[SPEAKER_06]: This is Invest Talk from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_06]: Here's your host, Justin Klein.

[SPEAKER_07]: Good afternoon fellow investors and welcome back to Invest Talk.

[SPEAKER_07]: This is our Friday October 16th, 2026 edition of Invest Talk.

[SPEAKER_07]: We're set it for this hour to close the weekend with, we didn't have a few shows earlier this week.

[SPEAKER_07]: Like I said yesterday, there were some pickups in our production and traveling and you know life happens.

[SPEAKER_07]: So, I had to take a few days off, but we are back, so don't worry, we'll be here consistently.

[SPEAKER_07]: And we are here to answer your findings and investment questions, we're here to, as usual, help you take that next step in your financial journey so that you can capitalize opportunities

[SPEAKER_07]: and avoid the risks the pitfalls in today's market.

[SPEAKER_07]: That's what you saw today.

[SPEAKER_07]: If you were positioned accordingly, you probably have no K-Day.

[SPEAKER_07]: You're a position poorly.

[SPEAKER_07]: You probably saw a lot of red in the screen.

[SPEAKER_07]: So it was a very, very bifurcated market.

[SPEAKER_07]: So we'll talk about that a little bit more, but this is an example of widening these days.

[SPEAKER_07]: Top of these things and adjust your portfolio.

[SPEAKER_07]: Our performance, so you can take the appropriate amount of risk and take smart risk, not just any type of risk, but smart risk, especially in this market where geopolitics are playing a huge factor here, as well as how that's feeding into the cost of capital and then how that feeds into markets with bond markets as well as equity markets.

[SPEAKER_03]: So that's where we're going to look at today and much much more.

[SPEAKER_07]: So we are here for all of it during the next hour.

[SPEAKER_07]: But it quick heads up, are all new in-person in Vest Talk Retirement Summit.

[SPEAKER_07]: It's just eight days away.

[SPEAKER_07]: This is a complimentary event.

[SPEAKER_07]: We'll have an Irvine, California on Saturday, October 24th, that is one week from tomorrow.

[SPEAKER_07]: You are invited if you're in the area, if you live in the area, if you plan to be in the area, next weekend, it's going to be a great event.

[SPEAKER_07]: We have some experts covering tax strategy, a state planning, real estate, looks at the cover investment strategy.

[SPEAKER_07]: I'm going to cover broader financial planning and how it all puts together.

[SPEAKER_07]: We'll do a Q&A session for all of us.

[SPEAKER_07]: So anything that's on your mind, you want to ask about.

[SPEAKER_07]: We can cover that.

[SPEAKER_07]: And once again, it's next weekend.

[SPEAKER_07]: It's free of charge, but seating is limited.

[SPEAKER_07]: We have a handful of spots left.

[SPEAKER_07]: I just talked to you, Shelby, or marketing director earlier today, and she gave me an updated number.

[SPEAKER_07]: So, seating is very limited.

[SPEAKER_07]: So if you're going to register, you want to do that sooner rather than later before, you are waitlisted.

[SPEAKER_07]: Because once it fills up, we're going to start a wait list.

[SPEAKER_07]: So you can register now over at kppfinancial.com or investtalk.com.

[SPEAKER_07]: So head over there now.

[SPEAKER_07]: Now, just to be able to talk about today's Mark performance or run down the show topics.

[SPEAKER_07]: But first, let's tackle this color question now.

[SPEAKER_02]: Hello, this is Paul from San Diego.

[SPEAKER_02]: And I'm holding currently GE Aerospace Symbol GE.

[SPEAKER_02]: And I was going to continue to hold it for the long term.

[SPEAKER_02]: I just wanted to see what you thought about that.

[SPEAKER_02]: OK, thanks, Rod.

[SPEAKER_07]: Looking at GE Aerospace, this is a name that has done fairly well.

[SPEAKER_01]: zoom out to a weekly chart here.

[SPEAKER_07]: Yeah, I mean, it's low back in 2022 was around $40 per share.

[SPEAKER_07]: Now we're at $313 per share.

[SPEAKER_07]: Why is that?

[SPEAKER_07]: It's because earnings has earnings have gradually

[SPEAKER_07]: excuse me, and it continues to go up, both in a revenue basis and earnings.

[SPEAKER_07]: So the growth is very good.

[SPEAKER_07]: Earnings for share growth the year every year, expected this year to be 21%.

