[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers.

[SPEAKER_01]: 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_02]: Good afternoon fellow investors and welcome back to

[SPEAKER_02]: Hope everyone made it to the deadline.

[SPEAKER_02]: It made it in on the deadline by the deadline, shall we say.

[SPEAKER_02]: Nobody likes paying taxes, but it is a fact of life, right?

[SPEAKER_02]: Let's see, death in taxes.

[SPEAKER_02]: And here we are.

[SPEAKER_02]: Certainly many moving parts in today's markets, including taxes, as well as geopolitical risks, as well as

[SPEAKER_02]: Shifts in different sectors, AI, all of this impacts the current trend that we're seeing right now.

[SPEAKER_02]: Which means you probably have finance and investment questions for me.

[SPEAKER_02]: So, so we encourage you to call 24 hours a day, 7 days a week, whether you're listening on the live stream or after hours it doesn't matter.

[SPEAKER_02]: becomes your mind, you're thinking about it, give us a call.

[SPEAKER_02]: Now I'm Justin Collin and my goal here is to help you become a better investor.

[SPEAKER_02]: We're going to make the most of this hour.

[SPEAKER_02]: By once again, answering your finance and investment questions, bring new data, perspective that help you will help you make better decisions with your money.

[SPEAKER_02]: Help you go into the decision-making process with your eyes wide open with the right mindset.

[SPEAKER_02]: With a mindset that's grounded in reality, not headlines or emotions or political bias or anything like that.

[SPEAKER_02]: So that's what this hour will be about.

[SPEAKER_02]: And in just a bit, we'll talk about today's Mark performance as usual.

[SPEAKER_02]: We'll also discuss or preview the topics we'll hit on for the hour.

[SPEAKER_02]: But as usual, we'll tackle this first call a question now.

[SPEAKER_04]: This is Josh Cohen from the UK.

[SPEAKER_04]: This is a company I've owned for quite a while and I was wondering if you thought this would make the kind of a good area to appreciate it.

[SPEAKER_04]: Thank you.

[SPEAKER_02]: Good area to pick it up or to trim it.

[SPEAKER_02]: I think you said pick it up but he said he owned it so I'm a little confused.

[SPEAKER_02]: But this is some ex.

[SPEAKER_02]: This is a large one of the largest cement producers out of Mexico.

[SPEAKER_02]: Historically, it's been a fairly volatile name that bottomed in 2020 around $1.60.

[SPEAKER_02]: Now it's of $11.88.

[SPEAKER_02]: Does have some dead in its balance sheet, but that's been repaired over the last number of years, 10 years ago.

[SPEAKER_02]: on a markup of 15, 17 billion, excuse me.

[SPEAKER_02]: Free cash flow of 734 million.

[SPEAKER_02]: It's down from it's all time I decade ago at about 1.8 billion.

[SPEAKER_02]: But that's still pretty decent free cash flow yields, right around 5% or so.

[SPEAKER_02]: Got a huge dividend, but you don't buy this for the revenue by it for

[SPEAKER_02]: The cyclical nature of its business and right now you continue to see increasing demand for infrastructure for cement for building etc.

[SPEAKER_02]: But ultimately, their strength is being our closest neighbor and big, a straightening partner.

[SPEAKER_02]: It has pulled back recently, literally touched the two-day moving average back in late March and has bounced nicely.

[SPEAKER_02]: Overall, it's in a bullish uptrend, relative strength is 90, very strong.

[SPEAKER_02]: So it's a name I'd probably continue to hold.

[SPEAKER_02]: If you want to buy it here and add more to it, that's fine as well.

[SPEAKER_02]: Understand, though, that this is probably not a set it for get it 10-year-old or anything like that.

[SPEAKER_02]: When the cycle turns, this will certainly struggle.

[SPEAKER_02]: Mainly because it's cyclical, but also a byproduct is that there are generally a price taker.

[SPEAKER_02]: Sement, the cement for the most part.

[SPEAKER_02]: And that's why their profit margins are relatively thin, return equity only 3%, operating margin is about 11%.

[SPEAKER_02]: That's good, but they need to surface their debt.

[SPEAKER_02]: Hey, they're dividend, et cetera.

[SPEAKER_02]: So I kind of like it, but only for the near term.

[SPEAKER_02]: No, we have a lot to cover over the next hour, hour, 40 minutes left in the show.

[SPEAKER_02]: Our main focus point is about custodial investing.

[SPEAKER_02]: Is that type of account right for your kids?

[SPEAKER_02]: We'll talk about the pros and cons.

