[SPEAKER_03]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_03]: Here's your host, Justin Klein.

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

[SPEAKER_01]: This is our Monday, August 17th, 2026, edition of Invest Talk, a lot to unpack during this hour.

[SPEAKER_01]: We have some great topics to cover.

[SPEAKER_01]: But most importantly, we'll be your topics.

[SPEAKER_01]: Whatever's on your mind, we want to hear from you.

[SPEAKER_01]: That's what the show is about.

[SPEAKER_01]: It's not about me, I can say to you, I can talk for a long time.

[SPEAKER_01]: I do this every day.

[SPEAKER_01]: I've done it for geez, almost 20 years now.

[SPEAKER_01]: I've invested for over 25 years.

[SPEAKER_01]: This is old hat to me.

[SPEAKER_01]: But what I love is hearing new questions, new faces, or new voices, shall we say.

[SPEAKER_01]: We got a great one.

[SPEAKER_01]: I think it was last week.

[SPEAKER_01]: Last Monday we had a

[SPEAKER_01]: Anybody of all ages, come on in, ask your question, whatever is in your mind, we are here to help.

[SPEAKER_01]: Help you become a better investor, avoid the pitfalls, and capitalize on the opportunities because no matter what the headline say, no matter how you feel about the world, the market does not care what you feel.

[SPEAKER_01]: And they will always be opportunities waiting for you with the right, focus, energy, and discipline.

[SPEAKER_01]: Hopefully we're a part of that process.

[SPEAKER_01]: Keeping you engaged, keeping you focused, keeping you disciplined so that you're not making bad decisions.

[SPEAKER_01]: It's an our nature to make bad decisions financially, because we're emotional beings.

[SPEAKER_01]: Good, proper money management is about having a level head.

[SPEAKER_01]: So we are here for that.

[SPEAKER_01]: Now, just a bit, we'll talk about today's Mark performance and run down show topics, but first let's tackle this call a question now.

[SPEAKER_08]: Hi, Luke Burgess, and this is Alfonzo from the Bay Area.

[SPEAKER_08]: Can you review the mechanics of position sizing using the concrete example?

[SPEAKER_08]: I'm saying I have about a million dollar portfolio

[SPEAKER_08]: Doc, say any illegal mind.

[SPEAKER_08]: Thank you.

[SPEAKER_01]: Position sizing is just making sure that no one position is larger than a certain percentage of your portfolio.

[SPEAKER_01]: And then if things go well, it's trimming it back to your original target.

[SPEAKER_01]: So we like to limit our exposure to around 5% of anyone name an portfolio.

[SPEAKER_01]: If it does really well, you know, that might start to float up, six, seven percent.

[SPEAKER_01]: But then, you know, we start to push in seven, especially we're going to get that back down.

[SPEAKER_01]: We want to, we want to trim it back down to 5% or so, whatever our original target is.

[SPEAKER_01]: And sometimes if the market shifts, you lower that target all the way back down to,

[SPEAKER_01]: You know, two, three percent, maybe to let me position if something made you changes.

[SPEAKER_01]: That is the essence of position sizing and making sure that your target allocation is aligned with the overall trends in the market.

[SPEAKER_01]: Because easy to set an allocation, it's more challenging to update it regularly.

[SPEAKER_01]: and monitor it.

[SPEAKER_01]: Okay.

[SPEAKER_01]: Today's allocation and a year from now's allocation should probably different because the market dynamics are going to shift and you have to be willing and able to make those adjustments.

[SPEAKER_01]: That's if you are being a bit more.

[SPEAKER_01]: targeted with your allocations.

[SPEAKER_01]: As opposed to just being a index investor rate, that's what we do as professionals.

[SPEAKER_01]: We are constantly monitoring the macro environment and then adjusting our target allocations and it probably won't change dramatically in one year.

[SPEAKER_01]: but at the margins most likely will.

[SPEAKER_01]: So hopefully that helped give you some insight on position sizing now.

[SPEAKER_01]: We had a great show on Friday and we looked into the story.

[SPEAKER_01]: Soft jobs report and the dollar's new direction of what it means for investors.

[SPEAKER_01]: We have to answer the list of the question on figure symbol rail, RAAL.

[SPEAKER_01]: It's in freight cars of American.

[SPEAKER_01]: If you happen to miss it, go check it out.

[SPEAKER_01]: That's where you get every show's to follow and best talk wherever you get your podcasts.

[SPEAKER_01]: Now, we have a lot of crowd to cover over the next 45 minutes or so in time for many.

[SPEAKER_01]: We'll get you all of it.

[SPEAKER_01]: I mean, the focus point is about the global shipping lanes being under siege.

[SPEAKER_01]: or moves, the black sea, the red sea threatened to hit your investments, the economy as a whole.

