[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_02]: Good afternoon fellow investors and welcome back to Invest Talk.

[SPEAKER_02]: I know, probably wondering what's been happening over the last week.

[SPEAKER_02]: Well,

[SPEAKER_02]: Luke and I were traveling.

[SPEAKER_02]: We were both in at a wedding in Maui.

[SPEAKER_02]: So, that's why I was going to Tuesday.

[SPEAKER_02]: You left Wednesday.

[SPEAKER_02]: So we had some stuff lined up for the end of last week.

[SPEAKER_02]: Hopefully you enjoyed that content.

[SPEAKER_02]: And then this week, we have a couple of great team members behind the scenes, Tom and Jorge.

[SPEAKER_02]: Jorge was on a

[SPEAKER_02]: on vacation, on a cruise, and then Tom got the flu.

[SPEAKER_02]: So we were able to do the show for the first few days of this week, but we're back.

[SPEAKER_02]: We're back.

[SPEAKER_02]: This is our October 15th, 2026 edition.

[SPEAKER_02]: Don't worry, just kind of a crazy last week with traveling and illnesses and all of that.

[SPEAKER_02]: So we're back, hopefully going forward won't have any, or hiccup, sput.

[SPEAKER_02]: With that being said, let's move on to what we're going to cover for today.

[SPEAKER_02]: Obviously, as usual, we're going to answer your finance and investment questions.

[SPEAKER_02]: We're going to unpack what's going on in the markets and try to give you some lessons, some data, some perspectives, so that you can take it all back to your own personal situation and make better decisions with your money capitalized on the opportunities, as well as avoid the pitfalls I'm going to talk about something later today around

[SPEAKER_02]: that everybody who owns an insurance policy, especially a quote unquote life insurance policy or an investment policy, whatever that might be, it's going to be very, very important whether it's you, your family members.

[SPEAKER_02]: This is probably one of the

[SPEAKER_02]: Most important dynamics to understand in today's investment world, a really financial system as a whole.

[SPEAKER_02]: So we're gonna dig into that in much, much more on today's show.

[SPEAKER_02]: Now, a quick heads up.

[SPEAKER_02]: I know we've had about a week off or so, but there does not change the fact that our invest talk, retirement summit is coming up.

[SPEAKER_02]: It's only nine days away.

[SPEAKER_02]: So it's a week from this Saturday, October 24th.

[SPEAKER_02]: You're invited if you're in the Irvine area

[SPEAKER_02]: We have limited spots, left, it's filling up fast.

[SPEAKER_02]: So if you're going to register, you want to do that ASAP because once those spots are filled up, we are, it's going to be a wait list.

[SPEAKER_02]: It might be some last-minute cancellations, but you want to get in and make sure you are on the list to attend the Invest Talk Retirement Summit.

[SPEAKER_02]: We're gonna talk about tax strategy, a state planning, real estate, investment strategy, as well as the broader plan, how that all fits into the broader plan.

[SPEAKER_02]: We have expert Q and A sessions, it's gonna be a great morning.

[SPEAKER_02]: Once again, next Saturday, October 24th, it's free of charge, but seating is very limited and we are down to the last few slots.

[SPEAKER_02]: So if you're gonna call or you're going to register, head over to investtalk.com,

[SPEAKER_02]: Click on the drop down menu and believe it's under.

[SPEAKER_02]: Let me see.

[SPEAKER_02]: You're probably going to pop up, but if you click on the Best Stock Media, the bottom one is the Best Stock retirement summit and you can register.

[SPEAKER_02]: Now, just a bit.

[SPEAKER_02]: I'm going to talk about today's Mark performance and run down the show topic for the hour, but as usual, let's tackle this first call a question now.

[SPEAKER_05]: Yes, I was hoping to ask a question about investments in specifically AI.

[SPEAKER_05]: When Trump declared that AI would now be called SI, would that be changing the terms of investments?

[SPEAKER_05]: Is that legitimate?

[SPEAKER_05]: Seems like it could be a date and switch.

[SPEAKER_05]: All right, thanks, look forward to hearing it.

[SPEAKER_02]: doesn't change the investment landscape at all.

[SPEAKER_02]: If you, there's been some articles written on this.

[SPEAKER_02]: Basically, the reason he's trying to change his super intelligence is because himself and some of the people within his circle bought up a bunch of the dot SI domain names because all the dot AI domain names have been bought up.

[SPEAKER_02]: So it's kind of a digital real estate play and he's trying to get everyone to call it super intelligence.

[SPEAKER_02]: So that the dot SI domain names are more valuable.

[SPEAKER_02]: That's all this is.

[SPEAKER_02]: So it's nothing to do with change and technology.

[SPEAKER_02]: It's just a, you call it a ruse.

[SPEAKER_02]: I would call it a ruse.

[SPEAKER_02]: They try to get people to switch the name, nobody's doing it, at least not in the investment world.

[SPEAKER_02]: Maybe within the Trump circle, sure.

[SPEAKER_02]: But I don't think it's really going to catch on.