[SPEAKER_02]: Because research shows that children who develop health, a healthy relationship with money early, in life, end up in a significantly better financial position as adults.

[SPEAKER_02]: So we'll look

[SPEAKER_02]: and explore practical strategies for instilling sound, financial habits in your kids, maybe to your kids, maybe to your grandkids, maybe to cousin or nephew, whatever it is, we're going to go over that.

[SPEAKER_02]: In addition, we'll have other topics on the docket as well.

[SPEAKER_02]: I want to look at the shale regions of the United States, how are they doing when it comes

[SPEAKER_02]: energy market now, talk about us being energy self-sufficient, and that's kind of true.

[SPEAKER_02]: We still import more oil than we export.

[SPEAKER_02]: We also export a lot of natural gas, but that comes with its own issues.

[SPEAKER_02]: So we'll look at that.

[SPEAKER_02]: We'll also look at home builders.

[SPEAKER_02]: Home

[SPEAKER_02]: on there, spending when it comes to new builds, and then we'll also look at if we have time defense spending, how durable, what's the type of economic growth, durable economic growth that can create.

[SPEAKER_02]: We also have voice bank questions, one is on a Vanguard emerging market, mutual fund, as well as NHP National Healthcare Properties.

[SPEAKER_02]: And of course, as always, questions that came in, via the comment section over on the Invest Talk YouTube channel, as well.

[SPEAKER_02]: But most importantly, we'll be your live calls.

[SPEAKER_02]: So if you call live, 45 Pacific time, every week day, you will get in front of line.

[SPEAKER_02]: We love your live calls and encourage you to reach out for the same via our live stream or maybe on damn 1220 in the Bay Area.

[SPEAKER_02]: You can call right now.

[SPEAKER_02]: But we're gonna head into a quick break and up next, I'll comment on today's market activity.

[SPEAKER_03]: When you tell your friends about Investork and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investorkos Justin Klein.

[SPEAKER_03]: Parallel investing means Justin invests right alongside KPP Financial clients.

[SPEAKER_03]: He makes the same trade for KPP Financial on the same day at the same price and the same percentages as KPP clients.

[SPEAKER_03]: There's no front running and no special treatment.

[SPEAKER_03]: In this way, Justin and KPP Financial share the same risks and the same potential for success.

[SPEAKER_03]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.

[SPEAKER_03]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.

[SPEAKER_03]: And you can learn more anytime at Investalk.com.

[SPEAKER_03]: The Invest Talk phone lines never close, and now Justin Klein is here taking your calls live.

[SPEAKER_02]: Invest Talk, 88899 chart.

[SPEAKER_02]: two weeks ago, I don't think anybody would have guessed that, but yet here we are.

[SPEAKER_02]: SB up about 80 basis points on the day NASDAQ of 1.6% on the day.

[SPEAKER_02]: It was really driven by

[SPEAKER_02]: A rally, a kind of shit, really.

[SPEAKER_02]: I talked about it if you actually go watch my YouTube video.

[SPEAKER_02]: I encourage everyone to do it.

[SPEAKER_02]: If you understand what's going on in the market, it go over all the charts, all the economic data, give you an overview of how things are trending.

[SPEAKER_02]: Now, I got some things right, and I got some things wrong on that video.

[SPEAKER_02]: The one right thing that I got was, it looked to me like capitulation in software.

[SPEAKER_02]: I was looking at the IGV, the most popular cloud computing software ETF had this huge volume on 3 days cell-off, mid-incremental low, but really didn't break down considerably.

[SPEAKER_02]: And I said this feels like a capitulatory event.

[SPEAKER_02]: You had, what did you have up big today?

[SPEAKER_02]: So if I was a 5% Robinhood up 10% or some of the big movers, a lot of them were quantum computing names and just looking at these lists.

[SPEAKER_02]: But names like, actually let me put up bring up the heat map.

[SPEAKER_02]: Things like Broadcom up 4% Microsoft up 4, Tesla up 7, you had, let's see, Intel up 1.7% Oracle up 4,

[SPEAKER_02]: pounds here up about 5% sales force at 3.7, app loving up 7 into it up 6.

[SPEAKER_02]: So you can see a lot of the software named service now up 7% on the day.

[SPEAKER_02]: Though that does this mean that the ultimate bottom is here for software, not necessarily.

[SPEAKER_02]: Would you have to realize about

[SPEAKER_02]: bear markets in an asset class or a sector is that the rallies are often strong just in a bear market.

[SPEAKER_02]: And then they, okay, that's because it's a lot of short covering and I think that's what you're seeing right now in markets is just short covering, not just in software, but kind of across the board.

