[SPEAKER_01]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_01]: And now, here are Justin Klein and Luke Guerrero.

[SPEAKER_02]: Good afternoon, fellow, investors, and welcome back to Invest Talk.

[SPEAKER_02]: Zartouz Day, August 5th, August 25th, 26th, 26th edition of it.

[SPEAKER_02]: That's fabulous.

[SPEAKER_02]: We're time to have a look.

[SPEAKER_02]: I wish, and that is the voice of Luke Garo.

[SPEAKER_02]: So we have a special Tuesday edition.

[SPEAKER_02]: We haven't done a Tuesday together.

[SPEAKER_07]: I'm sure at some point, right?

[SPEAKER_02]: Maybe at some point, but it's definitely the first Tuesday of 2026 that we're doing the show together.

[SPEAKER_02]: So we're excited for this hour with you.

[SPEAKER_02]: You get both of us double trouble today, we're here.

[SPEAKER_07]: One it or not.

[SPEAKER_02]: Whether you wanted or not, yep, yep.

[SPEAKER_02]: And we're ready for your question.

[SPEAKER_02]: So if you're going to ask a question on any given shows, this is the time to do it.

[SPEAKER_02]: You get,

[SPEAKER_02]: You get two for one special here.

[SPEAKER_02]: So we're excited for this hour.

[SPEAKER_02]: Help you come to a better investor, answer your finance and investment questions, bring you data and perspective, develop over 25 years of investment experience.

[SPEAKER_02]: Now in just a bit, we'll talk about today's mark performance and run down the show topics, but as usual, we'll tackle this first call equation now.

[SPEAKER_04]: Yes, this is Brett Connor from California.

[SPEAKER_04]: I wanted to get your insight on a company called, well, actually, you know, this company cost Go, I'm just trying to get in a type value company and as good strong fundamentals, I know the price sure prices kind of high Just want to see if you think it's a good long-term investment and just dollar cost average it.

[SPEAKER_02]: Thank you.

[SPEAKER_02]: Well for all the days to have

[SPEAKER_02]: No, but both of us, but most importantly, Luke on the show, it's to have a question about Costco.

[SPEAKER_02]: Luke, why don't you tell the audience about your love for Costco?

[SPEAKER_02]: Before we even get into the actual business or investment, these, etc.

[SPEAKER_07]: This is only an hour long show.

[SPEAKER_02]: True.

[SPEAKER_07]: And so I don't think we have the time to go over all of it, though I will say, I did use to deliver.

[SPEAKER_07]: five rotisserie chickens to my house every hospital order he is crazy.

[SPEAKER_02]: I don't need that old school chicken.

[SPEAKER_07]: No, no, I don't need rotisserie chicken anymore.

[SPEAKER_07]: A lot of sodium, not the sodium is bad for you if you drink enough water.

[SPEAKER_07]: Again, this is not a nutrition show.

[SPEAKER_07]: This is about Costco.

[SPEAKER_07]: The stock, of course, the big box wholesale retailer,

[SPEAKER_07]: Probably one of the most successful membership models, I would say, I think that's really what separates Costco from a lot of these other businesses, is that a lot of the revenue is kind of baked in already, right, that's why they have the ability to offer the volume that they do at such discount pricing.

[SPEAKER_07]: It's one of the reasons why we held Costco for years, although we sold it.

[SPEAKER_07]: middle of last year, and frankly, since the end of 2024, it's kind of just been sideways.

[SPEAKER_07]: You know, what are your thoughts on this name?

[SPEAKER_02]: Well, like you said, we've owned the company in the past, so we certainly like it.

[SPEAKER_02]: Luke loves the company.

[SPEAKER_02]: He probably could.

[SPEAKER_02]: How often you go to Costco once a week?

[SPEAKER_07]: No, no, no, no, I've actually, and again, we're talking about shopping habits again.

[SPEAKER_07]: But I have, I have shrunk it down to, I get everything I need once a month.

[SPEAKER_02]: got it okay efficiency got it so so you know it it produces about 8.8 billion dollars in free cash flow which is still near an all-time high I would say close to half of that probably comes from Luke himself but then return inequities 29% so it's a very quality business and it has about 6 billion dollars in that cashiness balance sheet so

[SPEAKER_02]: It, you know, debt-free.

[SPEAKER_02]: But when you look at things like enterprise value, even though you're at about 30 times, which is pretty expensive for a company this large that it was growing kind of high single digits on the revenue side and earning side kind of around 10% range.

[SPEAKER_02]: So you're going to pay a premium for this name, absolutely, but, you know, that's one of the reasons why we sold it.

[SPEAKER_02]: The valuation got a little stretched, and then the momentum started to wane as well.

[SPEAKER_02]: And that's why we going back to what I talked about yesterday, opportunity costs.

[SPEAKER_02]: We found, we said, okay, if it's just going to try to chop sideways, then we much rather put this money in something that's actually going to start to advance.

[SPEAKER_02]: It's about a chance to advance at a much better valuation.

[SPEAKER_02]: And that's been,

[SPEAKER_02]: certainly a correct call, and you know, valuations can correct in multiple ways.

[SPEAKER_02]: It can decline in price.

[SPEAKER_02]: That's the most common, but often

[SPEAKER_02]: the performance can just be substandard for a long period of time while the business continues to produce profits cash flow for shareholders and that's kind of the case here with Costco because the enterprise value the EBITDA peaks back in 2025 about 36 times so now it about 29 times so you know it's getting better it's becoming more attractive but is it cheap yet?

[SPEAKER_02]: I mean

[SPEAKER_02]: I think low 20s I'd probably put pay and a prize value either for for this name.

[SPEAKER_07]: I pay more than that.

[SPEAKER_07]: I mean, you know, it's it is.

[SPEAKER_07]: First off, I mean, low 20s.

[SPEAKER_07]: It probably hasn't touched that in what three, four years.