[SPEAKER_01]: What sectors are going to be hurt or currently being hurt?

[SPEAKER_01]: And then what sectors are actually benefiting because that can happen as well.

[SPEAKER_01]: So we're going to look at all of that much, much more, and then we have other topics.

[SPEAKER_01]: What is?

[SPEAKER_01]: private, private investments as a whole.

[SPEAKER_01]: Now, there's private equity, private credit, there are private reads.

[SPEAKER_01]: There are a lot of different type of private, non-traded assets that are often sold by a lot of the big wirehouses.

[SPEAKER_01]: I would say you're Morgan Stanley Merrill Lynch is of the world, etc.

[SPEAKER_01]: And they're usually being sold because you're dealing with

[SPEAKER_01]: because they're getting a big commission.

[SPEAKER_01]: But I really want to dig into how do you vet that if you do have an advisor that's pitching, because not all private funds are bad, but it's just a very high hurdle to go over.

[SPEAKER_01]: So what questions do you need to ask to feel comfortable with making that decision?

[SPEAKER_01]: So we'll go look at that.

[SPEAKER_01]: And then rates are up, interest rates are higher.

[SPEAKER_01]: is that the library would say that it's because of the debt situation.

[SPEAKER_01]: We're at $40 trillion in debt.

[SPEAKER_01]: We have about an 8% debt to GDP ratio in a non-recessionary environment, which is massive, to give you some context.

[SPEAKER_01]: Usually in a non-recessionary environment, our deficit is two to three percentage GDP.

[SPEAKER_01]: So it's anywhere from about three to four times its normal level with this economic backdrop.

[SPEAKER_01]: And so, people will say, well, that's because that's why rates are up.

[SPEAKER_01]: But there are other reasons for that, and a lot of it has to do with going up.

[SPEAKER_01]: It's going on in AI.

[SPEAKER_01]: So we'll get to that, and then we have voice bank questions.

[SPEAKER_01]: One is on equity and retirement.

[SPEAKER_01]: And, of course, another question.

[SPEAKER_01]: So that question on Avalon Bay, A, V, B.

[SPEAKER_01]: We also have some questions that came in.

[SPEAKER_01]: Be the comment section over on the Indus Talk YouTube channel and we're going to head into a quick break.

[SPEAKER_01]: Please don't be in call any time and leave your question on the Indus Talk Voice Bank.

[SPEAKER_01]: If you're listening via our live stream or possibly an AM1220 in the Bay Area, you can call right now at 8.99 chart.

[SPEAKER_03]: It's official.

[SPEAKER_03]: Total lifetime downloads for the Invest Talk podcast are now more than 63 million.

[SPEAKER_03]: Justin Klein is here now, taking your calls live.

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

[SPEAKER_01]: Over the new week in front of us, and the first day of trading is behind us,

[SPEAKER_01]: And it was a overall pretty negative day in markets.

[SPEAKER_01]: I said this on the weekend video.

[SPEAKER_01]: I'm starting to get a bit, I don't want to say bearish.

[SPEAKER_01]: But I'm getting, I feel this rally here is from the loads a couple of weeks ago.

[SPEAKER_01]: It's getting a little heavy.

[SPEAKER_01]: Go ahead, over the weekend, obviously

[SPEAKER_01]: You had NASDAQ down about third of one percent, SMB down about half a percent, Russell 2000 down a third of a percent, the Dow down half a percent.

[SPEAKER_01]: Markets are really driven to the downside by TechU and Microsoft down three, Metadown three and a half, oracle down two and a half.

[SPEAKER_01]: What are their tech names?

[SPEAKER_01]: We're down, servers now down five percent, and then you had financials.

[SPEAKER_01]: Broadly read, it is a few in the green, but most of the major banks were lower.

[SPEAKER_01]: And that's a bit of a...

[SPEAKER_01]: But a different look than we've seen.

[SPEAKER_01]: Financial has been one of the strongest sectors for a while, so I'll be watching that.

[SPEAKER_01]: Treasury's your a bit weaker with yields up 5 base disappoints on the long end.

[SPEAKER_01]: 30 are now above five point three percent dollar indexes off point one percent go finish up point eight percent more strength there silver up one point seven percent Bitcoin did have a nice bounce though up two point three percent W tech rude up two and a half percent you continue to see oil prices input costs to the broader economy just slowly grind higher I think the first four five months of the

[SPEAKER_01]: of the war, the supply chains were finding solutions.

[SPEAKER_01]: What are those solutions in the oil market is the strategic oil reserve being drawn down, and they're still doing that, but that is finite that we'll end at some point and we're getting closer and closer to that.

[SPEAKER_01]: I think this is the major issue that we're hurtling towards and the midterms are not that far away only, it's about two and a half months, right?

[SPEAKER_01]: It's a very interesting market.