[SPEAKER_02]: Ultimately, it does usually lead to a rollover and the downtrend continuing, but, you know, it can bounce for a number of weeks.

[SPEAKER_02]: The main optimism more broadly is about President Trump telling Fox News that he believes the U.S. Iran war is very close to being over.

[SPEAKER_02]: I still abide that.

[SPEAKER_02]: It's pretty clear that there's no going back to

[SPEAKER_02]: Two months ago, the outcome here is either, in my mind, around just continues to keep the streets of our moves closed, or they negotiate a path towards a nuclear weapon.

[SPEAKER_02]: Three of those are kind of the outcomes, because,

[SPEAKER_02]: If you take both of those away, that significantly weakens around geopolitically.

[SPEAKER_02]: That's just understanding the dynamics of geopolitics.

[SPEAKER_02]: So to me, this is going to drag on for some time.

[SPEAKER_02]: And you're going to get this ping pong between headlights, positive and negative.

[SPEAKER_02]: Remove 10,000 troops over there.

[SPEAKER_02]: You don't usually move 10,000 troops halfway around the world.

[SPEAKER_02]: If you're not going to use them to some degree.

[SPEAKER_02]: So to me, this is a military buildup that's happening.

[SPEAKER_02]: It's probably going to turn into more escalation in the coming months.

[SPEAKER_02]: Best is based on the evidence and history.

[SPEAKER_02]: Now, maybe the resolution does come a little earlier than expected, but to me, I think this does drag on.

[SPEAKER_02]: Now, the Fensilez beige book was also put out, it observed that economic activity grew modestly overall with a stable labor market, limited AI impact, although geopolitical risks were rising as well as impact costs.

[SPEAKER_02]: They're like that as a concern.

[SPEAKER_02]: Empire State Manufacturing Index came at plus 11 versus consensus negative point five, so that was positive.

[SPEAKER_02]: The price is paid increased from plus 36 to plus 51.

[SPEAKER_02]: So you continue to see a very inflationary environment.

[SPEAKER_02]: Braids were up two to three bases points across the curve, so treasuries were a bit weaker on that side.

[SPEAKER_02]: Dollar index was down point.

[SPEAKER_02]: One gold down point six silver up point one Bitcoin work.

[SPEAKER_02]: It was up 1% WTI crude roughly flat as we kind of still hang around this 90 to 100 L per barrel number with a lot of risk in both directions, depending on how this all resolves.

[SPEAKER_02]: So that was the market today, but we're going to move into a break, David from San Jose once talked about CRM salesforce on AM 1220, so hang on you'll be next.

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

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

[SPEAKER_03]: So when you've got finance and investment questions, don't forget to call Invest Clark, 888-99-Chart.

[SPEAKER_02]: Let's go talk to David.

[SPEAKER_02]: He is in San Jose looking at Salesforce C. R. M. Do you underlooking a buyer?

[SPEAKER_06]: Well, I have a small position and just wondering if I should add to it or due to the AI and certainties of its impact, uh, sell it.

[SPEAKER_02]: Well,

[SPEAKER_02]: Near-term, as I said a little bit earlier on the show, what looks to be in the midst of at least a short-covering rally in software, in SaaS businesses like Salesforce, they were oversold, and now they were due, and you're getting that rally.

[SPEAKER_02]: Salesforce has kind of under-perform even admits this rally so that's something to be concerned about.

[SPEAKER_02]: I do think longer term I have an issue with Salesforce and just CRM companies in general because I think over time this type is just a database.

[SPEAKER_02]: It's going to be very

[SPEAKER_02]: Companies or, yeah, companies can start to create their own databases, pretty easily using AI, spinning up some software their own CRM in some ways that's probably more customizable to their industry.

[SPEAKER_02]: You know, for example, we use a CRM called red tail.

[SPEAKER_02]: This is specific to financial advisory businesses.

[SPEAKER_02]: So we're lucky there's one that's already kind of designed for.

[SPEAKER_02]: companies like ours.

[SPEAKER_02]: But that's not the case for every vertical, right?

[SPEAKER_02]: I know sales force does have their own.

[SPEAKER_02]: They have some niche ones specific ones.

[SPEAKER_02]: They do have one for financial advisors as well.

[SPEAKER_02]: I think they have a medical one.

[SPEAKER_02]: They have some niche ones.

[SPEAKER_02]: But obviously, it's better if you have your own that's fully customizable for your use case for your purposes.

[SPEAKER_02]: clog, clog code for most companies to spin up their own custom CRM in time.

[SPEAKER_02]: So to me, this is I would be looking for an exit on a rally.