[SPEAKER_07]: It's been kind of the mid-20s for the last few quarters, but it is a deceleration from 81% in Q1 of last year.

[SPEAKER_07]: So,

[SPEAKER_07]: There's some growth to celebration.

[SPEAKER_07]: It's trading at a pretty hefty multiple, 36 times for looking earnings, enterprise value either on 27, that's near the high end of its range, even though it's pulled back.

[SPEAKER_07]: So to me, it's a bit expensive.

[SPEAKER_07]: I don't love it here at these levels.

[SPEAKER_07]: The months I'm certainly slowed.

[SPEAKER_07]: And so I would be a seller of the name.

[SPEAKER_07]: I do think the business is good, but it's just too expensive based on its growth trajectory, which is certainly slowing.

[SPEAKER_07]: So I'm passing on GE.

[SPEAKER_07]: Now, with a great show yesterday, we looked into this story.

[SPEAKER_07]: Our REITs, a buyer sell, wouldn't interest rates rise.

[SPEAKER_07]: Cover that topic as well as answer listener questions on Texas Pacific land and much, much more.

[SPEAKER_07]: And if you happen to miss it, go check it out.

[SPEAKER_07]: Best way to get every show is to follow and best talk wherever you get your podcast.

[SPEAKER_07]: Now, we have a lot of ground to cover.

[SPEAKER_07]: Over the 45 minutes or so in time for many, we'll get to all of it.

[SPEAKER_07]: Our main focus point is,

[SPEAKER_07]: About a Supreme Court ruling that could have a major impact on your 401k and that is, whether private, equity, private credit, hedge funds, these private investments can be put inside a 401k or should be put inside a 401k.

[SPEAKER_07]: The outcome could reshape how millions of Americans retirement assets are managed or what investment options

[SPEAKER_07]: You can access, so we're gonna dig into that story.

[SPEAKER_07]: In addition, we're going to touch another topic.

[SPEAKER_07]: One is gold, gold demand from central banks.

[SPEAKER_07]: In September, was in the height with at the highest level in almost two years.

[SPEAKER_07]: So we're gonna look at that story and what that means for the gold market.

[SPEAKER_07]: And then oil companies, while you and I are paying a lot more at the pump,

[SPEAKER_07]: Pretty much throughout our economy because of the war in the Middle East.

[SPEAKER_07]: Big oil companies are burning, a ton of money.

[SPEAKER_07]: Burning season is kicking off.

[SPEAKER_07]: This week, kicked off this week, and we'll get more in the coming weeks.

[SPEAKER_07]: But in the first half of this year, profits from the names like Exxon, Chevron, Shell, Total, BP, they're about 75% year over year, from the same period last year.

[SPEAKER_07]: So the limit they have is, what do you do with this money?

[SPEAKER_07]: Do you buy back shares, do you pay it?

[SPEAKER_07]: David and you go reinvest in new supply.

[SPEAKER_07]: What do you do with this money?

[SPEAKER_07]: And this could have a large impact on the ultimate price of energy.

[SPEAKER_07]: We're gonna dig into that story.

[SPEAKER_07]: And hopefully much, much more and much, much more is answering your finance and investment questions.

[SPEAKER_07]: We do a backlog of questions we're going to get to as many as we can today.

[SPEAKER_07]: We have one on the delities, fully paid lending program, and then Philip Morris International PM.

[SPEAKER_07]: And then we have some questions that came in via the comment section on the Invest Talk YouTube channel.

[SPEAKER_07]: But we're going to do a quick break.

[SPEAKER_07]: Please remember you can call any time and leave your question on the Invest Talk Voice Bank.

[SPEAKER_07]: And if you're listening, be out of live stream on vestalk.com or possibly an aim to help 20 in the Bay Area you can call right now at 8-899 chart next.

[SPEAKER_07]: I will comment on today's market activity.

[SPEAKER_06]: [♪ music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing

[SPEAKER_07]: It ain't 99 chart, it ain't 99, 2, 4, 2, 7, 8.

[SPEAKER_07]: So I get through and ask your question on today's show.

[SPEAKER_07]: Let's go take a look at the market today.

[SPEAKER_07]: It was overall a down day.

[SPEAKER_07]: You had the Russell 2000 down about one and two thirds percent.

[SPEAKER_07]: The NASDAQ down a little over two percent.

[SPEAKER_07]: The S&P down a little over one percent.