[SPEAKER_02]: Still AI, is it super intelligence?

[SPEAKER_02]: Sure, if you want to refer to it as that, but nobody within the investment world is going to,

[SPEAKER_02]: It changed the way they talked about it, at least we haven't.

[SPEAKER_02]: Anybody within, you know, go watch Bloomberg, nobody's saying super intelligence, everyone's still talking about AI and at the end of the day, that's irrelevant compared, you know, it's all about the technology, how it's applied, what are the economics of the technology, et cetera.

[SPEAKER_02]: There's absolutely no reason to switch the name and nobody really is, so you can ignore it.

[SPEAKER_02]: Now, once again, we are off for a few days.

[SPEAKER_02]: We posted a best-of-show and a special personal finance episode.

[SPEAKER_02]: We also did an interview, our post interview.

[SPEAKER_02]: They did early in the year with...

[SPEAKER_02]: a high price founder, Anthony Katz, which gives a lot of insight into his industry.

[SPEAKER_02]: He's one of my best friends, so I thought that was a great interview.

[SPEAKER_02]: So go check that out.

[SPEAKER_02]: But we have a lot of ground to cover over the next 45 minutes or so, and time permitting will get to all of it.

[SPEAKER_02]: Our main focus point today concerns the story.

[SPEAKER_02]: Our REITs, a buyer, sell when interest rates rise.

[SPEAKER_02]: The bond, sell off housing.

[SPEAKER_02]: Victim.

[SPEAKER_02]: want to make our climbing globally.

[SPEAKER_02]: So how does that impact both mortgage rates and how does that feed into asset classes like REATS?

[SPEAKER_02]: So we'll dig into that.

[SPEAKER_02]: We also have other topics on the doc.

[SPEAKER_02]: Like I said, I want to talk a lot about the nudity industry, the insurance industry, both I'm an investment standpoint, as well as a security standpoint.

[SPEAKER_02]: holding annuities, universal life policies, a lot of insurance products, and for decades it hasn't mattered through the insurance company us, right, there hasn't really been a major default within the insurance industry.

[SPEAKER_02]: I'm making a call today that within the next three to five years, there is going to be an absolutely major crisis within the insurance industry.

[SPEAKER_02]: where there's defaults, and there's not an FDIC.

[SPEAKER_02]: There is, to example, they're not paying into it, and that means that's going to impact the other companies in the insurance industry that's complex, but the point is, there's a lot of wrong doing by these insurance companies, especially the ones that are tied to private equity, private credit.

[SPEAKER_02]: So we're going to take a look at that.

[SPEAKER_02]: Also, anthropic, open AI, they're trying to go public.

[SPEAKER_02]: Do they have an economic mode?

[SPEAKER_02]: And these companies that are going to produce, say, ton of free cash flow and profits for shareholders on a consistent basis over time.

[SPEAKER_02]: When we get past the hype, when we get past the IPO, when all the shares are out there in the marketplace, is that business going to be able to produce profits and compete with each other.

[SPEAKER_02]: And actually produce profits for shareholders, consistently, consistently, not based on,

[SPEAKER_02]: real cash flow, real profits.

[SPEAKER_02]: So we'll dig into that.

[SPEAKER_02]: And then we, if we have time, is a government debt crisis, let me take a look at that as well.

[SPEAKER_02]: So a lot to talk about.

[SPEAKER_02]: On today's show, we have voice bank calls, cash security puts, Philip Morris International.

[SPEAKER_02]: As you can imagine, not doing the show for last week, we have a backlog of some questions.

[SPEAKER_02]: So we're going to get to all of it.

[SPEAKER_02]: Today, and much, much more, and of course, we have comments that came in via the mistalk YouTube channel.

[SPEAKER_02]: But we're going to head to a quick break right now.

[SPEAKER_02]: Please remember, I know we have a backlog of calls, but you can call right now live.

[SPEAKER_02]: If you're listening on our website, investalk.com, listen to live stream more possibly on the Intel 20th of the day area.

[SPEAKER_02]: You can call right now, 8-8-9-9 chart is the number, and up next, I'll comment on today's market activity.

[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_02]: Let's go take a look at the market today.

[SPEAKER_02]: It was a very interesting day after the big sell off yesterday.

[SPEAKER_02]: The market did bounce back decently.

[SPEAKER_02]: Let me pull this up here.

[SPEAKER_02]: Yeah, the Dow is up a little over 1% the S&P, up about a third of 1% the NASDAQ.

[SPEAKER_02]: slightly positive.

[SPEAKER_02]: The Russell 2000 was a strong, so small caps with a nice bounce back here up 1.38% really on rates dropping.

[SPEAKER_02]: You definitely saw treasuries a bit firmer on the, well, look like a bad PPI number after the bad CPI number yesterday.

[SPEAKER_02]: The,

[SPEAKER_02]: Trudging market is not reacting the way you would expect rates to be up, but in fact, rates are down over the past couple of days.

[SPEAKER_02]: They're down 90 to 10 basis points at the long end of the curve.