[SPEAKER_02]: I wouldn't be selling it now because like I said, the industry's very oversold probably could get a strong short-covering rally, but if this

[SPEAKER_02]: low 200s between say 210 and 225 in that range.

[SPEAKER_02]: That's an area I would probably step in, be stepping out of Salesforce.

[SPEAKER_02]: I think there are opportunities within software where it's not quite as easy to just have cloud code with you up something that's very similar.

[SPEAKER_02]: But I don't think Salesforce is that.

[SPEAKER_02]: I think there is some existential risk to the name over the long term.

[SPEAKER_02]: Now, it's demise is probably not this year, next year, even the year after, it's probably something more and over a 10 year time period.

[SPEAKER_02]: But over that period, this is going to be a very volatile name with big rallies, big sell-offs.

[SPEAKER_02]: But I think you are in the midst of a big rally in the short term.

[SPEAKER_02]: That makes sense?

[SPEAKER_02]: Perfect.

[SPEAKER_02]: Thank you.

[SPEAKER_02]: No problem.

[SPEAKER_02]: Thanks for the call.

[SPEAKER_02]: Let's go answer a YouTube question, Matya Matya says, hey guys, what are your thoughts on Comcast?

[SPEAKER_02]: CMCSA, I have a small position already.

[SPEAKER_02]: Would you not be a good time to add more?

[SPEAKER_02]: CMCSA.

[SPEAKER_02]: So this is an interesting name.

[SPEAKER_02]: It's a name that a lot of people don't like.

[SPEAKER_02]: And you can tell that because,

[SPEAKER_02]: earnings this year, so it'll be $3.50, so it's then down 19%, but then bounce back 10% next year, $3.85.

[SPEAKER_02]: But it's a $28 stock.

[SPEAKER_02]: You're talking about a 7 multiple.

[SPEAKER_02]: Very low, $100 billion mark a cap, free cash flow, $19 billion.

[SPEAKER_02]: Then they do have a good amount of debt, about $96, $95

[SPEAKER_02]: So a lot of that cash flow is going to go to servicing that debt, potentially paying down that debt, paying the dividend, which is the pay ratio is only 25%.

[SPEAKER_02]: So I think it can continue to pay that.

[SPEAKER_02]: What is it doing with that cash flow?

[SPEAKER_02]: It's actually buying back shares pretty aggressively, which at a seven PE, how does it make sense?

[SPEAKER_02]: The mid-teens earnings yield.

[SPEAKER_02]: Hard argue with that.

[SPEAKER_02]: The better return than paying off that,

[SPEAKER_02]: So I like the capital allocation.

[SPEAKER_02]: Let me go look at a daily chart here.

[SPEAKER_02]: It bought them in the fall.

[SPEAKER_02]: It isn't going up.

[SPEAKER_02]: I am giving this a thumbs up.

[SPEAKER_02]: I like the valuation.

[SPEAKER_02]: The chord cutting is, I think, mostly behind them.

[SPEAKER_02]: They still provide internet services.

[SPEAKER_02]: Once again, their cash flow is very steady, very strong.

[SPEAKER_02]: And so I'm gonna give TomCast,

[SPEAKER_02]: a thumbs up as a devalue blade.

[SPEAKER_02]: Their free cash flow is now at an all-time.

[SPEAKER_02]: Hi.

[SPEAKER_02]: It's like a bargain to me.

[SPEAKER_02]: Now, the next investor talk we're looking to this topic.

[SPEAKER_02]: The resilient market paradox, why stocks keep holding up despite chaos, even with the Iran War, a Hormuz blockade, oil's hopping 100 and failed peace talks to stock market is shown remarkable resilience, leaving many investors puzzled and cautious on equal measure.

[SPEAKER_02]: We will dig into what rules really holding markets up and whether the resilience is a sign of strength or dangerous complacency.

[SPEAKER_02]: We'll get to that story.

[SPEAKER_02]: Tomorrow but for now I'm Justin Klein and ready to take your calls any time and edit it at 99 chart.

[SPEAKER_03]: The official numbers are in now with 62 million downloads in Vestart, listen live or download the free podcast, call anytime 88899 chart.

[SPEAKER_02]: We're going to take a live call at Chris from Walnut Creek, wants to talk about the space X IPO.

[SPEAKER_05]: Hi, thanks for taking my call.

[SPEAKER_05]: I've been investing in a mutual fund through my 403B and 457 plan for, I think, since around 2015, I've been buying this particular fund and looking at what it holds the other day, and I noticed that it has about 1.3% SpaceX from early round buying, I guess, in 2015,

[SPEAKER_05]: couple years after or something.