[SPEAKER_07]: The DAO was only down about three quorth about one third of one percent.

[SPEAKER_07]: So, just a modest sell-off there, because you actually had strength in financials, names like JP Morgan, up nearly 2% on the day, same with City, American Express, up about one, whilst far-gupped one and a half, so there's a lot of banks and a lot of financials that were strong.

[SPEAKER_07]: But it was anything surrounding the AI traded that was a week.

[SPEAKER_07]: Apple was strong up 1% because they're not deploying billions and billions of billions

[SPEAKER_07]: But guess who is?

[SPEAKER_07]: Names like Amazon down about half percent on the day.

[SPEAKER_07]: Microsoft down 1.8 go with that 1.4 meta down 2 and a quarter on the day.

[SPEAKER_07]: And all that feeds into those that are benefiting Oracle down 3 and 3 quarters.

[SPEAKER_07]: They're kind of a better version of Core Weave, but Core Weave is having problems.

[SPEAKER_07]: So just because they're a little better than Core Weave doesn't mean they aren't going to have their own problems with the amount of money they're spending on data infrastructure.

[SPEAKER_07]: And then that's feeding into names like Palantir down 6% on the day crowd strike down 7% Palantir networks down 7% micro and down 3.7 broadband on 2.6 so that's really where the

[SPEAKER_07]: the red in the market was concentrated.

[SPEAKER_07]: Like I said, financial is a good, even health care stocks, see that lily up 1% Johnson Johnson up 1.5.

[SPEAKER_07]: And you go into Durables, Coke, Proctor and Gamble, Philip Morris, Pepsi all nicely positive on the day.

[SPEAKER_07]: Even the utility stocks were strong with Duke Energy up 1.8 in the like.

[SPEAKER_07]: So there was a lot of strength there, even the retail trade outside of Amazon, which obviously is actually more of a tech name.

[SPEAKER_07]: Walmart and Costco were up.

[SPEAKER_07]: So this wasn't overall about market.

[SPEAKER_07]: Just continue rotation out of tech and into the harder, uh, the more traditional companies, not the most exciting names, but names that aren't as, uh, levered to the AI build up.

[SPEAKER_07]: So that's kind of the trend in the markets today.

[SPEAKER_07]: You had treasuries that were a bit stronger.

[SPEAKER_07]: You had yields down two to four

[SPEAKER_07]: But the market is going to get weaker, which is happening right now, that there's less pressure on the Fed to raise rates.

[SPEAKER_07]: And so shorter term rates may be coming in.

[SPEAKER_07]: I could easily see only one more rate hike from the Fed before something breaks enough to give them pause.

[SPEAKER_07]: Let's just say that.

[SPEAKER_07]: And you're starting to see things break like core weave.

[SPEAKER_07]: Dollar next down point three, percent on the day, gold finished up point three, silver up point two.

[SPEAKER_07]: three as well Bitcoin down 1.2 a lot of correlation there with big tech and Bitcoin because guess what a lot of people own Bitcoin as well as a lot of tech names and so in tech struggles tends to deliver on the Bitcoin space as well.

[SPEAKER_07]: WTI crude up 2.6% second sorry seventh consecutive daily gain for oils and oil prices.

[SPEAKER_07]: continue to go up despite what looks to be a slowing global economy.

[SPEAKER_07]: Let's see, yeah, Kevin Worst spoke at the IMF, no hearly hints at a decision, so that didn't really, I think, change much on that side, and let's see what else, yeah, there's still

[SPEAKER_07]: But that's about it.

[SPEAKER_07]: Yeah, interesting way to close the week.

[SPEAKER_07]: We had OpX week, it's often is a time of shifts in the market.

[SPEAKER_07]: So do we get the market freed up after OpX next week to sell off further?

[SPEAKER_07]: I think that's certainly possible.

[SPEAKER_07]: We also are on the myth-deverning season.

[SPEAKER_07]: And then we are knocking on the door here of the midterms.

[SPEAKER_07]: Or we two weeks from Tuesday, so two.

[SPEAKER_07]: Check my calendar.

[SPEAKER_07]: Yeah, isn't it?

[SPEAKER_07]: November 3rd?

[SPEAKER_07]: Yeah, so two weeks from Tuesday, so about two and a few weeks.

[SPEAKER_07]: Oh, away from the midterms.

[SPEAKER_07]: What happens after the midterms are those results contested?