[SPEAKER_02]: So what the bond market is kind of saying is we're at levels of pain.

[SPEAKER_02]: that are going to be felt in the broader market, and I think you're getting that with things like the September retail sales number, which was up 0.8% month over month, better than consensus of 0.3, but that was really around gas station, as you imagine, gas prices are up.

[SPEAKER_02]: So gas station sales are up 6.4% huge jump.

[SPEAKER_02]: furniture did well at one point three restaurants and bars one point one but then you had the uh... it dragged down by retail building materials were down sporting goods were down so uh... while the consumer is relatively resilient it's in areas that just simply are not going to drive a lot of

[SPEAKER_02]: productivity in the economy, like just spending more money on gasoline.

[SPEAKER_02]: The PPI number producer price index, which is the leading indicator of the CPI, that was up 1.3% month over month, consensus is up 0.5%, so definitely beat that in a dramatic way.

[SPEAKER_02]: You had energy prices, we're driving it, that there's a largest monthly number since March of 2022.

[SPEAKER_02]: So a re-exceleration in inflation, but the question is, or at least the question is, will the Fed react to it?

[SPEAKER_02]: And the bond market is saying, no, not really, they're why they may raise rates again at some point, it's unlikely to be at a fast pace.

[SPEAKER_02]: And if you take a look at the,

[SPEAKER_02]: The CME index, the FedWatch tool, the odds of a rate hike next month actually dropped from 33% to 28%, which was very, very interesting.

[SPEAKER_02]: And then you had issues around AI.

[SPEAKER_02]: So that's been selling off.

[SPEAKER_02]: It did get a bounce back, even though the Dow, or sorry, the Nasdaq barely closed positive, a lot of the names closed off their lows.

[SPEAKER_02]: And video was down 1.8% until down 2.8.

[SPEAKER_02]: Cisco down 3.3 Dell down 6.8% on the day.

[SPEAKER_02]: Land research, the plug materials both down a little over 3%.

[SPEAKER_02]: So that's really, really, really was the, with a weakness in today's market.

[SPEAKER_02]: There was some strength that a finance, the financial service industry did fairly well.

[SPEAKER_02]: Most of that was, uh, what was positive.

[SPEAKER_02]: And then you had some strength out of the healthcare sector as well.

[SPEAKER_02]: Technology was a bit mixed with mainly the software names bouncing back.

[SPEAKER_02]: So it names like service now up 6% on the day, up 11 up 6.5%.

[SPEAKER_02]: So really there's a strong market rotation going on here.

[SPEAKER_02]: That's really the theme over the past week or so is that the air trade is starting to crumble.

[SPEAKER_02]: And small caps after underperforming for the past couple of months are starting to outperform once again.

[SPEAKER_02]: And then you have the issue with core weave, one of the the Neil clouds, the companies that are spending so much on AI data center infrastructure, their bonds are

[SPEAKER_02]: And so it's basically saying that the bond market is not believing in this company anymore.

[SPEAKER_02]: So, absolutely, there are problems underneath the hood here.

[SPEAKER_02]: You have the the the memory makers and in South Korea, they're falling out of bed at seven straight days of losses for the the cost be index.

[SPEAKER_02]: So, major, major rotation happening in markets and I think we could have seen the the bottom bonds, at least in the short short term.

[SPEAKER_02]: They're moving into a break.

[SPEAKER_02]: Give me a call now, lots of talk about it over last week.

[SPEAKER_02]: So you know in the number, I love talking to live calls, so give me a call now at eight and eight, 99 chart.

[SPEAKER_01]: Investing can be daunting and doing it all by yourself can be unmanageable.

[SPEAKER_01]: The best time to get a second opinion is before disaster strikes, not after.

[SPEAKER_01]: If you've built a portfolio over the years, but aren't sure whether it still fits where your headed, KPP financial can help.

[SPEAKER_01]: Our team can review your current investments, identify potential risks or gaps, and give you a clear picture of where you stand.

[SPEAKER_02]: This is me screaming from the rooftops and if you know anybody that owns a insurance investment product or the common investment product, they're usually poor investment products and I'll tell you why in a second, but if you own a universal life policy or index the new

[SPEAKER_02]: If if you own any of those and they're backed by for profit companies not mutual insurance companies I encourage everybody if you buy an insurance product fixed the newty any type of universal whole life policy.

[SPEAKER_02]: It, which I don't usually recommend either of those, make sure they're in a mutual company, meaning it's owned by the policy holders, not by some for-profit company.

[SPEAKER_02]: And there's a lot of shenanigans going on behind the scenes of these for-profit companies, which I'll talk about in a little bit.

[SPEAKER_02]: But since the financial crisis, we're almost two decades on for the financial crisis, but people are still scarred by that.

[SPEAKER_02]: And it means people continue to buy into these indexed-inuity products,

[SPEAKER_02]: with promise of stock market like gains, but no risk of loss.

[SPEAKER_02]: And the reality is that if you look at the details, levels in the details for these particular products, is that you lock up your money for 10, 12, plus years, and they say it's indexed to a particular index.