[SPEAKER_05]: Yeah.

[SPEAKER_05]: And so I'm wondering what is kind of a significant portion of the fund that I'm wondering if the IPO is so large, what does that mean that I'm going to have three or four percent of SpaceX in my fund or how that works for

[SPEAKER_05]: the IPO and our mobile air.

[SPEAKER_02]: Yeah, potentially, all of those are are variable.

[SPEAKER_02]: It depends on what it's marking the value of that as it's part of its nav, net asset value currently, and then what the evaluation is upon IPO, what the valuation is upon actually trading, you know, could rally of considerably upon trading and it could double triple quadruple from

[SPEAKER_02]: based on Nav right now.

[SPEAKER_02]: They could also be selling into that.

[SPEAKER_02]: If they were smart investors, they probably would do that.

[SPEAKER_02]: If they were good risk managers, they would probably sell into these IPOs because typically they're overpricing overvalued, which gives opportunity for early investors to exit, including

[SPEAKER_02]: Insiders.

[SPEAKER_02]: So to answer your question is, I don't know, it could be a lot of things.

[SPEAKER_02]: You never know what those fund managers are going to do.

[SPEAKER_02]: What does their perspective say?

[SPEAKER_02]: Do they have limits on how much exposure they can have to one company, one sector, etc.

[SPEAKER_02]: It's all really up in the air.

[SPEAKER_05]: Okay.

[SPEAKER_05]: Thank you.

[SPEAKER_05]: Appreciate it.

[SPEAKER_02]: No problem.

[SPEAKER_02]: Thanks for the call.

[SPEAKER_02]: Then my main focus point today is about custodial investing, custodial accounts and really just any type of account for kids.

[SPEAKER_02]: That you've probably spent many years learning about money, parents probably didn't teach you much, learning about balancing spending, saving is probably mostly trial and error.

[SPEAKER_02]: Probably most of you want to give that wisdom that you've learned throughout the years to your kids or grandkids.

[SPEAKER_02]: Teach them good money management habits, investment habits, the power of compound growth that can bring future financial security.

[SPEAKER_02]: And one great way to do that is, by opening a custodial brokerage account for them.

[SPEAKER_02]: This is where the child generally owns the investments or the assets within that account.

[SPEAKER_02]: But the adults control deposits, withdrawals,

[SPEAKER_02]: The child reaches the ability, 18 or 21 depends on what state you reside in.

[SPEAKER_02]: And then also determines whether it's called a atma or a UGMA, atma is universal transfer to miners act, UGMA is universal gift to miners act, either way they operate very similarly.

[SPEAKER_02]: There's also custodial Roth IRAs, if they have earned income, so maybe they have to work whereas atma's UGMAs, they don't have to having income for any type of Roth you have to have earned income.

[SPEAKER_02]: others 529 plans, that's obviously state sponsored, tax advantage, it's good way for parents to put money away for future educational expenses, but UGMAs almost there a lot more flexible.

[SPEAKER_02]: And once again, they're, they're your child's own by your child.

[SPEAKER_02]: So all of these give you an opportunity to teach your kids about financial literacy in the real world, real world applications.

[SPEAKER_02]: involving your kids helps them set goals, understand where money is invested, which helps foster discipline, patience, and confidence once they do hit adulthood.

[SPEAKER_02]: Now, a lot of people don't know how the taxes work with these, and at the simplest level, any investment income in a custodial brokerage account, such as dividends, interest, capital gains, taxed, are taxed to the child.

[SPEAKER_02]: Even if the parent manages it and controls it.

[SPEAKER_02]: And you can give them money, up to the annual exclusion of 19,000 for last year in this year, no gifting tax filing is required as long as it's below that number.

[SPEAKER_02]: So you can fund this account up to that amount, each year.

[SPEAKER_02]: But your child-paced taxes on the investment income, but only above a certain threshold.

[SPEAKER_02]: So for example, this year, it's $1,350.

[SPEAKER_02]: a standard deduction for kits.

[SPEAKER_02]: Basically, anything up to $1,350 dollars is investment income to your child, anything above.

[SPEAKER_02]: Sorry, $1,350 is the initial deduction.

[SPEAKER_02]: So no taxes there.

[SPEAKER_02]: The next $1,350 is tax to your child.

[SPEAKER_02]: There we go.

[SPEAKER_02]: And then above the $2,700, so $1,350 times too, that is tax at the parents rate.

[SPEAKER_02]: Okay, so this count gets pretty big.

[SPEAKER_02]: It can add up when it comes to dividends, et cetera.