[SPEAKER_07]: I think that is an underappreciated risk in markets.

[SPEAKER_07]: So entering interesting times as we head into the final quarter of the year.

[SPEAKER_07]: At the time of the time, we see questions via web form over in besttalk.com and let's go into one of those now.

[SPEAKER_07]: It says should we start thinking about picking up stocks like win, resorts, or loss, Vegas sands?

[SPEAKER_07]: Well, first off, anything related to loss Vegas, I would say no, but these are names that are actually more tied to the cow these days.

[SPEAKER_07]: So yes, you might know of

[SPEAKER_07]: The win in Las Vegas, but the win Mikhail is a much bigger driver of their business.

[SPEAKER_07]: She pulls up a lot of different systems here if we go to Arbic.

[SPEAKER_07]: So here's a geography by revenue.

[SPEAKER_07]: Yeah, Mikhail is 52% of win resorts revenue.

[SPEAKER_07]: 47 and 48% is in the United States.

[SPEAKER_07]: So

[SPEAKER_07]: This in a downtrend, I don't really see a reason to get into these names, both cyclically, as well as the competition from your poly-market of the world.

[SPEAKER_07]: I just don't really see a compelling case to be picking up these names.

[SPEAKER_07]: I don't think they're necessarily cheap.

[SPEAKER_07]: They have decent debt in their balance sheet.

[SPEAKER_07]: Very levered to both the United States and the Chinese economy, which I have to see from a geopolitical standpoint, becomes an issue.

[SPEAKER_07]: So no, I see no reason to be adding these to your portfolio.

[SPEAKER_07]: This is the best stock.

[SPEAKER_07]: If you've never called, I want to do it now.

[SPEAKER_07]: Can you call it out?

[SPEAKER_07]: It did.

[SPEAKER_07]: Now here in chart.

[SPEAKER_06]: As retirement gets closer, the questions often become more complicated.

[SPEAKER_06]: How much can you afford to spend?

[SPEAKER_06]: From where should you get your income?

[SPEAKER_06]: How should your portfolio change?

[SPEAKER_06]: This isn't a game, it's your life.

[SPEAKER_06]: KPP Financial Helps Investors work through important decisions before retirement begins.

[SPEAKER_06]: So, learn more, request a conversation, or get a free portfolio review.

[SPEAKER_06]: You can start now at investalk.com.

[SPEAKER_07]: Those are recent reports from the World Gold Council, and it showed that, in September, Central Banks bought the most gold since November of 2024, about 63 tons.

[SPEAKER_07]: And this is coming after a financial time's precious metal symposium, this is on Wednesday, where they really checked in on investors within the space, central banks, etc.

[SPEAKER_07]: And the moral of the story is that the trends from basically since the Ukraine war on in the gold space have not really changed.

[SPEAKER_07]: Their continues to be over all buying.

[SPEAKER_07]: Yes, there has been some pressure this year, especially after, and this is underappreciated, after the invasion of Iran, where a lot of those countries in the Central and the mid-E, excuse me,

[SPEAKER_07]: These money, they need capital because they couldn't sell their oil.

[SPEAKER_07]: So what do they do?

[SPEAKER_07]: They sold gold.

[SPEAKER_07]: They sold some of their reserves.

[SPEAKER_07]: And that's one of the reasons why you saw oil, oil, gold, kind of peak.

[SPEAKER_07]: What did the peak, yeah?

[SPEAKER_07]: Peaked right at the end of February.

[SPEAKER_07]: It was right around the start of the invasion.

[SPEAKER_07]: And then it fell about to, looking at GLD,

[SPEAKER_07]: And since then, it's been kind of shopping sideways to down, but considering higher interest rates considering a stronger dollar, it's held up very, very well kind of what I talked about yesterday, but the point here is that central banks are going to continue to weaponize the dollar that's what happened during the Russia Ukraine war.

[SPEAKER_07]: it's what's likely to continue to happen going forward.

[SPEAKER_07]: And so why will the rest of the world use gold?

[SPEAKER_07]: Excuse me, we use the dollar when they can go and buy a neutral reserve asset like gold.

[SPEAKER_07]: Then you look at our fiscal situation.

[SPEAKER_07]: We're running a 7% deficit GDP ratio.

[SPEAKER_07]: That is in a non-recessionary environment.

[SPEAKER_07]: What happens when maybe prices of home stagnate?