[SPEAKER_02]: But the reality is that only part of it is typically indexed to that

[SPEAKER_02]: and oftentimes it can change over time.

[SPEAKER_02]: So with fiend, probably the one that's owned by a polyglomission, they're probably one of the worst actors within the insurance industry right now.

[SPEAKER_02]: Where there are policies that over the 12 years ending at the end of 2023, there are indexed the new of the policies earned about 3.7% some of them.

[SPEAKER_02]: Versus the actual index, the S&P that it's supposed to be linked to,

[SPEAKER_02]: earned well over double digits.

[SPEAKER_02]: So those that thought they were getting, S&P like returns or index like returns, they didn't get anywhere close to that.

[SPEAKER_02]: Never say, well, I did better than cash.

[SPEAKER_02]: Sure, but that's not what you're paying for.

[SPEAKER_02]: You're paying for something that's linked to an index.

[SPEAKER_02]: And a lot of times, the bait and switch, where they can change how much of that policy is actually exposed to the index.

[SPEAKER_02]: every two years.

[SPEAKER_02]: So that's one of the issues here as they play a lot of shenanigans the way that these things are structured, which means that they're usually almost always terrible investments over time.

[SPEAKER_02]: Okay.

[SPEAKER_02]: Once again, they're going to sell you on the safety of no downside, but the problem is that no downside is suddenly going away as well.

[SPEAKER_02]: Why?

[SPEAKER_02]: Because they're making related party transactions.

[SPEAKER_02]: They're investing in very risky investments like private equity and private credit.

[SPEAKER_02]: That is, you don't know what the real return is.

[SPEAKER_02]: And that's really the problem.

[SPEAKER_02]: That's why Apollo Management bought Athenaeus because they wanted that cash flow from all those premiums to go and put money into their private credit and private equity funds.

[SPEAKER_02]: And then you look at what happened with Mark Walters.

[SPEAKER_02]: He used policy money to go buy the Lakers, for example.

[SPEAKER_02]: And now he has to turn around and sell it because he didn't call that a related party transaction but it actually is.

[SPEAKER_02]: So that's really the big issue here, is that these are products that are sold with huge commissions and they're not usually good for the actual buyer of the annuity or buyer of the universal life policy.

[SPEAKER_02]: Agents get five to seven percent of the total amount that goes into say $100,000, they're gonna get paid five to $7,000 for putting a customer into one of these products.

[SPEAKER_02]: versus a much simpler product like a fixed annuity, they'll get around 3% commission.

[SPEAKER_02]: So you get double the commission, and that's usually what they opt for, right?

[SPEAKER_02]: Same dollar amount, double commission, they're gonna push them towards the more complex, hard to understand, but more upside product.

[SPEAKER_02]: And yes, they're could potentially more upside, but the reality is, especially now with higher rates,

[SPEAKER_02]: It kind of makes more sense to go lock in a 5, 6% rate if you're just going to go with a new product.

[SPEAKER_02]: But like I said, the problem is that it's not just that these are bad investments with high fees and complexities and poor long-term returns, but it's the fact that so many of them now are sold by companies that are putting your principle, your premiums.

[SPEAKER_02]: At risk, into these very murky investments like private equity and private credit, a lot of related party transactions, like I said, where the valuations may be a little off, right, when the transactions actually go through all of that.

[SPEAKER_02]: So this is a giant problem.

[SPEAKER_02]: This is probably the riskiest thing that's happening has happened over the last decade plus in our financial system.

[SPEAKER_02]: It's not the banks.

[SPEAKER_02]: It is these insurance companies that are not being properly regulated at the federal or the state level.

[SPEAKER_02]: Now, I think there was a recent takeover.

[SPEAKER_02]: I wanna believe in, I wanna say it was in Georgia, if I remember correctly.

[SPEAKER_02]: of a smaller one that was doing a lot of related party transactions and making a lot of a really poor investments.

[SPEAKER_02]: But my point here is that if you or your loved ones, if you own any of these insurance products and they're backed by an Athenaean or any of these really heavily private equity focused type of for-profit entities, you need to be very, very skeptical

[SPEAKER_02]: of their ability to really safeguard your money.

[SPEAKER_02]: Because very well, that index knew you might hold, you may just become a creditor.

[SPEAKER_02]: And you may lucky to get your money back.

[SPEAKER_02]: If there's any some sort of receivership.

[SPEAKER_02]: So, I wanted to highlight that because it is extremely, extremely important to understand for millions of Americans out there.

[SPEAKER_02]: Now we're heading to a break, the Symbestock.

[SPEAKER_02]: The voice bank never closes, so give me a call now at 8.98.

[SPEAKER_02]: At KPP Financial, Accountability means more than advice.

[SPEAKER_02]: It means we invest alongside you through our parallel investing approach.

[SPEAKER_02]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time, same day, same price, same percentage.

[SPEAKER_02]: If your portfolio moves, ours does too.

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[SPEAKER_02]: Visit investtalk.com to get your free portfolio review.