[SPEAKER_01]: This is why I'm starting to, at least in the back, I say we're probably entering a more choppy environment instead of a very trendy environment.

[SPEAKER_01]: That's my read of it.

[SPEAKER_01]: No, no, let's go answer a YouTube question.

[SPEAKER_01]: Notallus 49 says, I love the show.

[SPEAKER_01]: I have a question about two reads.

[SPEAKER_01]: IIPR, this is the innovative industrial properties of the cannabis read.

[SPEAKER_01]: and vg properties do you think read either is attractive occur prices for long-term position.

[SPEAKER_01]: I know IPR is still dealing with 10 issues vg the financials look solid to me.

[SPEAKER_01]: So I wonder if the recent weakness is mainly due to current issue environment or if there are other concerns.

[SPEAKER_01]: I'm missing.

[SPEAKER_01]: Okay.

[SPEAKER_01]: So on vg, let's go look at if you're looking at the broader and true environments saying that's going to impact the re-sector usually that is true.

[SPEAKER_01]: If you actually look at the XLRE, which is the spider-select, real estate sector ETF, which is a bunch of REITs same with IYR, that's not their eye shares, trust real estate, you have to look very similar.

[SPEAKER_01]: Those are both all above the 100-imoving average in an uptrend.

[SPEAKER_01]: So higher interest rates are not hurting the sector as a whole, at least right now, very, very much.

[SPEAKER_01]: And to me, that is because of where their properties are mainly located.

[SPEAKER_01]: That is Las Vegas.

[SPEAKER_01]: Las Vegas is struggling.

[SPEAKER_01]: Part of it is, I think, 30% of their tourists were Canadian.

[SPEAKER_01]: Maybe it's not that high, but I know it was a large number.

[SPEAKER_01]: And with the kind of fight between a current administration and Canada, a lot of those Canadian tourists went overseas for vacation, they went to other countries.

[SPEAKER_01]: So that's a big part of it.

[SPEAKER_01]: Also the Vici's part of this issue.

[SPEAKER_01]: So one of the reasons Vegas has got more expensive

[SPEAKER_01]: big casino companies, they sold their properties to companies like VG, and then they lease them back.

[SPEAKER_01]: And so they got a big cash infusion, but over the long term that raises your costs.

[SPEAKER_01]: of operating.

[SPEAKER_01]: And so I think the economy of Vegas is going to continue to struggle, so I would stay away from that one.

[SPEAKER_01]: Now, I, A, P, R has its own risk, like you said.

[SPEAKER_01]: But I think this is a much better risk risk reward, not to say that it's not risky, because it certainly is.

[SPEAKER_01]: It's in the cannabis space, but you're seeing a rebound funds for operation.

[SPEAKER_01]: And I think it's a good risk for its reward even if it is high risk, which so if you're looking for something safe within the Reed space, this is not it.

[SPEAKER_01]: This is one of the highest risks in the Reed space, but doesn't mean it's a bad risk.

[SPEAKER_01]: It's just high risk.

[SPEAKER_01]: Nothing next in Best Talk.

[SPEAKER_01]: Actually, we're heading into a break.

[SPEAKER_01]: I'm ready for your calls now 24-7 voice bank.

[SPEAKER_01]: Never closes, so give me call now at 8.99.

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

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

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

[SPEAKER_01]: Let's talk about private investments in general.

[SPEAKER_01]: Between now and 2030, estimates are that financial advisors will move two trillion dollars of the clients' money into alternative funds.

[SPEAKER_01]: This is where, and that's probably a better way to classify it as alternatives.

[SPEAKER_01]: This is an area that is very murky.

[SPEAKER_01]: It carries very high fees.

[SPEAKER_01]: The marketing is grandiose, but the closures are many, but probably I won't read them.

[SPEAKER_01]: You're going to quote unquote trust your financial advisor, right?

[SPEAKER_01]: So let's talk about how to vet these type of investments if you ever are pitched one.

[SPEAKER_01]: There are a lot of questions you should be asking.

[SPEAKER_01]: The first would be is,

[SPEAKER_01]: have them critique it, what are the costs, what are the risks, what are, what is the reduced liquidity?

[SPEAKER_01]: What have them argue against it in some way, shape or form?

[SPEAKER_01]: Because that's the good, that's every investment should be looked in that light.

[SPEAKER_01]: What are the pros and the cons?

[SPEAKER_01]: They should be able to tell you the cons, not just the pros.

[SPEAKER_01]: Then what about the cycles in history?

[SPEAKER_01]: individual investors come in at the end of a cycle, not the beginning, usually it's big institutions that put their money in first and they've already seen that huge amounts of endowments and pension funds have been buying these type of assets for a number of years, why are we not at the end versus the beginning?

[SPEAKER_01]: How do I answer that?