[SPEAKER_07]: So you have less capital gains taxes for people that sell their homes

[SPEAKER_07]: What happens to the deficit then?

[SPEAKER_07]: So people are losing faith in kind of alphiatic currencies.

[SPEAKER_07]: So people are asking themselves how do they protect the value of their currency against this inflationary backdrop?

[SPEAKER_07]: And that's why essential banks continue to be the biggest buyer.

[SPEAKER_07]: And consumers are increasingly in countries all around the world turning to gold as that neutral reserve asset.

[SPEAKER_07]: The people's bank of China added to its gold reserves in the past few months, increasing their percentage total percentage of their reserves to 9% is now in gold volume.

[SPEAKER_07]: So they're the second largest, second most important central bank in the world next to the Federal Reserve, but it's pretty clear to me to need to be that this is not just a

[SPEAKER_07]: This is long term.

[SPEAKER_07]: Yes, there's apps in flows, but overall it's not a shock that what a gold really bottoms late 2022.

[SPEAKER_07]: And it's been rallying very strong ever since.

[SPEAKER_07]: Now let's pivot over and answer a voicemail question now.

[SPEAKER_04]: Hey guys, great show.

[SPEAKER_04]: Calling in with a Roth conversion question.

[SPEAKER_04]: I'm trying to convert part of my traditional era to a Roth era.

[SPEAKER_04]: I am currently 60.

[SPEAKER_04]: So I was calling you to find out about the five year rule.

[SPEAKER_04]: And it sounds like there's a 10% penalty if you leave the money in there less than five years.

[SPEAKER_04]: But I also read that possibly, if you're older or 55 and a half, that 10% penalty doesn't come into play.

[SPEAKER_04]: I wonder if you could just clarify that for me.

[SPEAKER_04]: I appreciate your time.

[SPEAKER_07]: Thank you.

[SPEAKER_07]: Have a good day.

[SPEAKER_07]: Yeah, it doesn't apply to over 59 and a half, I believe.

[SPEAKER_07]: Yeah, I mean, if you are, I think, worried about taking, remember, you can take the money out of the, because at the five-year rule, you can take the money out after that, but after 15 and a half, it doesn't apply.

[SPEAKER_07]: So it's 15, nine and a half, it's not 55, it's 15, nine and a half, that five-year, no longer apply.

[SPEAKER_07]: So you can convert your Roth and take the principal out at any, well, you can take it at any time, because it's, yeah, over 15, half.

[SPEAKER_07]: So yeah, it's 59 and a half,

[SPEAKER_07]: Five-year rule doesn't apply, but for everyone else out there, this is a you think he said it was 60 so yeah He doesn't have to worry about the five-year rule.

[SPEAKER_07]: But everyone else out there It's very important to something we're going to talk about next Saturday, which is The Roth conversion question is So tied in to your entire financial picture, especially as you get your 60s You're how much can can we making how long are you going to work for?

[SPEAKER_07]: What is your RMD going to be?

[SPEAKER_07]: The size of those accounts how they're invested, what the value will likely be in 10, 15 years.

[SPEAKER_07]: For this guy of these 60 now, what is that likely amount of your IRA if you keep it in there, you don't do a conversion in 13 years.

[SPEAKER_07]: So these are all factors we're gonna dig into and it can be complex, but you have the right software, you have the right setup, you can answer that.

[SPEAKER_07]: We're going to head into a break right here calls now at 8 a.m. at 8 a.m. at chart.

[SPEAKER_07]: At KPP Financial, Accountability means more than advice.

[SPEAKER_07]: It means we invest alongside you through our parallel investing approach.

[SPEAKER_07]: 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_07]: If your portfolio moves, ours does too.

[SPEAKER_07]: That is alignment.

[SPEAKER_07]: That is transparency.

[SPEAKER_07]: That is the KPP difference.

[SPEAKER_07]: Visit investtalk.com to get your free portfolio review.

[SPEAKER_06]: The Invest Talk Retirement Summit is coming to Irvine, California, on Saturday, October 24th.

[SPEAKER_06]: For an exclusive in-person event, it will focus on five key decisions that can shape your financial future, attendance is complimentary and seating is limited.

[SPEAKER_06]: Reserve your place now at investalk.com.

[SPEAKER_07]: It hit 99 chart, it hit 992, 4, 2, 7, 8.

[SPEAKER_07]: So I get to ask your question on today's show.