[SPEAKER_07]: So you had a missed out on a lot of games post 2022.

[SPEAKER_07]: I think that that multiples for this name are generally justified.

[SPEAKER_07]: I mean, they have 13 and a half percent EPS growth.

[SPEAKER_07]: They're in renewal rate on their membership is 93%.

[SPEAKER_07]: but I agree if you wear it is right now is is is far too expensive.

[SPEAKER_07]: So like you said it in one of two ways it's gonna have to correct either by the price falling a bit or earnings expanding from growth that's not currently priced in.

[SPEAKER_02]: Yeah that could certainly happen but also the price is what would have to have to not advance as well at the same time.

[SPEAKER_02]: So you know that's certainly possible and now when we bought it I think we bought it in 2023 roughly.

[SPEAKER_02]: Yeah that was trading and that

[SPEAKER_02]: You know, we sold it when it was close to the 35 times.

[SPEAKER_02]: So, you know, I would want to close to the 20 times.

[SPEAKER_02]: It's a great name to have everybody should have Costco in their watch list.

[SPEAKER_02]: There's not an argument about whether it's a good business or not.

[SPEAKER_02]: It absolutely is.

[SPEAKER_02]: It's just what are you willing to pay and to me.

[SPEAKER_07]: Well, you know, the big catalyst for me always was, they raise membership fees by $5.

[SPEAKER_07]: It's crazy amount of revenue baked in.

[SPEAKER_07]: Oh, yeah.

[SPEAKER_07]: And they do it straight to the bottom line.

[SPEAKER_07]: Seven to seven, eight years.

[SPEAKER_07]: So I like the business.

[SPEAKER_07]: I wouldn't buy it yet, but certainly like you said,

[SPEAKER_02]: Yeah.

[SPEAKER_02]: No, we had a great show yesterday.

[SPEAKER_02]: I looked in the story about regulations around digital assets and what that regulatory framework could mean for the ordinary investor.

[SPEAKER_02]: I also answered a question about cracker barrel and if you happen to miss it, go check it out.

[SPEAKER_02]: That's where you get every invest talk show is the following best talk wherever you get your podcasts.

[SPEAKER_02]: Now we've a lot of ground to cover today over the next.

[SPEAKER_02]: 40 minutes that was a long answer I think so we started talking about shopping so I know I know What ever we get you on the Costco topic, you know, it drags for sure But my focus points and that's my fault to be fair my fault now our main focus point is about radialios debt crisis Warning is the head U.S. heading for a fiscal breaking points

[SPEAKER_02]: radialia worn this week that treasury secretary Scott Besant's market intervention signals the debt crisis is getting closer so we're going to dig into those alarm bells and give our opinion on that one way or the other we have other topics on the docket as well oil oil markets with the worn around have been royal to some degree maybe not as much as others expected but clearly there are

[SPEAKER_02]: problems there in the middle east and there's there's a story from a lot of different players within the oil patch and different governments and the question is what is the realities we're going to look into the numbers when it comes to how much oil is really coming out of the street of our moves right now and then clean energy.

[SPEAKER_02]: President Trump and his administration has kind of pulled back on clean energies uh... what we call them subsidies subsidies that's the word i'm looking for subsidies uh... but that hasn't stopped

[SPEAKER_02]: the deployment of a lot of green energy projects.

[SPEAKER_02]: So we're going to look at those numbers as well.

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

[SPEAKER_02]: We have voice bank calls.

[SPEAKER_02]: One is on saving up for a house.

[SPEAKER_02]: The other is energy, energizer, holdings, ENR, as well as questions that came in via the comment section on the Invest Talk YouTube channel.

[SPEAKER_02]: Now, we're going to head to a quick break.

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[SPEAKER_02]: Luke, let's go take a look at the market today.

[SPEAKER_02]: It was a nice little bounce back day, especially for the AI trade.

[SPEAKER_02]: Some manufacturers did pretty well AMD up nearly 5% Nvidia up to as we head into member earnings for Nvidia tomorrow after the bell.

[SPEAKER_02]: So that's gonna be big news, but today you had oil prices pull back and therefore

[SPEAKER_02]: names like X on the Chevron were a bit weak, but kind of a mixed bag, it dows up a third of one percent by some p same Nasdaq, about two thirds one percent, and then Russell up about half a percent.

[SPEAKER_02]: What did you take away from today's market?

[SPEAKER_07]: You mean how much, I mean you have, like you said, in video earnings, you have other high profile earnings for the rest of the week, really across various sectors that I think the market is waiting for.

[SPEAKER_07]: You had a couple good data points, consumer confidence slipping today, weekly payrolls up from the prior four-week rolling period, which actually broke seven straight weeks of declines.

[SPEAKER_07]: I think the most interesting thing to me today was really this rate rally in lower oil.

[SPEAKER_07]: especially on the back of that op-ed from the Treasury Secretary talking about not just what we're going to do militarily to Iran but the economic sanctions I don't know if you read that about the quote unquote economic d-day so the market essentially saying yeah we don't believe you so you expect if you had economic pressure reason leading to rising tensions you think oil would be up right but it seems the market once again is just shaken off

[SPEAKER_02]: Yeah, well, it looks like both Oman and Iran outlined a framework to restore navigation through the Twitter moves, basically saying that they're now in charge of the streets of the street of the room.

[SPEAKER_02]: So it's unclear how that's really going to stand with the US, which talk a little bit later about how much oil is still moving through that region.

[SPEAKER_02]: And it's kind of murky, but clearly there's some pressure on oil near term on that news.

[SPEAKER_02]: Let's see what I'll say.

[SPEAKER_02]: I know after hours into it head earnings.

[SPEAKER_02]: So that was down.

[SPEAKER_02]: I think it was about 10% on the day or after hours.

[SPEAKER_02]: So I think it's going to probably weigh especially on software tomorrow.

[SPEAKER_02]: So that'll be interesting to see how that evolves as we move into.

