SPEAKER_08]: Then you look at net income.

36:02.945 --> 36:05.988
[SPEAKER_08]: Net income is actually falling in the past five years.

36:06.708 --> 36:08.590
[SPEAKER_08]: And I mentioned return on equity.

36:08.671 --> 36:10.594
[SPEAKER_08]: has thinned as well.

36:12.376 --> 36:24.814
[SPEAKER_08]: Now they are a bit of a unique bank and that it is a digital first bank and actually one of the largest auto lenders in the United States.

36:25.955 --> 36:27.117
[SPEAKER_08]: So they don't really have physical branches.

36:27.738 --> 36:32.164
[SPEAKER_08]: Which means they don't have a lot of overhead related to physical branches.

36:33.562 --> 36:35.664
[SPEAKER_08]: But I mean, they went through a pretty brutal credit cycle.

36:35.684 --> 36:40.910
[SPEAKER_08]: In 2023 and 2024 use vehicle prices collapsed off of pandemic highs.

36:41.831 --> 36:48.498
[SPEAKER_08]: Consumer to a taken out auto loans and elevated vehicle prices found themselves on their water to link with sea spike charge offs surged.

36:49.819 --> 36:50.981
[SPEAKER_08]: And that's really been the story.

36:52.723 --> 36:54.084
[SPEAKER_08]: That's really been what's going on here.

36:55.265 --> 36:59.670
[SPEAKER_08]: And so what's been driving a little bit of a recovery is credit normalization.

37:01.372 --> 37:05.837
[SPEAKER_08]: Capital returned becoming a bit of a reality of it $2 billion in buyback.

37:06.297 --> 37:07.218
[SPEAKER_08]: It's authorized.

37:08.339 --> 37:11.923
[SPEAKER_08]: Overall, it's not exciting to me if I'm being honest.

37:12.003 --> 37:17.328
[SPEAKER_08]: I mean, it's really just a classic credit cycle recovery story trading at a steep discount to its intrinsic value.

37:18.570 --> 37:24.015
[SPEAKER_08]: If normalization continues, fine, if capital return, which is already in motion continues, fine.

37:24.776 --> 37:30.822
[SPEAKER_08]: But it's risk is highly macro sensitive and any consumer credit deterioration,

37:31.072 --> 37:31.693
[SPEAKER_08]: pretty quickly.

37:32.594 --> 37:34.737
[SPEAKER_08]: And so for an al, I'm hesitant.

37:34.757 --> 37:36.399
[SPEAKER_08]: I'm hesitant to add it to my portfolio.

37:36.419 --> 37:37.420
[SPEAKER_08]: I'm not terrified of it.

37:38.562 --> 37:40.505
[SPEAKER_08]: But the downside risks are pretty real.

37:40.525 --> 37:43.148
[SPEAKER_08]: That's ally financial ticker AL, LY.

37:45.812 --> 37:46.553
[SPEAKER_08]: Well, we almost did it.

37:47.093 --> 37:52.741
[SPEAKER_08]: We almost made it through yet another week, but we still have a little bit more to go.

37:52.761 --> 37:55.184
[SPEAKER_08]: A couple more questions to answer.

37:56.646 --> 37:57.467
[SPEAKER_08]: Still more to do.

37:58.696 --> 38:03.252
[SPEAKER_08]: This is Invest Talk, I'm Luke Guerrero, we have one goal here to help you achieve your financial freedom.

38:03.934 --> 38:09.212
[SPEAKER_08]: Our work continues after a final break, so get your questions in now at 888-99 chart.

38:17.275 --> 38:25.345
[SPEAKER_01]: The weekend is here or almost here, but you've got finance and investment questions, so step up and call in.

38:25.925 --> 38:26.706
[SPEAKER_01]: Invest talk.

38:27.087 --> 38:28.168
[SPEAKER_01]: 888-99.

38:28.889 --> 38:29.229
[SPEAKER_01]: Chart.

38:30.131 --> 38:31.252
[SPEAKER_04]: Just in a loop.

38:31.272 --> 38:32.333
[SPEAKER_04]: Thanks for everything you do.

38:32.814 --> 38:33.575
[SPEAKER_04]: Chuck from Clayton.

38:34.336 --> 38:37.539
[SPEAKER_04]: I'm looking at Mueller Industries in L.I.

38:37.760 --> 38:39.041
[SPEAKER_04]: Mary Lincoln, Ida.

38:39.522 --> 38:42.025
[SPEAKER_04]: It's about three and a half percent of my portfolio.

38:42.686 --> 38:46.270
[SPEAKER_04]: I like it because of the Maryland industry.

38:46.537 --> 38:52.172
[SPEAKER_04]: I was thinking about adding more of it to my portfolio, but wanted to get your idea on how this company does.

38:52.533 --> 38:53.235
[SPEAKER_04]: Thank you very much.

38:54.098 --> 39:01.558
[SPEAKER_08]: Muller Industries is, I would say, the dominant, more North American manufacturer of copper, brass, and aluminum products.

39:01.825 --> 39:14.139
[SPEAKER_08]: In fact, the only vertically integrated producer of copper tube fitting brass rod and forgings on the entire continent and that vertical integration is really the core of its competitive mode.