[SPEAKER_02]: Now the one thing you have to remember is the gift is permanent.

[SPEAKER_02]: You can't take the money back.

[SPEAKER_02]: It is your child's legally belongs to your child.

[SPEAKER_02]: It cannot be taken back redirected to another beneficiary.

[SPEAKER_02]: Like a 529 can, right?

[SPEAKER_02]: 529 you put money in and they don't go to college or they don't use it.

[SPEAKER_02]: You can actually change who is the beneficiary of the 529.

[SPEAKER_02]: And you can't change the rule of when they take control of it.

[SPEAKER_02]: Based on state that you're in, it's with your 18 or 21.

[SPEAKER_02]: No matter what the parent's original intent made, you can't say, oh, I want it to be 25, but I want it to be 30.

[SPEAKER_02]: Doesn't work like that.

[SPEAKER_02]: Now, the downside to this is, whatever money is in there, actually counts against student assets or counts as student assets.

[SPEAKER_02]: When filing for financial aid, could reduce aid eligibility.

[SPEAKER_02]: Whereas the 529 plan is considered parental assets, because the parent is the account owner, the child is just the beneficiary.

[SPEAKER_02]: So won't have as much of an impact on financial aid.

[SPEAKER_02]: So if you do want to get financial aid or you want your child to get a financial aid in college, you have to think about that before setting up some sort of custodial account.

[SPEAKER_02]: But either way, these are great ways to get your child up to speed.

[SPEAKER_02]: On how investments work, how money works, et cetera.

[SPEAKER_02]: And one thing you want to do when setting up this account to make sure there's no account minimum, no commissions, no monthly maintenance fees, try to set up a bit of broker with his fractional share investing so they don't have to buy.

[SPEAKER_02]: a whole share of a very expensive stock, like a Berkshire Halfway, for example, they can buy small increments.

[SPEAKER_02]: Strong mobile app is good too, so that they are able to access it and see what's going on in track of progress.

[SPEAKER_02]: Education of resources would be great too.

[SPEAKER_02]: I've used a thing called Greenlight, so that's something to think about as well.

[SPEAKER_02]: They're listening back to the Best Type Boys Bank for a question that came in earlier at 80, 99 chart.

[SPEAKER_00]: I just nilic assist Tyler and Los Angeles, I currently have a few different illiquid alternative investments that I've had for many years.

[SPEAKER_00]: I know you're not fans of these.

[SPEAKER_00]: I'm not a fan of him either and won't buy anything like this again, but I didn't know any of that when I made these purchases so I'm sort of stuck.

[SPEAKER_00]: One of them is national healthcare properties.

[SPEAKER_00]: It's a non-traded read that hasn't had a liquidity event.

[SPEAKER_00]: Since 2020, based on what I've heard from the show and about how these private investments are valued in the lack of transparency and reliability, I've basically just considered this to be dead money.

[SPEAKER_00]: That said, this particular investment recently filed for an IPO under the ticker NHP with a planned public offering leader this year, which is why I'm calling.

[SPEAKER_00]: I've heard you say that socks like this or stocks generally typically decline in the year post IPO.

[SPEAKER_00]: My assumption is if it's more often than not a bad investment to purchase a stock when it's first IPOs, and I'm holding a stock that could soon become liquid in the event of an IPO, I should probably sell it as soon as I'm able to.

[SPEAKER_00]: Perhaps most important note here is that I'm not too concerned with the valued IPO, it's a relatively small position.

[SPEAKER_00]: in my tax portfolio.

[SPEAKER_00]: And as I mentioned, I basically just considered it to be dead money.

[SPEAKER_00]: So I'd be happy to get anything back at this point.

[SPEAKER_00]: That said, it wouldn't hurt to get your opinion here.

[SPEAKER_00]: I do own other alternative investments that are also planning IPOs.

[SPEAKER_00]: So it would be great to understand your opinion on these situations for when they come up.

[SPEAKER_00]: Really respect your perspective and appreciate anything that you're able to share here in terms of what I should do next.

[SPEAKER_00]: Thanks so much.

[SPEAKER_00]: I'll be listening on the podcast.

[SPEAKER_02]: Thank you for the call.

[SPEAKER_02]: And this is a great question.

[SPEAKER_02]: I love this question, a lot of good lessons to discuss here, a lot of concepts to discuss.

[SPEAKER_02]: Number one, like you said, illiquid investments, you thought it was dead money.

[SPEAKER_02]: And sometimes it is, sometimes they come back from the dead and you get into a market where there's enough liquidity, the IPO market's hot, and they can go public.