[SPEAKER_02]: The Nvidia earnings treasuries, like you said, were a bit firmer, down, yields around about five to eight base points at the back end of the curve, which is pretty good.

[SPEAKER_02]: Pretty good move there.

[SPEAKER_02]: Dollar down point one percent, gold finished up point one, silver up point one, Bitcoin up point one, so interesting little correlation there.

[SPEAKER_02]: WTI was down three point one percent on the day.

[SPEAKER_02]: So that was the market today.

[SPEAKER_02]: Still kind of waiting once again.

[SPEAKER_02]: on the NVIDIA earnings.

[SPEAKER_02]: Now, let's pivot over to a question that came in via our website.

[SPEAKER_02]: And this one said, what would be a reasonable entry price for TYM technologies?

[SPEAKER_02]: Simple as the TTM-I-T-T-M-I.

[SPEAKER_07]: Let's take a look.

[SPEAKER_07]: I haven't heard of this one.

[SPEAKER_02]: A $11 billion market cap manufactured printed circuit boards.

[SPEAKER_02]: So clearly, in the electronic manufacturing business, businesses get earnings up 97% this year to $4.84, that's expectations, and $6.91 next year.

[SPEAKER_02]: So if you're looking based on forward-looking earnings, Luke, you're talking about a high-team's multiple.

[SPEAKER_02]: So it looks pretty cheap.

[SPEAKER_02]: Does that mean it's a buy?

[SPEAKER_07]: Well, it does a cheap, I mean, if you look back on more historical growth rates, excuse me, I'm kind of choked on my words a little bit.

[SPEAKER_07]: You see, not much in 2020 into 2023, really 2024.

[SPEAKER_07]: The big explosion in both top line bottom line was over the last

[SPEAKER_07]: year.

[SPEAKER_07]: Naturally, that's going to push earnings expectations for the subsequent year up higher as well.

[SPEAKER_07]: Does that mean, because again, I've been talking a lot about what moves multiples, does that mean that the earnings expectations are potentially a bit.

[SPEAKER_07]: unrealistic given where they've been.

[SPEAKER_07]: I mean, I don't know.

[SPEAKER_07]: Usually the current profitability is the best particular future profitability and it had a billion dollar quarter for the first, for the first year.

[SPEAKER_07]: I've never frankly looked at this name from a balance sheet perspective and from a kind of a growth story.

[SPEAKER_07]: I think it's pretty compelling.

[SPEAKER_02]: Yeah, it looks like it operates in aerospace and defense, commercial, radio frequency, especially components, et cetera.

[SPEAKER_02]: So I like their focus on automation, medical, industrial, instrumentation, networking, et cetera, data center, computing, compute, and market.

[SPEAKER_02]: So I like the business.

[SPEAKER_02]: My couple worries I have is cashflow, free cashflow is still slightly negative, that's not great.

[SPEAKER_02]: Turn equity after such a banner few years is still only about 13% obviously we'll head higher as profitability continues.

[SPEAKER_02]: They're issuing more shares again, which I don't love, but I do like the chart, it did pull back kind of to the level that it broke out from back in April, so I think there's some good support here.

[SPEAKER_02]: I think it's high risk, but I like the balance sheet no debt and I like the area that it's in, so I'm going to give it a thumbs up.

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[SPEAKER_02]: Now the current administration says that there are a large volume of oil that's moving through the streets.

[SPEAKER_02]: Energy Secretary Chris Wright said last week that the U.S. military has helped ships over 15 million barrels of crude oil get through the waterway.

[SPEAKER_02]: That was last Tuesday and they say over seven day period more than eight million

[SPEAKER_02]: So what do you think do you think they are being truthful or do you think that they are it has that line with maybe some of the other sources?

[SPEAKER_07]: Yeah, I mean the more commercial ship trackers see Not really just a little bit less, but a lot less.

[SPEAKER_07]: I mean two to six million barrels per day You know, is that from Washington inflating the numbers is it from

[SPEAKER_07]: tankers crossing at night at a time when they turn transponders off and so you essentially have to recreate the journey once it gets to port.

[SPEAKER_07]: It could be either of those.

[SPEAKER_07]: I think notably though, right, at some point the oil has to show up somewhere.

[SPEAKER_07]: And so, if buyers are purchasing oil that doesn't appear for delivery, like the true volume becomes known once it gets to its importation point.

[SPEAKER_07]: And thus far, importation from Asia doesn't really back up the larger numbers, right?

[SPEAKER_07]: It kind of pegs it more at the 4 to 6 million barrels per day.

[SPEAKER_02]: And the UK maritime trade operations, this is related to the Royal Navy, so not U.S.

[SPEAKER_02]: They said that over the weekend, U.S. facilitated 74 trains, it's through the straight of removes.

[SPEAKER_02]: From Thursday through Saturday around 25 per day, now the issue with that is,

[SPEAKER_02]: You have no idea how much oil are on those tankers or even if there's oil on them, right?

[SPEAKER_02]: It's just talking about ships crossing.

[SPEAKER_02]: So there's a lot of murkiness in these numbers that have reported by so many different kind of independent sources that's all conflict in some way shape or form, but ultimately it's

[SPEAKER_02]: The rubber S hit the road, where the barrels have to hit the market, right?

[SPEAKER_02]: And that is what's reflected in the price.

[SPEAKER_02]: And if you go look at all the all the independent sources, it looks like the number of barrels moving through the straight of removes in August are much lower than July.

[SPEAKER_02]: And I think that's a bigger reason why you kind of continue to see a march higher.

[SPEAKER_02]: What are we Brent in the 90s with WCI?

[SPEAKER_02]: We're wet in the high 80s from a correctly.

[SPEAKER_02]: So, I mean, is this going to continue through the midterms?

[SPEAKER_02]: They have enough strategic oil reserves to keep the market at bay.