[SPEAKER_07]: Now, our main focus point today is about the Supreme Court's decision on potentially in your 401k.

[SPEAKER_07]: It's a lawsuit brought by a former Intel employee, yeah, Intel, the chip producer, chip maker.

[SPEAKER_07]: That sued when they added private funds, private equity, and hedge funds into the plan.

[SPEAKER_07]: And how they rule could have a large impact on your 401k plan and what goes in your 401k.

[SPEAKER_07]: Now the plaintiff accused the company of violating its fiduciary duty by including private equity and hedge funds in its defined contribution plan, which basically they're 401k.

[SPEAKER_07]: Now this is something you can do to your employer at any time.

[SPEAKER_07]: If you think your funds, the funds that are picked for you are in there for any reason beyond that is in your best interest,

[SPEAKER_07]: you have the right to sue your employer.

[SPEAKER_07]: Those that are in charge of the 401k have a fiduciary duty to act in your best interest.

[SPEAKER_07]: So that's the first thing you need to know.

[SPEAKER_07]: Doesn't mean you have a case, but

[SPEAKER_07]: know that you have that possibility.

[SPEAKER_07]: So with this lawsuit alleges that the investments performed worse than standard equity funds would have.

[SPEAKER_07]: Now the answer to that is of course they did probably mainly because usually these are not good investments.

[SPEAKER_07]: But that's not really a good reason that's the argument here is that that's not really a good reason to say that they breach their fiduciary duty.

[SPEAKER_07]: Just because something underperformed over a period of time doesn't necessarily mean that it was put in there

[SPEAKER_07]: it'll reasons right reasons that are we're not in their best interest for example I use a foreign stocks a foreign stocks were in a performing for a decade up until the end of 2024 and since then They have started out before Now in 2024 if you were ahead of a 401k you might say well I don't think we really need much foreign exposure they haven't done very well

[SPEAKER_07]: Then that's that they're they're rational.

[SPEAKER_07]: They don't know much about the investment world or how these things kind of flow in cycles.

[SPEAKER_07]: They may just exclude that.

[SPEAKER_07]: Now they also may exclude it because they want to put in funds where they get some sort of commission or a kickback or some sort of perks.

[SPEAKER_07]: And that's where I think things get murky and that happens a lot with the advisors on 401k plans.

[SPEAKER_07]: They get some sort of what's getting commissions or kickbacks.

[SPEAKER_07]: from either a fund family or a particular fund that might be in there are funds that are in the in the plan and that's really the issue that I see more often than not.

[SPEAKER_07]: I do think that more plans should include more options but private equity and private creditor and hedge funds typically are pretty illiquid.

[SPEAKER_07]: You see that now with what's going on

[SPEAKER_07]: and the insurance industry and what's going on with just being able to liquidate a lot of these positions.

[SPEAKER_07]: If you hold them, if you were sold them, I'm sure hundreds, not thousands of you out there are holding these type of names that just can't be sold.

[SPEAKER_07]: And in a 401k, people leave their money.

[SPEAKER_07]: If they take a loan out, they need to liquidate some assets or maybe they just retire.

[SPEAKER_07]: And now they want to go invest in something else.

[SPEAKER_07]: So this lawsuit isn't just about

[SPEAKER_07]: these private equity funds and whether they underperform or not.

[SPEAKER_07]: Because it's about, how do you benchmark these things?

[SPEAKER_07]: Where do you benchmark a private equity fund against the S&P?

[SPEAKER_07]: That really, because they're kind of investing in small midcap names.

[SPEAKER_07]: So it's more of a, against the Russell 2000, those things are very hard to kind of parse out.

[SPEAKER_07]: Private credit fund is it, you know, against the total bond market, probably not, because that's treasury is in it.

[SPEAKER_07]: It's probably more a high yield bond fund, right?

[SPEAKER_07]: Once again, those are difficult to kind of benchmark.

[SPEAKER_07]: So it's not really, I think the story of this lawsuit, the actual things they should be focusing on, once again, are the conflicts within that industry, which are numerous, and very common.

[SPEAKER_07]: So that's what I would ask if you have a 401k, you should be talking to your HR department, you should be talking to your CFO or whoever is put in charge of picking,

[SPEAKER_07]: The funds ultimately signing off on the plan who has the fiduciary duty, and ultimately has the risk to be sued by the employees.