[SPEAKER_01]: Then, kind of like an IPO,

[SPEAKER_01]: Why aren't the best investors buying this?

[SPEAKER_01]: Why am I getting?

[SPEAKER_01]: Why is this average guy or gal getting pushed this?

[SPEAKER_01]: Been looking at the fun at the past history.

[SPEAKER_01]: Can they absorb more capital?

[SPEAKER_01]: It's easy to invest 10 to 20 million dollars in a few great ideas, but what about hundreds of millions if that billions and billions of dollars?

[SPEAKER_01]: How's it going up in a AUM going to change the way they invest?

[SPEAKER_01]: And then if they paid a dividend, like a private credit fund, how much is that covered by actual investment income, as opposed to maybe taking at some sort of loan, to create leverage, identify the where's the contribution coming from?

[SPEAKER_01]: How tax efficient is it?

[SPEAKER_01]: It's okay, one, 10, 99, what is it?

[SPEAKER_01]: Then legality, what happens if something goes bad?

[SPEAKER_01]: What recourse do you have?

[SPEAKER_01]: You see the fund?

[SPEAKER_01]: Soaring the manager who's liable if things go badly.

[SPEAKER_01]: And then liquidity, what are the limits on my liquidity and the fees applied if I need money?

[SPEAKER_01]: Am I going to get what the statement says?

[SPEAKER_01]: And then why are the fees actually justifiable?

[SPEAKER_01]: So these are things that you have to ask, and make sure that they are confident, you are confident in their answers as they go through these questions.

[SPEAKER_01]: Let's keep things moving and pivot back to the best talk voicemaking.

[SPEAKER_02]: Hi, good day, Justin and Luke.

[SPEAKER_02]: Matt from Minneapolis here.

[SPEAKER_02]: I have a quick question for you, gentlemen.

[SPEAKER_02]: Looking to expand, I guess, world investments and so forth.

[SPEAKER_02]: And I was wondering, what your thoughts are of that fund, is that a thumbs up or thumbs down something that should look at getting into in the future or keep looking for something better.

[SPEAKER_02]: Thank you.

[SPEAKER_02]: Look forward to listening to your thoughts and everything on the show.

[SPEAKER_02]: Have a good day.

[SPEAKER_01]: All right.

[SPEAKER_01]: VT, looking at a more global portfolio, this is the Vanguard Total World Stock Index ETF.

[SPEAKER_01]: But it's not really a great start.

[SPEAKER_01]: Why?

[SPEAKER_01]: Because 61% of this portfolio is still US equities.

[SPEAKER_01]: 38%.

[SPEAKER_01]: It's foreign.

[SPEAKER_01]: So we're just going to buy this as a total target allocation.

[SPEAKER_01]: I think it's a good target allocation to have as a portfolio, or the maybe your equity slice of your portfolio.

[SPEAKER_01]: 6040, domestic versus foreign.

[SPEAKER_01]: I think that's a good place to be in this environment.

[SPEAKER_01]: But then sound like this is only when you're going to own.

[SPEAKER_01]: You're going to own a lot of other things and just throw this in.

[SPEAKER_01]: It probably will up your foreign exposure, but it's not going to get you all the way there.

[SPEAKER_01]: So that's where it's talked about is stepping back and seeing the big picture.

[SPEAKER_01]: What is your allocation to these different asset classes?

[SPEAKER_01]: This,

[SPEAKER_01]: Well, help, but it's not going to help in a dramatic fashion, because it's only 40% in 40.

[SPEAKER_01]: But low fee, solid portfolio, and solid benchmark to look at your equity allocation.

[SPEAKER_01]: Now, the next investment stock we're looking to this story, the trillion dollar interest, bill, nobody votes on it.

[SPEAKER_01]: While the government's own borrowing costs now shape monetary policy, that story is for tomorrow, but for now I'm adjusting the line, and right, take your calls anytime

[SPEAKER_04]: Justin Klein is here and ready to tackle your questions.

[SPEAKER_04]: I've heard you say multiple times that you prefer shorter duration trash rebonds.

[SPEAKER_04]: Can you explain to me why it is more advisable?

[SPEAKER_04]: Call in Vestart, 888-99 chart.

[SPEAKER_01]: At KPP Financial, Accountability means more than advice.

[SPEAKER_01]: It means we invest alongside you, through our parallel investing approach.

[SPEAKER_01]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.

[SPEAKER_01]: same day, same price, same percentage.

[SPEAKER_01]: If your portfolio moves, ours does too.

[SPEAKER_01]: That is alignment, that is transparency.

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[SPEAKER_01]: Visit investtalk.com to get your free portfolio review.

[SPEAKER_03]: The Markets React to Uncertainty.

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[SPEAKER_03]: Your financial future depends on the answers to those questions.

[SPEAKER_03]: Justin Klein is here now and ready to talk with you.