[SPEAKER_07]: I mean, in a lot of ways, the market seemed to think so, right?

[SPEAKER_07]: You have had the premium between physical and paper oil, right?

[SPEAKER_07]: Those oil futures kind of collapse in the past three months.

[SPEAKER_07]: So that's effectively the market saying, okay, there's enough oil getting out right now, whether it's being escorted by the US or on the Oman side, or through that UAE Saudi bypass pipeline, or even Iran allowing it to pass such that,

[SPEAKER_07]: you know, the market can clear at this given price.

[SPEAKER_07]: And so I think that's probably the best indicator.

[SPEAKER_07]: Now that means if we're wrong about the supply and there's less of a cushion if it's thinner, then there's a lot of risk to the upside.

[SPEAKER_02]: Yeah, and to me the the ultimate tell is how much how much oil is moving out of the street your goal reserve.

[SPEAKER_02]: It's still consistent and that means that there's a deficit in the market and to me what happens when that stops we'll see both to the back to the best talk voice bank, you know the number it's eighty eight and eighty nine chart.

[SPEAKER_03]: Hey guys, good evening, it's Larry down in South Florida.

[SPEAKER_03]: I had a question about a stock M.T.W.

[SPEAKER_03]: The company is mana to walk.

[SPEAKER_03]: It's a small cap industrial crane maker.

[SPEAKER_03]: Just kind of curious about where you might see a company like this fitting and considering all the trade and tariff talk.

[SPEAKER_03]: Thanks guys, take care.

[SPEAKER_02]: All right, looking at man into a walk, it's the name.

[SPEAKER_02]: It's funny.

[SPEAKER_02]: Hey, I haven't been doing this a long time and you look at a name, especially some of these smaller names you're interested in, maybe I think we might have owned this at some point, way back in the day.

[SPEAKER_02]: And then you don't hear about it for a while, and then it comes back to me, I was just popping up.

[SPEAKER_02]: 799 million dollar market, so very small.

[SPEAKER_02]: Burning's are supposed to be up pretty big this year, 180's, every 10th and 92 cents, but then flat next year, also 92 cents.

[SPEAKER_02]: The trial looks pretty good, but I think it's a reason why there's a reason why it's been a small cut for a long period of time, right?

[SPEAKER_07]: Yeah, I mean, they had a bit of a turnaround in more recent years.

[SPEAKER_07]: I mean, the chart looks good.

[SPEAKER_07]: It's certainly juicy in the past in the past month or so.

[SPEAKER_07]: It's pushed it up to near the top end of its five-year valuation range.

[SPEAKER_07]: And frankly, performance is kind of all over the place.

[SPEAKER_07]: You have revenue kind of being flat for a couple of years.

[SPEAKER_07]: Some solid growth in some years.

[SPEAKER_07]: It's pretty volatile, Nate, which is something that you inherently expect from those small caps.

[SPEAKER_07]: I think it's a bit inflated here, you know, obviously we don't put analysts targets as gospel here, consensus target at 14, kind of across the board cell rating here.

[SPEAKER_07]: I think frankly, it's become a bit expensive, especially considering earnings are supposed to kind of reset next year.

[SPEAKER_02]: Yeah, I think my problem is that if you go look at the market cap, it has the same market cap that it did back in 2006, and it doesn't, it's only paid a small amount of dividend since then.

[SPEAKER_02]: So you're basically 20 years of no growth here, and it shows in, if you go look at the return equity, it's been kind of oscillating between positive and negative for a long period of time.

[SPEAKER_02]: I just don't think there's a good business here.

[SPEAKER_02]: For a trade sure, but this is not a long term hold.

[SPEAKER_02]: Now next in Vestock, we'll look into the story.

[SPEAKER_02]: Germany's aging population and a record of self-spending is a preview of America's fiscal future.

[SPEAKER_02]: Let's talk about tomorrow, but for now, I'm Justin Klein with Luke Guerrero, and we are ready to take your calls any time and eight and eight, 99 chart.

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

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

[SPEAKER_01]: Justin Klein and Luke Guerrero.

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

[SPEAKER_01]: 888-99-Jerk.

[SPEAKER_02]: Luke, our main focus point today is about Ray Dahlio's debt crisis warning.

[SPEAKER_02]: First off, what do you think of Ray Dahlio?

[SPEAKER_07]: He loves giving warnings.

[SPEAKER_02]: He does.

[SPEAKER_07]: The man has never missed an opportunity to give a warning or point to his books and he certainly did not miss the opportunity recently.

[SPEAKER_02]: Are you saying he's a bookhux there?

[SPEAKER_07]: I'm just taking a back, are you from the 1930s?

[SPEAKER_07]: Who would say something like that?

[SPEAKER_07]: Bookhuxter?

[SPEAKER_07]: Yes.

[SPEAKER_07]: The salesmen.

[SPEAKER_07]: He's always been a salesman.

[SPEAKER_07]: I also heard not the funnest guy to work for.

[SPEAKER_07]: Well, I'm going to say, well.

[SPEAKER_02]: What he said recently was that Secretary of the Treasury's Scott Bessant, his announcement on debt buybacks, fits a broader pattern that signals a forthcoming crisis in the debt markets.

[SPEAKER_02]: He says he's guessing three years plus or minus two, which calls it one to five years basically.

[SPEAKER_02]: And he said investors should own less bonds, more gold and crypto currency.

[SPEAKER_02]: Now, I generally agree with that sentiment.

[SPEAKER_02]: Cryptocurrency is probably a lot less.

[SPEAKER_02]: He says the same thing.

[SPEAKER_02]: But clearly, the government's fiscal situation is worsening.

[SPEAKER_02]: At a rapid rate, the question is, are we at the inflection point that he's warning about?

[SPEAKER_07]: It's funny, you know, I point to the supposedly AI written op-ed from Drunken Miller earlier, and I don't care who wrote it.