39:14.159 --> 39:30.178
[SPEAKER_08]: And one of the reasons why it's up 49.02% over the past 52 weeks, up 4.60% year to date up 14.88% over the past three months and revenue growth solid.

39:30.817 --> 39:35.304
[SPEAKER_08]: 11.7% on an annualized basis and pretty even across the board.

39:35.344 --> 39:49.688
[SPEAKER_08]: I mean, 2020 into 2021 was a solid year, but still growing from 4.1 to 4.5 billion year over year, that's pretty good, especially for an on-energy material company.

39:50.649 --> 39:55.457
[SPEAKER_08]: Let's look at their profitability, 18.3% net margin.

39:55.690 --> 39:57.893
[SPEAKER_08]: projected to be 15.8% next year.

39:58.234 --> 40:00.978
[SPEAKER_08]: Return on equity, 25.6%.

40:01.339 --> 40:08.350
[SPEAKER_08]: And I mean, they're trading at the upper end to their five-year valuation range, sitting at about 16.7 times, price to four-looking earnings.

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[SPEAKER_08]: Their average is 11.4 at the highest 18.3.

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[SPEAKER_08]: So what is a big expensive?

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[SPEAKER_08]: But the copper prices are the dominant earnings lever here.

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[SPEAKER_08]: And the AI data center and energy transition tailwinds, they're structural.

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[SPEAKER_08]: They also did a good job integrating acquisitions in 2025.

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[SPEAKER_08]: And they explicitly benefit from trade protectionism.

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[SPEAKER_08]: And what we saw today after Supreme Court ruling immediately putting tariffs back in place in it under a different authority, doesn't seem like the administration is gonna drop that.

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[SPEAKER_08]: That seems to be the president's signature policy.

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[SPEAKER_08]: And so when you see margin expansion sustained like this, I'm willing to pay a little bit more.

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[SPEAKER_08]: Now Q4EPS,

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[SPEAKER_08]: did miss a little bit, but that was almost entirely attributable to the 18.2 million unrealized hedge loss, essentially an accounting artifact of copper prices rising faster than Mueller's hedges were marked.

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[SPEAKER_08]: So it's not an underlying business situation, right?

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[SPEAKER_08]: It's a derivative accounting timing issue.

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[SPEAKER_08]: So when copper prices rise sharply for it hedges that were placed at lower prices, will they show mark to market losses?

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[SPEAKER_08]: The underlying volume and revenue picture, it was solid plus 4.2% on revenue.

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[SPEAKER_08]: And so the stock pulled back, and it may be an opportunity here.

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[SPEAKER_08]: Now there are some key risks, construction activities, the core volume driver for their piping system, so any meaningful

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[SPEAKER_08]: Deviation and housing or commercial construction slowdown, so higher for longer rates, rates moving higher again, dampening homebuilder activity, at precious volumes of corporate prices, reverse sharply the revenue passed through works in reverse, and edge game losses create another accounting headache.

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[SPEAKER_08]: But the valuation case is wrong, especially compared to its peers that average 29 to 33 times price to forward looking earnings.

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[SPEAKER_08]: It's a bit of a quality cheap quality in the industrial space.

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[SPEAKER_08]: So bottom line here is to me it seems high quality, appropriately valued.

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[SPEAKER_08]: It has a very durable

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[SPEAKER_08]: ticker m li.

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[SPEAKER_08]: Well, we do not have any time left, unfortunately, to go over that other story I wanted to bring you today.

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[SPEAKER_08]: But I do want to remind you that if you have not already to check out our Invest Talk YouTube channel, just head over to YouTube and type in Invest Talk with two T's.

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[SPEAKER_08]: Because we have started to bring you bit of a different, different video series.

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[SPEAKER_08]: Let me post it our first one today.

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[SPEAKER_08]: Our focus points on this podcast, we're gonna go in deeper on our YouTube channel.

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[SPEAKER_08]: 20, 25 minutes.

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[SPEAKER_08]: Bringing you the information you need to know.

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[SPEAKER_08]: It's all free and it's all ready over on our YouTube channel.

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[SPEAKER_08]: I'm Luke Guerrera and this completes another episode of Invest Talk.

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[SPEAKER_08]: Justin and I thank you for listening and encourage you to tell your friends and family members about our free podcast at downloads.

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[SPEAKER_08]: You can get those at iTunes in Spotify and while you're over on iTunes, please be sure to leave us a rate and review.

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[SPEAKER_08]: One other thing I wanted to highlight are practice of parallel investing where when we make trades for our clients, we make the same trade for ourselves on the same day, same price, same percentage, no front running, no special treatment.

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[SPEAKER_08]: We invest right alongside our clients.

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[SPEAKER_08]: We share the same risks and potential for success.

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[SPEAKER_08]: That's how we build trust.

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[SPEAKER_08]: That sounds interesting, head over to investalk.com to learn more.

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[SPEAKER_08]: Independent Thinking, shared success.

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[SPEAKER_08]: This is Invest Talk.

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[SPEAKER_08]: Enjoy your weekend.

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