[SPEAKER_03]: Call on Vest talk.

[SPEAKER_03]: 888-99 chart.

[SPEAKER_01]: Our main focus point today is about global shipping being under siege.

[SPEAKER_01]: Not just the straight-on-home moves, but the black sea, the red sea as well, there's threats there.

[SPEAKER_01]: And this is causing problems globally, this is part of the general inflationary backdrop.

[SPEAKER_01]: Yes, we have a little bit of a drop as of late inflation, but a lot of that is base effects.

[SPEAKER_01]: More than actual,

[SPEAKER_01]: decline in the price of underline goods.

[SPEAKER_01]: Yes, gasoline in an oil is fluctuating rapidly, but everything else is kind of going through a consistent uptrend.

[SPEAKER_01]: Mainly because there's not a strategic fertilizer reserve, for example.

[SPEAKER_01]: And these are arteries of global trade.

[SPEAKER_01]: Across various sectors, we've talked many times.

[SPEAKER_01]: We know straightaway her moves is 20% of global oil runs through that.

[SPEAKER_01]: That's well known.

[SPEAKER_01]: But most people don't know that 30% of fertilizers move through that area.

[SPEAKER_01]: And this is why you're starting to see this feed into the cost of food.

[SPEAKER_01]: Because initially, didn't have a big impact because the fertilizer that was growing the food at the current time,

[SPEAKER_01]: earlier in the year, that was already paid for.

[SPEAKER_01]: But as we move into new growing seasons, be more fertilizer.

[SPEAKER_01]: And then eventually those costs are going up and that is pushing prices at your grocery store at your restaurant.

[SPEAKER_01]: Then there's consumer goods manufacturing.

[SPEAKER_01]: That area is a choke point for shipments from Asia to Europe and even to the East Coast.

[SPEAKER_01]: Let's use the Red Sea and the Suez Canal.

[SPEAKER_01]: A lot of them are having to reroute around Africa that's adding 10 to 14 days in transit time, increasing costs, delaying retail goods overall,

[SPEAKER_01]: Then there's the black seat.

[SPEAKER_01]: This is where a lot of grain and metals come through.

[SPEAKER_01]: Think wheat, corn, sunflower oil.

[SPEAKER_01]: So it's impacting, once again, food inflation and then industrial supply chains of many kinds.

[SPEAKER_01]: So there's a lot of concurrent pressures that are building.

[SPEAKER_01]: the transitoles are a part of this as well.

[SPEAKER_01]: And I said, like I said, the top of the show, there's there are a lot of losers, mainly the consumer.

[SPEAKER_01]: We're seeing now real wages turn negative once again.

[SPEAKER_01]: Real wage growth, meaning inflation is now higher than wage growth.

[SPEAKER_01]: But these, this feeds into

[SPEAKER_01]: certain sectors, like consumer goods where just in time inventory from Asia is no longer as easy as the ones was.

[SPEAKER_01]: Those higher freight costs to move physical products from the store shelves that is tightening margins, auto manufacturers, industrial suppliers, they're seeing critical components delayed.

[SPEAKER_01]: So the efficiency, I think is one of the big reasons why the efficiency of the economy

[SPEAKER_01]: productivity, despite what's going on with AI, it's not picking up, things are just taking longer.

[SPEAKER_01]: And you're not the only one that deals with higher food costs.

[SPEAKER_01]: You do so indirectly as well, such as that you're grocery store, think airlines, they're buying food, and all things

[SPEAKER_01]: think of all the moving parts of a plane, or buses, or chips, all these things take a lot of power and industrial might.

[SPEAKER_01]: And the classic type of company that struggles in inflation environment is your package food producer.

[SPEAKER_01]: They are exposed up and down the supply chain.

[SPEAKER_01]: to packaging, to transporting those goods to the distribution centers and then to the stores.

[SPEAKER_01]: And then the workers are labor supplies basically flat to negative.

[SPEAKER_01]: Our population is going 0.1% year of year, and most of that labor supply is being eaten up by retiring baby rumors.

[SPEAKER_01]: So that's why it's becoming difficult to find good workers and you have to pay them

[SPEAKER_01]: Beneficiaries are the oil companies, we've seen that I think that will probably continue for a little bit of time, but I think it's going to be relatively short lived at some point, these things kind of add and they float.

[SPEAKER_01]: Most of all the shippers, the shippers are the ones that are benefiting the most.

[SPEAKER_01]: Come here's your willing to pay more.

[SPEAKER_01]: The delays means that these ships are difficult to build, they get stuck at ports for longer.

[SPEAKER_01]: There's a lot of issues that are causing the price to ship products to go up.