[SPEAKER_07]: The opinion was his opinion, and one of those poignant things that was said, whether he wrote it or Claude did, was that the bond market is the last

[SPEAKER_07]: uh, uh, a fiscally austere member of the U.S. government, right?

[SPEAKER_07]: Like it is the last entity, of course, that is trying to pinch the purse here, because the things that he's prescribing right alias prescribing and talking about this inflection point and what typically happens with sovereign debt crises and what comes next is something that everybody knows needs to be done, right?

[SPEAKER_07]: The reality is is this situation is not going to be fixed without cutting spending and raising

[SPEAKER_07]: those are the only two ways to get us out of the situation.

[SPEAKER_07]: Now, my contention is, uh, although that is what is required, will it happen?

[SPEAKER_07]: Is it politically feasible?

[SPEAKER_07]: I think is a, is a fundamentally different thing.

[SPEAKER_07]: Is it more likely that we just go back to the early 2020s playbook of running crazy deficits, having, you know, inflating away the debt?

[SPEAKER_07]: Probably, but the conclusions that he has of being underweight bonds holding a good allocation in gold, I certainly agree with.

[SPEAKER_02]: Yeah, and I think when it comes to sustainability, the debt, I would say if you go look at the post-World War II era, we ran pretty large deficits, but we spent that on the country.

[SPEAKER_02]: We didn't spend that on wars in the Middle East, for example.

[SPEAKER_02]: You know, because wars in the Middle East don't really grow our economy and they do not at least on a sustainable basis, that's for sure, right?

[SPEAKER_02]: So much better to spend it on an interstate highway system, for example, than on wars, that's

[SPEAKER_02]: tenable way to spend money, and I think that's the question is, like you said, I don't think the government can shrink the amount of spending, but they can certainly spend the money wiser on ways that make the economy more efficient and grow.

[SPEAKER_02]: And so,

[SPEAKER_02]: Yeah, that's one thing that member Doge does just kept spending that didn't happen.

[SPEAKER_02]: Obviously, right now, we spend more than 40% more than we bring in.

[SPEAKER_02]: The US budget deficit top 432 billion just in the month of July alone.

[SPEAKER_07]: So, yeah, I mean, it's, you know, I think that we always focus on the spending dealing more.

[SPEAKER_07]: us steer and spending and whatnot, but I think he points out correctly the uncomfortable truth that we have a revenue problem.

[SPEAKER_07]: We're just not bringing in money.

[SPEAKER_07]: Look at the fiscal trajectory of the United States at the end of the 90s.

[SPEAKER_07]: You know, you had a democratic administration with a Republican

[SPEAKER_07]: Congress and a balanced budget, and then subsequent decades of just cutting revenues.

[SPEAKER_07]: Because the reality is, we kind of know and can project out how spending is going to change.

[SPEAKER_07]: Obviously, we spent a bunch of money on a long war for 20 years that we didn't project out.

[SPEAKER_07]: But where we are now, we just have a situation where the uncomfortable truth is probably the one that's politically untenable.

[SPEAKER_07]: Nobody wants to cut social safety nets, nobody wants to raise taxes, but at some point we're going to have to do it.

[SPEAKER_02]: Yeah, that's what he says is that we need to reduce spending, raise, revenue, and lower interest rates.

[SPEAKER_02]: And right now, the current administration is...

[SPEAKER_02]: Kind of trying to do the latter, and that's pretty much it, you know, with trying to make excuses of not raising rates, doing the bond buy back in the long end, issuing them the short end, they'll probably try to cut rates, and I think that's the, the one lever they can, they could probably pull in the near term, dodged in work, so not cutting spending clearly, and we have the off balance sheet liabilities of Medicare Medicaid, continuing, that's not going anywhere as more baby boomers retire each and every day, and then like you said, tax revenue,

[SPEAKER_02]: Yeah, I think as long as I think it was interesting, I was looking at the percentage of tax revenue that comes from corporations, you know, it is probably very small.

[SPEAKER_02]: What do you think of this percentage of tax revenue that comes from corporate corporations?

[SPEAKER_02]: Yep.

[SPEAKER_07]: 10, 15, 10%, 8%.

[SPEAKER_07]: Yeah, what's close?

[SPEAKER_02]: 10%, very close.

[SPEAKER_07]: And I wasn't biting my time to use AI to find that.

[SPEAKER_07]: You can hear me typing when I did.

[SPEAKER_07]: Yeah, I mean, you have a global race to the bottom, right?

[SPEAKER_07]: Everybody wants to incentivize corporations to be in their jurisdiction.

[SPEAKER_07]: I would argue one of the best benefits of having a corporation-neur jurisdiction is the tax revenue generated from that corporation.

[SPEAKER_07]: So, you know, we've been given a lot recently without a lot in return.

[SPEAKER_07]: It's just an uncomfortable conversation, eventually we're going to have to have.

[SPEAKER_02]: Yeah, and yeah, the finding that balance of cutting spending without destroying the economy because that's frankly an issue because if you go look at the

[SPEAKER_02]: formula to calculate GDP, government spending is in there.

[SPEAKER_02]: And so that's a big, uh, big g. And so that'll be interesting to see.

[SPEAKER_02]: And then obviously tax raising tax revenues difficult.

[SPEAKER_02]: And so it's cutting interest, especially if the dollar declines, that creates inflation, et cetera.

[SPEAKER_02]: So it's definitely a quagmire will be dealing with for a long time.

[SPEAKER_02]: Those pivot to the invest stock voice bank from eight to eight, ninety nine chart.

[SPEAKER_05]: Oh, this is Caleb from Rhode Island.

[SPEAKER_05]: Let's call him and ask about energizer holding.

[SPEAKER_05]: Simple echo November, Romeo.

[SPEAKER_05]: It looks like it has pretty cheap forward earnings, but it's just, obviously, just kind of got nowhere in the past a little bit.