[SPEAKER_02]: So this looks like it's going public.

[SPEAKER_02]: And about $13 to $16 per share, evaluation about a 1.1 billion, let's see, what was the date I'm just looking at?

[SPEAKER_02]: This article here, that was April 13th.

[SPEAKER_02]: Okay, so just a couple days ago.

[SPEAKER_02]: So yeah, it looks like they're planning that.

[SPEAKER_02]: I'm not sure the exact date or when they plan to do it, but yeah, so first thing about IPS,

[SPEAKER_02]: I tend to say IPOs are bad investments, mainly because the insides of trying to get out including yourself, early investor, a lot of times it's management as well, is just trying to get liquidity.

[SPEAKER_02]: And they're doing that, trying to do that at a high price, they invest in banks that are taking them public or trying to get a high price because they get a percentage of total amount raised all of that.

[SPEAKER_02]: Now, the positive here, at least in the short term, is that it's not an over-hyped IPO, right?

[SPEAKER_02]: These are small names.

[SPEAKER_02]: It's usually applies more to the spaceships of the world, the big public facing ones, where there's a lot of hype and over-valuation, a lot of initial demand for the stock.

[SPEAKER_02]: Here that doesn't seem to be a lot of that.

[SPEAKER_02]: So I would try to assess it based on its cash flows, all that once they have their going public, they're gonna have to reveal to the public exactly what the finances look like.

[SPEAKER_02]: So I wouldn't necessarily sell it right away.

[SPEAKER_02]: I would look to see maybe how it trades in the short term and often times in the first three to six months, especially six months, it has the whole depth pretty well.

[SPEAKER_02]: Why?

[SPEAKER_02]: Because it's a lock-up period.

[SPEAKER_02]: Where the insiders can't sell after the initial, around they sell initial amount and then they,

[SPEAKER_02]: are locked up.

[SPEAKER_02]: They can't sell any for six months.

[SPEAKER_02]: But after six months, a lot of times, they start to be able to sell.

[SPEAKER_02]: So they do, they get liquidity, it overwhelms the market in supply and the stock goes down.

[SPEAKER_02]: That's typically how these things go.

[SPEAKER_02]: So I'll probably once again see what the numbers look like.

[SPEAKER_02]: See if it's reasonably valued upon IPO.

[SPEAKER_02]: See how it trades if it

[SPEAKER_02]: and then decide from there.

[SPEAKER_02]: But I would be using this as an opportunity to exit at some point mainly because, say, maybe they just stumbled into a good time to get liquid.

[SPEAKER_02]: And that's probably what's happening here.

[SPEAKER_02]: Then we all know about the war in the Middle East, what's going on with Iran, and how much is costing us?

[SPEAKER_02]: 10s of billions of dollars in spending already in just the matter of what six weeks or so.

[SPEAKER_02]: And then you have countries across the world, especially in Europe, looking to bulk up their defenses, spend them military.

[SPEAKER_02]: A lot of politicians will say, well, that's bullish for the economy.

[SPEAKER_02]: And that's certainly true in the short term.

[SPEAKER_02]: Any type of government spending tends to be good in the short term.

[SPEAKER_02]: But what about the long term?

[SPEAKER_02]: Well, the IMF did a study.

[SPEAKER_02]: And they showed that defense spending tends

[SPEAKER_02]: and store up fiscal problems, but there's not deliver lasting boost to the economy.

[SPEAKER_02]: Around half of the countries in the world have increased their military budget in the past five years.

[SPEAKER_02]: But history says that that juice to the economy only lasts about three years.

[SPEAKER_02]: Bit of to 164 countries.

[SPEAKER_02]: And they showed that deficit's worsened by about 2.6% of GDP as a result of higher defense spending.

[SPEAKER_02]: Public debt rose about 7% over 3 years.

[SPEAKER_02]: Last year, most European members of NATO agreed to raise annual spending on defense and strategic infrastructure to 5% of GDP by 2035 from 2% before.

[SPEAKER_02]: Now their modeling says that this will increase GDP by about 1.3% by 2030.

[SPEAKER_02]: So yes, it strengthens the industrial capacity over the short term, but it's a very very short term boost and usually just worsens fiscal deficits over long term because it's not a productive use of capital.

[SPEAKER_02]: Now this is Invest.com, Justin Klein, we have one goal here each and every week.

[SPEAKER_02]: Today's help you achieve your own version of financial freedom, and I work continues after this final break.

[SPEAKER_02]: It's questions in now at 8-899 chart.

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[SPEAKER_03]: 888-99, chart.