[SPEAKER_03]: The Vestock Retirement Summit is coming to Irvine, California, on Saturday, October 24th, for an exclusive in-person event.

[SPEAKER_03]: It will focus on five key decisions that can shape your financial future.

[SPEAKER_03]: Attendance is complimentary and seating is limited.

[SPEAKER_03]: Reserve your place now at investock.com.

[SPEAKER_07]: I want to know more about it.

[SPEAKER_07]: Also, in correlation to a question that a listener asked yesterday, in regards to the fact what's here in these two together, be a good contrast to the regards to the fact that has been a big capture of large capture, but not much.

[SPEAKER_07]: Thank you.

[SPEAKER_02]: Similar as yes, if you're looking at the VTI, that's going to be large gap names, and this is VEO, which is the Vanguard of Morningstar mid-cap ETF.

[SPEAKER_02]: So firmly a mid-cap blend, weighed pretty evenly between value and growth, kind of leans slightly value, which I like.

[SPEAKER_02]: But yeah, this is definitely to me a better long-term play than large caps.

[SPEAKER_02]: I really think investors are drastically underestimating the transformation that AI is having on the business models of the hyperscalers.

[SPEAKER_02]: Go look at their

[SPEAKER_02]: cash flows, they are absolutely plummeting outside of Apple, right?

[SPEAKER_02]: That's not a hyper-scale, right?

[SPEAKER_02]: They're not investing dramatically.

[SPEAKER_02]: Yeah, at least the infrastructure.

[SPEAKER_02]: But most of these other large cap names, especially if you own the S&P, the NASDAQ, the BTI, any broad large cap index, it's heavily heavily exposed to the hyper-scalers.

[SPEAKER_02]: And their profits look good right now, but the problem is is that they've bought all this equipment and right now it's not being expense or amortize excuse me.

[SPEAKER_02]: So it's not hitting their bottom line yet, but it will in the coming years as they depreciate these assets.

[SPEAKER_02]: And it's dramatically gonna impact their profitability metrics.

[SPEAKER_02]: I absolutely, so I keep saying, you want to be broadening out your exposure outside of just the S&P, the VTI, into more mid and small cabin to four in names.

[SPEAKER_02]: This is where, and if you remember, too, those mid and small captains, not only are they providing a lot of the products for the CapEx spend on AI infrastructure.

[SPEAKER_02]: But they're benefiting far more than any of these well-known AI names.

[SPEAKER_02]: We're talking about insurance companies that need less head count because they can, they don't need as many people on customer service building workflows.

[SPEAKER_02]: I mean, we're doing it here internally for KPPs.

[SPEAKER_02]: This is a perfect example.

[SPEAKER_02]: We just rolled out with help of using AI to figure out how do we build these systems and these workflows to make it better for our clients and easiest for us to manage our hundreds of households that we manage our manage assets for.

[SPEAKER_02]: We rolled out something where we can have our clients just submit a request if they want to add money to their account.

[SPEAKER_02]: For example, in that flow straight into our backend and we start, we see it.

[SPEAKER_02]: We don't know what needs to call us.

[SPEAKER_02]: No one needs to email us.

[SPEAKER_02]: They just put in the record and information that's needed.

[SPEAKER_02]: We intake it into our systems.

[SPEAKER_02]: It goes to our service provider or our main service team.

[SPEAKER_02]: They inform us that new money is come in on the investment side and we go and start to invest it.

[SPEAKER_02]: There's no emails that need to be exchanged.

[SPEAKER_02]: It's all internal within our systems.

[SPEAKER_02]: And this is all done with AI.

[SPEAKER_02]: We are a huge beneficiary of AI.

[SPEAKER_02]: We built internal tool to help manage accounts.

[SPEAKER_02]: Pull data, we've been able to reduce our software expense by Luke using Cloud Code to build tools that are more customized to what we are doing.

[SPEAKER_02]: We are huge beneficiaries.

[SPEAKER_02]: of this.

[SPEAKER_02]: It's making our lives better, our investment strategies better, our service to our clients are better, everything about it is better, and our cost is just a handful of AI subscriptions to Cloud and open AI and Chatchee PT, etc.

[SPEAKER_02]: And frankly, it's the larger companies that are going to have worse businesses.

[SPEAKER_02]: So you want more small, made-capped companies, foreign companies that are truly going to benefit from the power of AI.

[SPEAKER_02]: Now, my focus point today concerns the story.

[SPEAKER_02]: I'll reach a buyer sell when it streets rise.

[SPEAKER_02]: So let's dig into this.

[SPEAKER_02]: We've now seen the global market, global bond market sell off.

[SPEAKER_02]: That's feeding into the real estate markets.

[SPEAKER_02]: I'm seeing that here locally in Southern California.

[SPEAKER_02]: the most immediate and visible victim of higher rates.

[SPEAKER_02]: And it's not just on the residential side.

[SPEAKER_02]: It's also institutional investors.

[SPEAKER_02]: Why?

[SPEAKER_02]: Because bonds are competing.