[SPEAKER_05]: I'll add an edge in the main reason is the cause of its debt level.

[SPEAKER_05]: And maybe people are using more rechargeable batteries instead of theirs.

[SPEAKER_05]: I'm not looking at the dividend, but I am wondering if your belief they'll kind of reduce it.

[SPEAKER_05]: Maybe it would cause that further push down.

[SPEAKER_05]: I guess they probably should to manage their debt level.

[SPEAKER_05]: Yeah, I'm just wondering what you think would be a good risk versus reward for this, or if you think I should just move on for a while from this name in the list.

[SPEAKER_05]: I do not currently hold any of it.

[SPEAKER_05]: Thank you.

[SPEAKER_02]: All right, looking at energizer holdings, and this is the battery company as you would expect.

[SPEAKER_02]: They manufacture both batteries and lighting products.

[SPEAKER_02]: What's interesting is, this is kind of, man, even though everyone knows the brand, it's based on basically a commodity earnings in 2021, where $3.40, and $40, and this year, the system makes 330 down 6% from $352 last year, and then $3.38 next year.

[SPEAKER_02]: So,

[SPEAKER_02]: Talk about non-existent growth here.

[SPEAKER_02]: This is the epitome of that.

[SPEAKER_02]: Now, like the call is said, Luke, they do have a lot of dead looks about $3.2ish billion in net dead on a $1.5 billion market cap on the only $149.

[SPEAKER_02]: Well, these are not a free cash flow.

[SPEAKER_02]: That's the good thing.

[SPEAKER_02]: But their pair ratio is right out of 100%.

[SPEAKER_02]: So do you think the dividend is going to be cut?

[SPEAKER_02]: Or do you think they'll just kind of continue to try to take that cash flow and pay down debt?

[SPEAKER_07]: Probably continue, I don't know if in the foreseeable future, it's gonna be cut, I think that from what I'm seeing, it looks like this EPS shortfall, this most recent one was primarily due to one-time credit, that didn't repeat, so there wasn't really any change in demand, there was no like demand weakness that drove poor performance year over year.

[SPEAKER_07]: But I mean, there's just no growth.

[SPEAKER_07]: There's no growth that's trading at 6.4 times, price to 4 looking earnings for a reason.

[SPEAKER_07]: I'm not excited.

[SPEAKER_07]: I'm not excited.

[SPEAKER_02]: Yeah, as well as the names of you that return equity, it's really high 46%, but that's because of the large amount of leverage, the return of us to capital selling 2%, which is extremely low.

[SPEAKER_02]: So, I just don't see any reason, because even though it has pretty good cash flow, it's free cash flow yield is about 10%, which is good, but the problem is that cash will need to go to support the debt and pay down the debt, and they're just not producing enough, and it's a kind of a commodity business, so I would stay away from Energizer.

[SPEAKER_02]: Now, from time to time, we get questions of NVIDIA YouTube.

[SPEAKER_02]: So let's go ahead and answer one now.

[SPEAKER_02]: Rich P says, what do you think of pure play, data center reads like digital core?

[SPEAKER_02]: Read is it a good strategy to make it part of the long-term income strategy?

[SPEAKER_02]: What are the risks?

[SPEAKER_02]: Digital core.

[SPEAKER_01]: Do I have I looked at that one?

[SPEAKER_01]: Digital core.

[SPEAKER_02]: Now, there we go.

[SPEAKER_02]: Oh, digital core.

[SPEAKER_02]: This looks like a pink sheets,

[SPEAKER_07]: That's what I'm saying to you.

[SPEAKER_07]: Maybe I'm looking at the wrong exchange here.

[SPEAKER_02]: DGTCF is what I have.

[SPEAKER_07]: Well, the, I, there's DCRU as well, but that doesn't look good.

[SPEAKER_02]: Neither does digital course.

[SPEAKER_02]: Nothing looks like a stock that 47 cents.

[SPEAKER_02]: Well, I, I, I mean, I guess it's, it's probably, it's, first I would say, I wouldn't buy this one.

[SPEAKER_02]: It's Pink Sheets first off.

[SPEAKER_02]: Pretty casual is pretty good, but dude does a lot of debt, so I don't really love that.

[SPEAKER_02]: I rather if I'm gonna play the space over their own digital reality, for example, kind of the equinex, those are the top two, is the equinex still public.

[SPEAKER_02]: Yeah, those are kind of the top two.

[SPEAKER_02]: The question is, in the era of data centers and the build out, or are we building too much capacity and maybe the type of skills are crowding out?

[SPEAKER_02]: The pure played data center reads.

[SPEAKER_02]: We were thoughts on that.

[SPEAKER_07]: Well, if there is one issue that seemingly unites Americans, it's that the hate data centers.

[SPEAKER_07]: Absolutely hate data centers.

[SPEAKER_07]: So what is it?

[SPEAKER_02]: Three years ago.

[SPEAKER_07]: They didn't three years ago.

[SPEAKER_07]: I probably think the backlash is a little bit overplayed.

[SPEAKER_07]: I think from a policy perspective, the way it'll bear itself out is,

[SPEAKER_07]: Hey, meta, if you want to build a data center in my neighborhood, you got to give 1% of the compute revenue to our schools indefinitely.

[SPEAKER_07]: That's probably how it's going to bear itself out.

[SPEAKER_07]: But that being said, I agree with you, this specific database reach is definitely not the way to go.

[SPEAKER_07]: But it's also a trade that's been maybe a bit overextended recently.

[SPEAKER_02]: Yeah, I think my worry is,

[SPEAKER_02]: kind of broadly with the amount of capex that's going into these data centers and we'll how will the AI

[SPEAKER_02]: Industry of all will far more compute be needed for a far more AI queries be done on device.

[SPEAKER_02]: For example, I know that I think over the long term from a consumer perspective that most of those queries are going to happen on your iPhone, for example, because of the context that just is contained within the iPhone.