[SPEAKER_06]: Hi, I'm looking into a stock ticker VEMAX that's the Vanguard emerging market.

[SPEAKER_06]: Recently put in a large portion of my 401K holding into this a little over 50%.

[SPEAKER_06]: That was back in.

[SPEAKER_06]: being a march, so I'm timely, but wondering if this is still a bit of hold or if I should reallocate as this is a large portion of my holdings.

[SPEAKER_06]: Appreciate what you guys do every day.

[SPEAKER_06]: I'm looking forward to hearing your response on the podcast.

[SPEAKER_02]: Thanks.

[SPEAKER_02]: Looking at the EEM-AX, the Vanguard Emerging Markets' stock index.

[SPEAKER_02]: Fun, fairly low expansion, about 13 basis points.

[SPEAKER_02]: And if you listen to Invest Talk for some time now, you'll know that a pretty big fan of some foreign allocation right now.

[SPEAKER_02]: And when you're investing in emerging market ETF, you are definitely getting exposure to China, Taiwan, India, et cetera.

[SPEAKER_02]: tends to be more difficult for their economies, but in general, they're chaining higher.

[SPEAKER_02]: They're outperforming the broader indices.

[SPEAKER_02]: So far this year, this ETF or this ETF, this mutual fund, excuse me, it's about 7% already this year, after being up 25% last year.

[SPEAKER_02]: I didn't hear what percentage of your portfolio it is.

[SPEAKER_02]: I would love this in with all of your foreign exposure.

[SPEAKER_02]: probably want to want that more than 50% of your portfolio, but as long as it's below that, I think you're in pretty good shape.

[SPEAKER_02]: Also depends on what your other potential exposures are, or options excuse me, within your 401k, but this is a fine fun tone.

[SPEAKER_02]: Let's go answer one last YouTube question.

[SPEAKER_02]: Now, Jim Lane says, what are your thoughts on PLMR, E-L-M-R?

[SPEAKER_02]: Palomar Holdings, Palomar Holdings.

[SPEAKER_02]: This is an insurance company, E-L-M-R.

[SPEAKER_02]: I'm like other systems, so many systems, so many, so much data to analyze,

[SPEAKER_02]: Relates of strength around 29, relatively low.

[SPEAKER_02]: It did find a bottom back in the fall and has been on a gentle uptrend ever since, shall we say.

[SPEAKER_02]: Three and a half billion dollar market cap, no debt, free cash flow about 400 million.

[SPEAKER_02]: That's good, good strong cash flow, good strong free cash flow yield.

[SPEAKER_02]: See what they do.

[SPEAKER_02]: And then I said insurance, but especially insurance company property, casually for individuals and businesses, focused on residential and commercial earthquake markets in earthquake regions, such as California, Oregon, Washington, etc.

[SPEAKER_02]: Now, we are due for an earthquake here, I don't want to knock on wood, my desk is wood.

[SPEAKER_02]: So I don't want to jinx it.

[SPEAKER_02]: I remember the, I was a kid, but the, what would they call it?

[SPEAKER_02]: There's a big earthquake in 93.

[SPEAKER_02]: What was the name of that?

[SPEAKER_02]: I remember off something.

[SPEAKER_02]: That was the last really big one that caused a lot of damage here in Southern California.

[SPEAKER_02]: Most buildings have been earthquake proofed ever since.

[SPEAKER_02]: So I generally like writing this type of insurance.

[SPEAKER_02]: It's a niche player.

[SPEAKER_02]: I like the recent uptrend earnings this year is supposed to be 957 and 1097 next year.

[SPEAKER_02]: It's nearly $11 per share next year.

[SPEAKER_02]: It's $100 or $1300 stock.

[SPEAKER_02]: So you're talking about 12 times earnings.

[SPEAKER_02]: Sounds great to me.

[SPEAKER_02]: I like the trends and earnings.

[SPEAKER_02]: I like to try in the stock, you know it yet, pulled back considerably over last summer, but I see no reason to be down on it.

[SPEAKER_02]: I'm going to give Palomar holdings a thumbs up that's PLMR.

[SPEAKER_02]: Without a doubt, I'm just inclined reminding you about KPP financials parallel investing.

[SPEAKER_02]: when we make a trade for our clients and make the same trade for ourselves, same day, same price, same percentage, no front running.

[SPEAKER_02]: No, special treatment.

[SPEAKER_02]: We invest right alongside our clients.

[SPEAKER_02]: We should have the same risk and potential for success.

[SPEAKER_02]: You can learn more by heading over to invest.com.

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[SPEAKER_02]: Send best talk.

[SPEAKER_02]: Good night.

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