[SPEAKER_07]: So I don't ultimately don't think it's a good idea to have any of these alternative assets, but at least it's not a good idea for the average investor, average 401k, hard to submit, but it's good for the industry because they want more dollars, they want more dollars that are sticky.

[SPEAKER_07]: Just like BlackRock loves the fact that you are in a S&P link fund,

[SPEAKER_07]: or it's targeted fun because they make money off of that.

[SPEAKER_07]: That's one of the reasons why BlackRock is so large because you're 401k your real bow advisor.

[SPEAKER_07]: It's just putting money into the indexes.

[SPEAKER_07]: And so they want to replicate that in the private funds, but ultimately I don't think that's great for the investor.

[SPEAKER_07]: Now let's keep things moving and play another listener question now.

[SPEAKER_05]: Hi, don't get here from New York.

[SPEAKER_05]: Thank you for all that you do.

[SPEAKER_05]: I'm looking at a rolling in Fidelity's fully paid lending program for my taxable brokerage account.

[SPEAKER_05]: It's basically a program at Fidelity where people can loan your stocks and you get some money off of it.

[SPEAKER_05]: I meet the $25,000 account minimum, but I want to make sure the incremental yield is worth the trade-offs in the taxable environment.

[SPEAKER_05]: My main goal is earning extra yield, but since this is a standard taxable

[SPEAKER_05]: brokerage down.

[SPEAKER_05]: I know my dividends could be converted into payment in lieu of dividends.

[SPEAKER_05]: I don't really have that many dividend stocks in my portfolio as anyways, but I want to avoid accidentally increasing my tax burden or taking on unaccounted risk.

[SPEAKER_05]: Dispotential tax increase from receiving ordinary income by a cash in lieu payments outweigh the lending yield for dividend paying stocks.

[SPEAKER_05]: Cheers on Lone, lose SIPC protection and, instead, backed by fidelity's collateral.

[SPEAKER_05]: It's counterparty risk something a retail investor should really figure worry about with a major brokerage like fidelity.

[SPEAKER_05]: And my final question is, is this program that suited for only for non-dividing growth stocks?

[SPEAKER_05]: Or is there a smart way to manage your cost to portfolio?

[SPEAKER_05]: Just looking to make some extra money.

[SPEAKER_05]: My money is growing.

[SPEAKER_05]: I'm hoping, and I've read somewhere that, like,

[SPEAKER_05]: or these rich people make more money by not the actual income that they make, but actual like taking loans based on their portfolios that they have.

[SPEAKER_05]: Thank you very much.

[SPEAKER_05]: Bye.

[SPEAKER_07]: Well, you kind of called out a lot of the drawbacks there.

[SPEAKER_07]: No sipping insurance coverage on these assets to fidelity defaults.

[SPEAKER_07]: I don't think it's going to happen.

[SPEAKER_07]: We use fidelity as a broker.

[SPEAKER_07]: We don't do.

[SPEAKER_07]: We don't opt into this.

[SPEAKER_07]: The paid lending program.

[SPEAKER_07]: But.

[SPEAKER_07]: I can see it being attractive, especially if you're going to hold on to these names for a long period of time.

[SPEAKER_07]: Now, we have to remember too, there's some advertised rates.

[SPEAKER_07]: I think they say up to 27% on certain stocks that you can earn, especially stocks that may be hard to borrow.

[SPEAKER_07]: Probably the reason they're hard to borrow is because they're probably not great companies to be honest with you.

[SPEAKER_07]: So I'd be worried about holding those picker names anyway.

[SPEAKER_07]: Most of the good names that aren't often short, shorted, and that's why they're doing this or trying to get access to shares that could be lent out.

[SPEAKER_07]: Those, this is, you're not gonna earn much on typically.

[SPEAKER_07]: So it varies a lot, and so with the upside with the actual yields you're gonna get by opting into this fear and tire portfolio.

[SPEAKER_07]: If it's a lot, actually it's kind of a red flag for your portfolio.

[SPEAKER_07]: So, there's a trade-off there, like you said, the dividends or tax that your nearing contacts rate, so it depends on what is your nearing tax rate, is it high or not, if it's low, then that there's probably not much drawback on that side.

[SPEAKER_07]: You also don't get voting rights on these, probably doesn't matter for you if you're a small investor with not much impact on the overall, the voting of shareholders, etc.

[SPEAKER_07]: So, yeah, I think there are some drawbacks, not enough to meet for me to say opt out of it completely, but it does depend on what that yield is what else.