[SPEAKER_02]: For example, now there's another question about inference on the

[SPEAKER_02]: on the commercial side as well as training of these models etc.

[SPEAKER_02]: So there's a lot of murkiness to the future of the AI space.

[SPEAKER_02]: And I wonder what happens if demand starts to drop?

[SPEAKER_02]: Like I know, hasn't the cost of renting GPU started to fall?

[SPEAKER_02]: Have you seen those charts?

[SPEAKER_02]: I've seen some charts on that.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: So, you know, my worry is that companies are starting to right-sized their need for compute based on actual productivity.

[SPEAKER_02]: So that's my biggest worry about the data center reads, is that there's just a lot of capacity with throughout the industry, and do you get some sort of kind of like the fiber issue when in the dot com bubble, when there's all this fiber being laid, but majority of it wasn't needed.

[SPEAKER_02]: So in five years, what we need as many data centers that we build are building now, if so much of so many of these models can be ran on device.

[SPEAKER_02]: What do you think that's on that?

[SPEAKER_07]: I mean, it's possible.

[SPEAKER_07]: I think we're just at a point where it's in its infancy of what we actually, we don't really know much about what the future is going to look like.

[SPEAKER_07]: We never do.

[SPEAKER_07]: It's part of this business.

[SPEAKER_07]: But I think there's a big uncertainty, uh, specifically in this space.

[SPEAKER_07]: Like you said around whether or not the amount of compute that we've built out, the amount of data centers we've built out, is a bit much for the actual end use.

[SPEAKER_07]: Um, there is a lot of evidence that smaller, more localized models are pretty good at most tasks, not everybody needs front to your models.

[SPEAKER_07]: I think that would definitely

[SPEAKER_07]: heard this industry.

[SPEAKER_02]: Yeah, so I don't like having a little bit that I wouldn't go overboard without exposure.

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

[SPEAKER_02]: Paul Brown says I held TROW for three years.

[SPEAKER_02]: It's paid a good dividend and dividend looks to be secure, but I'm down 9% for one I paid for it.

[SPEAKER_02]: Fundamentals who are strong with the market doesn't seem to like the stock is the time to sell to avoid further declines in price, what do you think Luke, T-Rope price?

[SPEAKER_07]: T-Rope price, big asset manager, obviously a lot of the revenue coming from the investment advisory business, probably 70% of the revenue may be coming from the investment advisory business.

[SPEAKER_07]: At the same time, margins or rather fees tend to be compressing over the past a decade.

[SPEAKER_07]: Revenue is only at 3.3% growth on an annualized basis.

[SPEAKER_07]: Ebit is down over the past five years.

[SPEAKER_07]: Net income is down earnings per share down 1.5% and it goes a peak out in 2021 and about 13 dollars and 12 cents was the earnings per share.

[SPEAKER_07]: Now, I like this part of the financial services sector.

[SPEAKER_07]: They have what over $3,000, $1.7 trillion big asset manager.

[SPEAKER_07]: But the transfer this specific company kind of trying to fight against the current of fee compression has been pretty difficult.

[SPEAKER_02]: You've been getting a really high free cash flow yields.

[SPEAKER_02]: Enterprise value is 22.5 billion.

[SPEAKER_02]: You're talking about free cash flow at 2.8 billion.

[SPEAKER_02]: It's about a, what 12, they're from a free cash flow yield and what are they doing?

[SPEAKER_02]: They're paying out a dividend about four and a half per cent, but then the rest are just buying back shares and that's been, as allowed them to grow their earnings, 4% last year, 5% this year.

[SPEAKER_02]: So, I do think it's a pretty good value play and the question is, more around will the tide turn on indexing and move more towards active management as we enter a more volatile world?

[SPEAKER_02]: There's some potential there.

[SPEAKER_02]: So, I kind of like it, because I think there's a lot of value there.

[SPEAKER_02]: Those are Vestock, I'm Justin Klatt, and we have one goal here, each and every week, to help you achieve your own version of things.

[SPEAKER_02]: Freedom, and I work and to use after this final breaks, which of course isn't right now at 8-8-9-9-9-7.

[SPEAKER_01]: We've got two for the price of one.

[SPEAKER_01]: Justin Klein and Luke Guerrero are here, and they're taking your finance and investment questions now.

[SPEAKER_01]: 888-99 chart.

[SPEAKER_06]: I hope you've been just listening to these things that happened.

[SPEAKER_06]: I'm in my upper 20s, me and my fiancée with together.

[SPEAKER_06]: This is a really an investing question, the more of a seeding question.

[SPEAKER_06]: We'll probably look into by at home, I'd say like within the next two to three years.

[SPEAKER_06]: I know like housing markets are kind of localized, but I was curious what you guys would recommend as for like seeding towards a house.

[SPEAKER_06]: I have like a soccer count of 401k, but I don't feel right pulling money out of that.

[SPEAKER_06]: I know it's there for me to use, but like I just got to six figures.

[SPEAKER_06]: It was like a big milestone.

[SPEAKER_06]: and now I'm starting to see those compounds.

[SPEAKER_06]: It doesn't seem right.

[SPEAKER_06]: I would just curious what you guys would recommend.

[SPEAKER_06]: We both have pretty good jobs.

[SPEAKER_06]: Make a mic, commit, uh, like offer 200s.

[SPEAKER_06]: Not 100s, so I was curious what you guys thought.

[SPEAKER_06]: Thanks.

[SPEAKER_02]: Well, we started off the show with the question right up Luke's Alley and we end one as well.

[SPEAKER_02]: Second favorite topic is the idea of buying a home, especially in expensive markets.

[SPEAKER_02]: Like, the coastal regions, I guess.

[SPEAKER_02]: I guess you could speak to your thoughts on it, Luke.

[SPEAKER_07]: But I didn't really understand his question.

[SPEAKER_07]: Well, it sounds to me like he's set on buying a home.