[SPEAKER_01]: So this is, so the best way is to get commodity exposure, get exposure to oil companies downstream companies, refineries, those are, I think, the big winners

[SPEAKER_09]: I'm calling to ask about a refinance that I'm currently in the middle of so I'm refinancing at rental property that I own and that was wondering that you have a good bit of equity in that property and I haven't quite been maximizing my my raw contribution every year so

[SPEAKER_09]: Would it be smart to take some of that equity out of my house and actually just put it into my broth area where I feel like it couldn't make better returns and possibly beat what my home might be able to bring in terms of equity in the future, look forward to hearing your answer, thanks so much.

[SPEAKER_09]: Bye.

[SPEAKER_01]: Well, I think a simple answer is yes, if you're in a relatively low tax bracket.

[SPEAKER_01]: The number one thing you have to ask yourself when you're putting money into a Roth, though that's a contribution, or it's a conversion from a traditional IRA, is what tax rate am I in right now?

[SPEAKER_01]: If you qualify for a Roth to contribute, you probably are not that in that hybrid tax bracket.

[SPEAKER_01]: So that's probably fine, but when you're converting, that's where it can be an issue.

[SPEAKER_01]: So most likely, yeah, it's a good idea.

[SPEAKER_01]: Now remember, you're probably limited sound relatively young, probably under 50.

[SPEAKER_01]: So your contribution limit is still 7,000.

[SPEAKER_01]: It's only 500, there we go.

[SPEAKER_01]: Change this year.

[SPEAKER_01]: It always, some years, it changes, some years doesn't, you remember, but yeah, 7,500.

[SPEAKER_01]: So now a lot, but if that's what takes the, if you want to pull that out of your equity, to contribute to a rough, I think it's a good idea.

[SPEAKER_01]: Now let's play two in a row.

[SPEAKER_07]: This is Barron calling from the Bay Area, then for the show.

[SPEAKER_07]: I wanted to get you all guys take on Williams, the Noma, Dickerson Ball WSM.

[SPEAKER_07]: Just wanted to get you guys take on it.

[SPEAKER_07]: If it is a good time to buy and start a start a position in this holding.

[SPEAKER_07]: Thank you and you have a good day.

[SPEAKER_01]: All right, looking at William Sonoma, this is an interesting one.

[SPEAKER_01]: We've, we have owned this in the past four clients.

[SPEAKER_01]: We don't know what, oh, no, currently is one of the ones we sold it.

[SPEAKER_01]: We did really well.

[SPEAKER_01]: We bought it back.

[SPEAKER_01]: I think we bought it really, really well in the 50s or 60s, ran it up into the, I think the 150 range out.

[SPEAKER_01]: It's a 240.

[SPEAKER_01]: So it continues to do well, but to me, it's just a little too expensive.

[SPEAKER_01]: It's a, it's a cyclical business earnings are $10.31 next year expected $9.43 this year.

[SPEAKER_01]: It's a $240 stock.

[SPEAKER_01]: So it's about $10 towards our 24 times forward-looking earnings for a cyclical name.

[SPEAKER_01]: Now the positive years return equity is fantastic.

[SPEAKER_01]: 52% for cash flow is about $1 billion.

[SPEAKER_01]: And they have no debt, $29 billion in their prize value.

[SPEAKER_01]: And if I use value to even this

[SPEAKER_01]: The issue is that that's the highest it's been over the last 20 years, definitely the highest it's been in the last 10 years.

[SPEAKER_01]: So what it's a good company, it's just too expensive.

[SPEAKER_01]: And this is a very cyclical business, what is it what's the willingness to do?

[SPEAKER_01]: They sell home furnishing, think pottery barn, west-down, William Sonoma obviously, pottery

[SPEAKER_01]: So let's get great business to expensive, keep it on your watch list.

[SPEAKER_01]: I think in the next down cycle, one of those names you want to pick up.

[SPEAKER_01]: Let's go pivot and answer a question that came in via our website.

[SPEAKER_01]: So as longtime listener, first time question, an article in Wall Street Journal seems to say, some big tech earnings are House of Cards.

[SPEAKER_01]: As it includes unrealized stock, investment gains.

[SPEAKER_01]: How can one spot that what reported earnings numbers do not include those ethereal earnings?

[SPEAKER_01]: Well, this goes back to making adjustments in the footnotes.

[SPEAKER_01]: This is something you learn in.

[SPEAKER_01]: When you get licensed, but understanding how to adjust for the footnotes.

[SPEAKER_01]: Now, there are something called the adjusted earnings where that's a non-operating earnings.

[SPEAKER_01]: So that's what I'd be looking at, non-operating, I'm sorry, operating income.

[SPEAKER_01]: So excluding non-operating income.

[SPEAKER_01]: You could look at operating free cash flows well.

[SPEAKER_01]: That's another way to weed out whether it actually is real earnings or cash from operations.

[SPEAKER_01]: If you look at the cash flow statement, for example, that's what you want to see continue to grow.