[SPEAKER_02]: I've said this for a while.

[SPEAKER_02]: And we talked clients about this all the time, especially those that are retiring or in retirement.

[SPEAKER_02]: And they've owned real estate for a long time.

[SPEAKER_02]: And do they want to own real estate in this environment

[SPEAKER_02]: potentially down, if rates continue to go up, certainly you're going to under the price of real estate is going to underperform inflation going forward.

[SPEAKER_02]: Now, because to go up, yes, but I think for three decades, four decades, it was entrance falling in prices of real estate rising faster than inflation, because it's a levered asset.

[SPEAKER_02]: Now, the inferences likely going to happen.

[SPEAKER_02]: You're going to see, I think real estate prices vary very, very stagnant for a long period of time.

[SPEAKER_02]: Because mortgage rates are higher.

[SPEAKER_02]: Now, mortgage rates are now what seven half percent.

[SPEAKER_02]: Typically, there's a spread about one and a half to two percent above the 10-year treasury rate for mortgage rates.

[SPEAKER_02]: And right now, you have, what do we have, government yields, and look at 10-year.

[SPEAKER_02]: It's wants to load for me, it's thinking about it.

[SPEAKER_02]: There we go.

[SPEAKER_02]: We are at 5.08 percent on the 10-year.

[SPEAKER_02]: So maybe we get down in the low sevens on the third year.

[SPEAKER_02]: But overall, these higher rates are going to bite, continue to bite.

[SPEAKER_02]: And investors can get better yields elsewhere.

[SPEAKER_02]: Why would you go buy a three cap or a four cap or maybe even a five cap?

[SPEAKER_02]: Let's say cap, cap rate on a rental property and say coastal area like here in California when you can get six and a half, seven percent in corporate bonds.

[SPEAKER_02]: And not be a landlord, not deal with a headache.

[SPEAKER_02]: or seeing that all the time now.

[SPEAKER_02]: So investors are demanding higher yields, which means that prices have to come down.

[SPEAKER_02]: Both on the real estate, but also the REITs, and that's why you're seeing REITs fall, and all bond proxies, but once again, real estate is the most in your face.

[SPEAKER_02]: So higher for longer, higher inflation rates, higher long-term interest rates, it's going to continue to weigh on anything real estate related.

[SPEAKER_02]: whether you, however you think of President Trump, doesn't matter.

[SPEAKER_02]: It's what is the longer term impact here, is that for years, we Europe, for example, even Canada, kind of relied on the relationship with the United States and comes to security, for example.

[SPEAKER_02]: Now, that's a little more fractured, right?

[SPEAKER_02]: Which means that what are they doing?

[SPEAKER_02]: They're spending a lot more money on

[SPEAKER_02]: They're defense, they're also spending more money on resilience of supply chains.

[SPEAKER_02]: And then I'll take a capital, that I'll take a money.

[SPEAKER_02]: So what are they doing?

[SPEAKER_02]: They're raising capital to do that way that's on it.

[SPEAKER_02]: On a company level, on a sovereign level.

[SPEAKER_02]: And so over time, the cost of capital is likely to continue to go up.

[SPEAKER_02]: This is not the end of the rising real estate.

[SPEAKER_02]: Now it might be, or is that rising bond yields.

[SPEAKER_02]: Now, might be a short term, top.

[SPEAKER_02]: But over the next 3, 5, 10 years, the cost capital is going to continue to go up.

[SPEAKER_02]: Now, when it comes to reads, just like any sector, you can't just paint it all with a broad brush.

[SPEAKER_02]: Yes, they're all bond proxies, but that's only one factor.

[SPEAKER_02]: Pervailing interest rates.

[SPEAKER_02]: It's also what are the secular trends?

[SPEAKER_02]: For example, office and traditional retail probably not the places you want to be.

[SPEAKER_02]: Why?

[SPEAKER_02]: Because we're milk work, e-commerce, they also have a lot of them have massive debt loads that are maturing, so I have to refinance it higher rates.

[SPEAKER_02]: That will compress their payout ratios and also push the prices down.

[SPEAKER_02]: But then you have other sub-sectors like logistics and healthcare.

[SPEAKER_02]: Those most likely will continue to do fairly well and be able to over time buck the trend

[SPEAKER_02]: and just have broader growth over time, to pay down the debt and limit their interest expense.

[SPEAKER_02]: So don't avoid it altogether, don't avoid reeds altogether, but be very selective in the sectors you are exposed to.

[SPEAKER_02]: Let's keep things moving and rolling another fresh list in the question now.

[SPEAKER_06]: This is Gary and Louisiana.

[SPEAKER_06]: My question relates to Texas-specific land cooperation,

[SPEAKER_06]: I think the largest landowner in Texas, I, you know, the holder of stock in this company, it has approximately five or six different income streams.

[SPEAKER_06]: I'd like to know of your impression, and if this is a good time to add to my position.

[SPEAKER_02]: By looking at Texas Pacific Land Corporation, this is a,

[SPEAKER_02]: And he has been in a solid downtrend to top through on $525 per share back in March right after the start of the Iran war.