[SPEAKER_07]: OK.

[SPEAKER_07]: Which is fine.

[SPEAKER_07]: Which is fine.

[SPEAKER_07]: It's mathematically probably the poor decision, but that's fine.

[SPEAKER_07]: We all fulfill our own utility function.

[SPEAKER_07]: But I think his question is, essentially, if I'm trying to save money for a house, you know, what do I do with it?

[SPEAKER_07]: Because I'm trying to buy this house in the next couple years.

[SPEAKER_07]: Do I put it in something risky?

[SPEAKER_07]: Do I separate it into new different accounts?

[SPEAKER_07]: Kind of like high yield savings account?

[SPEAKER_07]: Do I do bonds?

[SPEAKER_07]: What should my investments strategy be?

[SPEAKER_02]: Well, we would say if you have a two, three-year time horizon, which sounds like you do, which I think, two, maybe close to the three years is probably a good time to buy a house to be honest with you.

[SPEAKER_02]: I think there's gonna be a two to three-year correct period in housing more broadly, no, our localized markets and everything.

[SPEAKER_02]: But in general, I'm, we don't know where this gentleman lives.

[SPEAKER_02]: But yeah, you should probably be pretty conservative with that money.

[SPEAKER_02]: Short-term treasuries is probably the best way to go.

[SPEAKER_02]: I mean, do you super charge it with something a little riskier maybe Corporate bonds?

[SPEAKER_02]: I don't know.

[SPEAKER_02]: What are your thoughts on that idea?

[SPEAKER_07]: options on med tech stocks.

[SPEAKER_07]: No, I think that I agree with you.

[SPEAKER_07]: Two to three years is pretty short-term.

[SPEAKER_07]: You're set on buying your house, though.

[SPEAKER_07]: Have a portfolio review.

[SPEAKER_07]: Maybe I'll convince you otherwise.

[SPEAKER_07]: And you can't risk the money, right?

[SPEAKER_07]: Right now, you're getting three and a half, four percent, you know, three and a half percent from treasuries is pretty a yield.

[SPEAKER_07]: You know, here's my question for you.

[SPEAKER_07]: I mean, what's a two year?

[SPEAKER_07]: What's a two year

[SPEAKER_02]: That's your yield of three and a half, three you sometimes, something like that.

[SPEAKER_07]: four one nine one or one nine one.

[SPEAKER_07]: Okay.

[SPEAKER_07]: That's pretty good.

[SPEAKER_07]: Do you put it in something like that?

[SPEAKER_07]: Do you just buy it to your treasuries?

[SPEAKER_07]: I'm finding being short duration.

[SPEAKER_07]: You're getting what 50, 60 basis points of extra yield on that money.

[SPEAKER_02]: Maybe do you have that idea?

[SPEAKER_02]: Now Luke, let's say he's in a market where the cost of rent is.

[SPEAKER_02]: I know this is rare.

[SPEAKER_02]: This was this was common men the decade possible and definitely the

[SPEAKER_02]: middle parts of the country, mainly the Midwest where the cost to rent was actually higher than the cost to own.

[SPEAKER_02]: In that case, would you recommend buying?

[SPEAKER_07]: Well, how do you define the cost of rent being?

[SPEAKER_07]: Holocaust.

[SPEAKER_02]: Holocaust, eh, a cost of your mortgage, plus your taxes, plus everything else.

[SPEAKER_07]: After you take into consideration, this crazy, fiscal deficit driven market and equity premiums we're seeing.

[SPEAKER_07]: Including that opportunity cost and there is, well, I think there's more to it than how much does my rent cost, versus how much does my mortgage cost.

[SPEAKER_07]: We also live in an inflationary environment we're fixing your home is going to be more expensive than it has been in quite some time.

[SPEAKER_02]: We're talking about the opportunity to call us at that down.

[SPEAKER_07]: Yeah, maybe in January, we got some new tariffs on Canada.

[SPEAKER_07]: Hopefully you don't need any Canadian lumber to fix your east coast home.

[SPEAKER_07]: I just think that generally speaking, unless you have a utility fort, we talk about this all the time.

[SPEAKER_07]: Buying a house is not an investment.

[SPEAKER_07]: If you and your partner want a house because you want a house, that's fine.

[SPEAKER_07]: Just understand that especially right now, the math a little bit against you.

[SPEAKER_02]: be ashamed is something happened at that door where you need some Canadian lumber.

[SPEAKER_07]: Mm-hmm.

[SPEAKER_02]: When one of those markets, yeah.

[SPEAKER_02]: There you go.

[SPEAKER_02]: Well, a very interesting conversation about housing.

[SPEAKER_02]: I tend to lean in your direction, Luke, that you a lot of...

[SPEAKER_02]: A lot of real estate investors, they rent.

[SPEAKER_02]: They buy, they do, and they rent, they rent themselves.

[SPEAKER_02]: And so, I do think renting is underrated now.

[SPEAKER_02]: Everyone's situation is different.

[SPEAKER_02]: So, every market is different.

[SPEAKER_02]: Every market is different.

[SPEAKER_02]: Everyone lives, we have clients in 40 plus states.

[SPEAKER_02]: So, we have clients where renting is a great option.

[SPEAKER_02]: Others where buying is a great option.

[SPEAKER_02]: So, it just depends on your own life situation.

[SPEAKER_02]: Well, that about does it, or the special edition that I've talked with both myself,

[SPEAKER_02]: and Luke Guerrero.

[SPEAKER_02]: And we want to remind you of KP Financial's Parallel Investing.

[SPEAKER_02]: We could trade for our clients, make the same trade for ourselves, same day, same price, same percentage, no front running.

[SPEAKER_02]: No special treatments.

[SPEAKER_02]: We invest right alongside our clients.

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

[SPEAKER_02]: And you can learn more by heading over to investtalk.com.

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[SPEAKER_00]: Good night.

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