[SPEAKER_01]: So if I look at, just look at cash for operations, 130 billion, now the continues to go up, but we know that cash from investing activities is deeply negative.

[SPEAKER_01]: Now at negative 139 billion, so that's going the other way.

[SPEAKER_01]: So those are the line items I'd be looking at on the income statement and the cash flow statement.

[SPEAKER_01]: And that would give me a clear picture of the real earnings trajectory.

[SPEAKER_01]: But yes, there are, I wouldn't say it's complete fugacy.

[SPEAKER_01]: I would say that it's just something that you have to account for.

[SPEAKER_01]: And I do agree that we are probably near peak earnings.

[SPEAKER_01]: The question is, is it just level out of these growth levels to you?

[SPEAKER_01]: see some sort of major deceleration or is it minor?

[SPEAKER_01]: But it's minor, the market can chop around and empower through to eventually if it rolls over an earnest, and this is more of a one-time flash in the pan.

[SPEAKER_01]: Well, yeah, I think more downside is to come.

[SPEAKER_01]: Let's play another listener question from A to D, 99 chart.

[SPEAKER_06]: Hi, I'm calling about one oak, OK, E. Wondering is now as a good time to pick some more of it up or if I should wait for another opportunity.

[SPEAKER_06]: I'll be listening on your show.

[SPEAKER_06]: Thanks so much for all the good information.

[SPEAKER_01]: All right, looking at, oh, what up?

[SPEAKER_01]: OK, he's a symbol.

[SPEAKER_01]: This is one of those names.

[SPEAKER_01]: We're actually looking at this amongst others.

[SPEAKER_01]: Some midcap is not going to be a midstream names that we'd want to.

[SPEAKER_01]: What do they do?

[SPEAKER_01]: They gather process, sell, and transport, natural gas, natural gas, liquids, oil, et cetera.

[SPEAKER_01]: The great business, $60 billion market cap with decent amount of debt, but return equity 16%, but this is the type of name that you want own in this geopolitical environment.

[SPEAKER_01]: Because clearly, we need to continue to produce energy here in America, like oil and natural gas, defeat a high data centers.

[SPEAKER_01]: good business.

[SPEAKER_01]: It's all about the flows.

[SPEAKER_01]: As long as our flows continue to grow, they're going to make money.

[SPEAKER_01]: Hernings are supposed to be $5.72 this year, $6.20 next year.

[SPEAKER_01]: It's a $95 stock.

[SPEAKER_01]: That has ran up from a low in the 60s, low 60s, now right 95.

[SPEAKER_01]: So it's had a pretty good run.

[SPEAKER_01]: But the technical is our solid, and this is, once again, a type of name that you want to own.

[SPEAKER_01]: I do like the refineries a bit better, but I don't have a, we used to own okay, but we're still looking at whether or not we want to buy a different midstream name.

[SPEAKER_01]: So it's definitely, you know, the top of our list.

[SPEAKER_01]: This is The Best Doc.

[SPEAKER_01]: I'm Justin Klein.

[SPEAKER_01]: We have one goal here each and every week.

[SPEAKER_01]: They help you achieve your own version of furniture.

[SPEAKER_01]: Freedom in our continues after this final break.

[SPEAKER_01]: It's a good question's in right now.

[SPEAKER_01]: Eight and a nine and a turn.

[UNKNOWN]: Justin Klein is here and ready to tackle your questions.

[SPEAKER_00]: Curious if you think it'd be better for me to let it go and spend money elsewhere.

[SPEAKER_01]: Well, first off, never take one man's opinion as gospel, including my own.

[SPEAKER_04]: Invest talk is ready 24-7.

[SPEAKER_04]: When you give a recommendation on your show for a buy-in, like an entry point to buy a stock, if I already own it, should I go ahead and be looking to sell it?

[SPEAKER_04]: Don't forget to call, Invest talk, 888-99 chart.

[SPEAKER_03]: There are a few things that make KPP financial special.

[SPEAKER_03]: One of them is parallel investing.

[SPEAKER_03]: This means they invest right alongside their clients.

[SPEAKER_03]: Here's how it works.

[SPEAKER_03]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.

[SPEAKER_03]: On the same day, at the same price, and same percentage.

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[SPEAKER_05]: Hello, I'm Marianne in Oakland, California.

[SPEAKER_05]: Listening on K-Dow.

[SPEAKER_05]: Do you have an opinion about holding or selling album on bay?

[SPEAKER_05]: It's so off the S&P 500 today.

[SPEAKER_05]: I started with 100 shares.

[SPEAKER_05]: I own 567 shares now from reinvesting continuously over years and years.

[SPEAKER_05]: And I'm wondering if I should do anything, should I just hold on to it until after the merger to form a new company or sell part of it or all of it now?