[SPEAKER_02]: But it's been a downtrend really ever since that out of 346 basically around trip to where we were right before the Iran war.

[SPEAKER_02]: They do pay a dividend, if I remember correctly, where is that?

[SPEAKER_02]: Their dividend yield is, there it is, as a small.

[SPEAKER_02]: So nothing too crazy about two thirds of one percent.

[SPEAKER_02]: So a small dividend, good cash flow, good, and good cash flow, but frankly, I just don't like the trend here.

[SPEAKER_02]: Now, would you have to remember, this is a, it's a landowner, like you said.

[SPEAKER_02]: It has royalty ownership, which allows it to generate revenue, their oil and gas development,

[SPEAKER_02]: in the United States, in the beginning of the Permian Basin, the issue is that that area has been slow to grow as of late.

[SPEAKER_02]: So I just don't like the overall trends I'm seeing in things like, let's say it's net income, it's 541 million that is near and all time.

[SPEAKER_02]: Hi, that's the positive.

[SPEAKER_02]: But I just don't like the chart.

[SPEAKER_02]: What's, what's, where's the beef here, right?

[SPEAKER_02]: This is in a consistent downtrend.

[SPEAKER_02]: And I think what you're seeing here is that those royalties, I'd have to look at them, is royalties expire.

[SPEAKER_02]: So what's this telling you is that, while it looks good now, over time, the value of those royalties will continue to window.

[SPEAKER_02]: So, yeah, not a name that I would own, if you're looking to capitalize on the oil and gas space.

[SPEAKER_02]: Let's go and answer a YouTube question, Nicholas Consist today.

[SPEAKER_02]: We saw a big drop in gold and have a large position of minors.

[SPEAKER_02]: I've been holding for eight months now and have seen a lot of all.

[SPEAKER_02]: I'll tell you that keep telling myself that the macro gold trend is healthy.

[SPEAKER_02]: Well, the headwinds for the industry keep building.

[SPEAKER_02]: Possible, could you explain why keeps you bullish even for just, even for just mid-2027?

[SPEAKER_02]: Yeah, very simple.

[SPEAKER_02]: This is the world.

[SPEAKER_02]: The world is moving towards a gold standard.

[SPEAKER_02]: Every, pretty much every, the utterance out there, it has fiscal problems.

[SPEAKER_02]: Both in Europe, here obviously in the United States, got that we can't dig yourself out of it, but it's clearly countries around the world are no longer trusting their savings to the US governments and to treasuries.

[SPEAKER_02]: Part of that is sanctions around what happened with Russian Ukraine, back in, it was at 2021 when the war started from my crappy 2021, 22, I forget exactly, but one of those years.

[SPEAKER_02]: So that's a big part of it, and China's basically for the past decade or so has been slowly allowing their treasury holdings to roll off and taking those proceeds and buying gold, they have the Shanghai gold exchange.

[SPEAKER_02]: Cunchies around the world are starting to move off the U.S. dollar standard, around

[SPEAKER_02]: So that's number one.

[SPEAKER_02]: So there's long-term secular trend here.

[SPEAKER_02]: Then if you look at the chart, yes, it has been under pressure since the firver in the first quarter.

[SPEAKER_02]: And it's been on a consolidation pullback pattern.

[SPEAKER_02]: But look what the dollar has been doing as of late.

[SPEAKER_02]: And gold, it's not making new lows.

[SPEAKER_02]: It's actually making a higher low from the lows in July.

[SPEAKER_02]: So, and rates are exploding to the upside and you'd say, got you be plummeting based on that.

[SPEAKER_02]: But it's not.

[SPEAKER_02]: It just remains in this kind of consolidation period.

[SPEAKER_02]: So to me, as soon as you get a little relief on the rate side and you have the dollar turns around, which I think it will in 2027, especially if the AI trade falls apart, which looks like it's starting to,

[SPEAKER_02]: That's going to put a lot of weakness on the dollar.

[SPEAKER_02]: A lot of foreign investors have been buying US equities because of the I trade.

[SPEAKER_02]: If that falls apart, they're going to pull money out and put it elsewhere.

[SPEAKER_02]: And a lot of that will come out of the dollar.

[SPEAKER_02]: So the relative strengthier, the goal is fantastic.

[SPEAKER_02]: So we actually, actually, in yesterday's move, new clients, buy, we were buying big time yesterday.

[SPEAKER_02]: And we got a bounce back today, what did GDX bounce back today?

[SPEAKER_02]: It has a 4.3% on the day.

[SPEAKER_02]: Close the above yesterday's high.

[SPEAKER_02]: So big, nice bullish reversal today.

[SPEAKER_02]: Take advantage of these things.

[SPEAKER_02]: You see those big down days?

[SPEAKER_02]: See broader relative strength, this is what keeps me bullish on gold, into your end, and 2027.

[SPEAKER_02]: That was the best thought.

[SPEAKER_02]: I'm Justin Klein.