[SPEAKER_05]: I don't know whether to expect that it's going to go up or down or what's going to happen to it.

[SPEAKER_05]: And the advice you can give would be very much for free.

[SPEAKER_05]: Shave it.

[SPEAKER_05]: I love your shout.

[SPEAKER_05]: Thank you.

[SPEAKER_01]: We should have looking at Avalon Bay.

[SPEAKER_01]: This is one of the best run apartment reads out there.

[SPEAKER_01]: And so you need to own it for a long time.

[SPEAKER_01]: It owns a lot of apartments in major cities.

[SPEAKER_01]: And it's interesting is those struggle to kind of post-pandemic.

[SPEAKER_01]: But then that started to turn around as of late and actually rents in those areas are starting to increase again.

[SPEAKER_01]: places like New England, New Jersey, New York, Mid-Atlantic, here in Southern California and Northern California, Seattle, those markets still remain strong.

[SPEAKER_01]: So, yeah, it did pull back, like you said.

[SPEAKER_01]: jumped off the S&P, but that doesn't change underlying characteristics of the business.

[SPEAKER_01]: In fact, a lot of times that force selling actually creates a buying opportunity.

[SPEAKER_01]: So I would continue to hold Avalan Bay.

[SPEAKER_01]: Now, lastly, let's talk about interest rates.

[SPEAKER_01]: Interest rates of continue to go up.

[SPEAKER_01]: You see, I talked earlier, 30 or 5.3% of the 10 year approaching 5% again,

[SPEAKER_01]: This is impacting mortgages and the cost of capital all across the economy.

[SPEAKER_01]: A lot of people think it's going on with the deficit, but it's not just that.

[SPEAKER_01]: There's the crowding out theory that there's a finite level of capital when certain sectors of the economy demand capital.

[SPEAKER_01]: Well, that's less capital from other parts in the cost of capital goes up and you're seeing that now with the air companies.

[SPEAKER_01]: No more of securities estimates that roughly $2 billion of borrowing by the biggest tech companies alone is equivalent to roughly 25% of U.S. Treasury net issuance to private investors.

[SPEAKER_01]: That's five times more than it was last year.

[SPEAKER_01]: An investment grade companies have sold one and a half trillion dollars of bonds this year.

[SPEAKER_01]: That's up 36% from a year earlier.

[SPEAKER_01]: So we're on pace to break the record that we saw in 2020 and 2020 we had rock bottom interest rates.

[SPEAKER_01]: Now, it's rates are much, much higher yet.

[SPEAKER_01]: They're still borrowing.

[SPEAKER_01]: Alphabet's borrowing at 6.4%.

[SPEAKER_01]: meta, pit over seven and a half percent in their recent issuance.

[SPEAKER_01]: And if you think you're not exposed to this, you are.

[SPEAKER_01]: Why?

[SPEAKER_01]: Most likely you own a targeted fund.

[SPEAKER_01]: Most likely that targeted fund has a indexed bond fund within it.

[SPEAKER_01]: If it's an indexed bond fund, what is that doing?

[SPEAKER_01]: Is it just nearing the entire bond market?

[SPEAKER_01]: And so it's taking a slice of that.

[SPEAKER_01]: This goes back to what I think long term index funds

[SPEAKER_01]: stewards of the capital markets because they're just price agnostic and ultimately that's not a good thing, it's not a good thing for capital markets, capital markets are supposed to weigh the data and make a capital allocation decision based on the fundamentals of an investment.

[SPEAKER_01]: That's not really happening anymore, both on the equity side and the bond side in a lot of cases.

[SPEAKER_01]: So you can't just blend the deficit for why insurance is going up or the Fed, but also the AI companies borrowing immensely.

[SPEAKER_01]: Well, that about does it.

[SPEAKER_01]: I'm Justin Klein, reminding you about KPP Financial's parallel investing and make a trade for our clients with the same trade for ourselves.

[SPEAKER_01]: Same day, same price, same percentage, no front running, no special treatments, which mean to you.

[SPEAKER_01]: Means we invest right alongside our clients, and we show the same risk and potential for success.

[SPEAKER_01]: And you can learn more by heading over to investtalk.com.

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[SPEAKER_01]: Independent thinking shows success.

[SPEAKER_01]: It's the best talk, good night.

[SPEAKER_04]: Invest talk is a trademark of KPP financial because of the nature of the interactive dialogue inherent in the format of this program.

[SPEAKER_04]: It's important for the listener to understand that not all comments may well apply to them.

[SPEAKER_04]: Specifically, nothing said she'll be taken to be investment advice.

[SPEAKER_04]: or shell statements on this program be considered an offer to buy or sell security.

[SPEAKER_04]: Because such advice is rendered solely on an individual basis, and at times, will require that the investor review a perspective before investing.

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