[SPEAKER_02]: We have one goal here each next week.

[SPEAKER_02]: They help you achieve your own version of adventure.

[SPEAKER_02]: Free time when I work it to news after this final break.

[SPEAKER_02]: So good questions in right now at 888 and you then chart.

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[SPEAKER_04]: pretty much sense at the beginning of the year.

[SPEAKER_04]: I was wondering if this was a good time to purchase some more at my position.

[SPEAKER_04]: Let's take it.

[SPEAKER_04]: I think I have about 3% of my my holdings as Kameko.

[SPEAKER_04]: Thanks very much in advance for your your answer.

[SPEAKER_04]: I appreciate it.

[SPEAKER_04]: Take care.

[SPEAKER_02]: Well, it's a very simple answer.

[SPEAKER_02]: Actually, going back to the,

[SPEAKER_02]: you're going a little insight here into how we deploy new client assets.

[SPEAKER_02]: We don't put it all in the market right away.

[SPEAKER_02]: We look for opportunity.

[SPEAKER_02]: So yesterday was an opportunity.

[SPEAKER_02]: Gold was down, about four, five percent of the miners were, we were picking up.

[SPEAKER_02]: It was that major support, picked it up.

[SPEAKER_02]: Obviously, nice to turn around.

[SPEAKER_02]: Today, Kat, Kamiko was down this morning.

[SPEAKER_02]: into support and we bought it for new clients right in the the ground 80 and change um as it was turning around this morning and it closed today at 83 in change so yeah i think this is was it was a great time to to pick it up uh and we still like the name and we like having exposure to nuclear engineering

[SPEAKER_02]: Lastly, let's talk a little bit about OpenAI and Thropic and their IPOs.

[SPEAKER_02]: And the bigger question over the long term, has to do with their competitive advantage.

[SPEAKER_02]: Because this is really what drives good investments over extended periods of time.

[SPEAKER_02]: Excuse me.

[SPEAKER_02]: Over short periods, any sector, company can get hype and momentum and flows into it that pushes prices up.

[SPEAKER_02]: But in order to have durable long-term performance, you need to have a durable competitive advantage where you can extract profits and cash flow out of.

[SPEAKER_02]: So the question is, where might that come from within these companies?

[SPEAKER_02]: Even if they're not there today, it's okay if they're there in three years or five years.

[SPEAKER_02]: And you got 10, but 3 to 5 years, if it gets there, the market will start to recognize that and eventually keep the price probably going higher, most likely.

[SPEAKER_02]: But if that disappears and suddenly it's more of a commodity type business, that's where I think you can see major, major losses within this space.

[SPEAKER_02]: So where could the most come from?

[SPEAKER_02]: A flywheel of tons of user data from users inputting their queries, that can help product development, that can create partnerships with other software pieces that will keep people using that platform and paying for that platform over time.

[SPEAKER_02]: Being okay with them raising the prices, right?

[SPEAKER_02]: For example, right now, most of these LMs, if you have kind of the basic paid model,

[SPEAKER_02]: you're paying what 19 bucks a month.

[SPEAKER_02]: You think that's gonna be 19 bucks a month for the next decade?

[SPEAKER_02]: No, it's going to be the Netflix model where it started off at whatever five, six, seven bucks a month.

[SPEAKER_02]: I forgot what Netflix started at.

[SPEAKER_02]: And now it's 20 something dollars a month because they just think people who continue to pay it and obviously vast majority are because they have that.

[SPEAKER_02]: Network effect people want their Netflix and they feel like that's the core of the streaming model.

[SPEAKER_02]: potential.

[SPEAKER_02]: I think the issue is that, well, if everybody's doing this, and you, you know, is your, your day to day queries from a consumer standpoint, do you really,

[SPEAKER_02]: Are you really going to be tied into that?

[SPEAKER_02]: Or is it going to be more about context?

[SPEAKER_02]: Is this why I say Apple over the long term?

[SPEAKER_02]: I think we'll be a big winner because there's a lot of context on your phone.

[SPEAKER_02]: Every text you ever sent, every email you ever sent, every app you ever download, all your screen time, what time you go to bed, all of that, is on your device.

[SPEAKER_02]: So I think over time, that will be a battle of,

[SPEAKER_02]: what ecosystem are you going to get?

[SPEAKER_02]: Loved and did.

[SPEAKER_02]: And I still think it's going to be.

[SPEAKER_02]: I thought the last one would potentially be cost advantage.

[SPEAKER_02]: And this is where I see the hardest, where I don't really see one company.

[SPEAKER_02]: unless they buy up a lot of bankrupt companies, compute power to get the scales where they can extract profits from what is called inference, which is your query.

[SPEAKER_02]: So that's the next one that could potentially be there, but I think that's going to be harder to come by.

[SPEAKER_02]: Well, that about doesn't.

[SPEAKER_02]: Thank you for tuning in, sorry for last week.

[SPEAKER_02]: It's been crazy one with travel.

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[SPEAKER_02]: This is Invest Talk, good night.

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