[SPEAKER_07]: IRAs are eligible, so I think that kind of helps if it is a, on the dividend side, right?

[SPEAKER_07]: Because whether it's an IRA, if it's taxiduring, any context rate or not,

[SPEAKER_07]: it doesn't really matter because it's only tax when you take the money out.

[SPEAKER_07]: So I think there's a little more upside doing this within an IRA.

[SPEAKER_07]: But yeah, I think I think that covered it overall.

[SPEAKER_07]: Not a terrible idea, but kind of depends on what type of account it is and what your tax rate is.

[SPEAKER_07]: Now as we close up the week, being at Friday, we'd like to check in on some of the major

[SPEAKER_07]: Benchmark numbers for the week in the two year yield was that 4.7% 2 weeks ago is that 4.83% so down a little bit this week as the market overall weekend in the odds of a rate hike in October later this month diminished think we're at here

[SPEAKER_07]: amazing how fast these Fed meetings come up and then the next Fed meeting will be on December 9th the final one for the year.

[SPEAKER_07]: There's a decent chance, 70, about 70, 90% chance.

[SPEAKER_07]: There's at least one rate hike by year and so overall that's probably what we're getting with the market started to price that in this week.

[SPEAKER_07]: The 10 year treasury do go down to 5.08, a couple of weeks ago

[SPEAKER_07]: The mortgage rates are probably going to come in.

[SPEAKER_07]: We work right out on the seven half percent.

[SPEAKER_07]: It's a, I'll be closer to seven and a quarter right now.

[SPEAKER_07]: Let's see the mortgage needs daily.

[SPEAKER_07]: Yeah, the 30 year treasury rate on mortgage news daily and a treasury rate mortgage rate, 30 year mortgage rate, 7.37 actually.

[SPEAKER_07]: So it didn't come down that much despite the 10 year coming down.

[SPEAKER_07]: Gold at 4165 announced an $18 increase compared to a couple of weeks ago.

[SPEAKER_07]: So it's hanging in there and certainly bounce back a little bit this week.

[SPEAKER_07]: Silver, $57.04 now, let's say $3.55, sent a decrease compared to a couple weeks ago.

[SPEAKER_07]: So that's been certainly weaker than gold overall.

[SPEAKER_07]: Oil, for back up about $100, the barrel, 101, $50, it's a $10 in changing increase from just two weeks ago.

[SPEAKER_07]: So like I said, the seven straight trading days of oil going up and that is fed into gasoline prices, $4.32 a gallon.

[SPEAKER_07]: down still a couple, uh, a sense from a couple weeks ago, but still well above that four dollar mark, which I think is kind of the area where people complain, and something doesn't vote well for.

[SPEAKER_07]: Whatever administration is in the White House, when you have a gasoline above $4 gallon national average, that doesn't vote well for the midterms coming up.

[SPEAKER_07]: California, $6.21 per gallon.

[SPEAKER_07]: So obviously, we're always in much, much higher, but strong premium continuing from the national average.

[SPEAKER_07]: Especially versus Wyoming, gas is at $4.49 a gallon today.

[SPEAKER_07]: Let's lip in another question from 8.89 chart.

[SPEAKER_00]: longtime listener to your gauge show on Matt for Minneapolis.

[SPEAKER_00]: I have a quick question for you guys.

[SPEAKER_00]: Looking, of course, I was too diversify my portfolio.

[SPEAKER_00]: I think you guys possibly have this stock in one of your portfolios.

[SPEAKER_00]: Tickersonal is PM, the Philip Morris company.

[SPEAKER_00]: I know it still does a good job of growing.

[SPEAKER_00]: It's done a good job this year so far.

[SPEAKER_00]: And I believe it still is a good dividend.

[SPEAKER_00]: I was wondering if you guys would even be more positive about this stock because I heard they just joined with Altria now, so the two big tobacco companies are one or something.

[SPEAKER_00]: Does that make them even powerful company and one that's better to have in the future?

[SPEAKER_00]: Look forward to hearing your answer on the show.

[SPEAKER_00]: Thank you, have a great day.

[SPEAKER_07]: I've seen no news about Altria and Philip Morris joining up.

[SPEAKER_07]: In fact, it's actually the opposite.

[SPEAKER_07]: They fill a Morris is a spin-off.

[SPEAKER_07]: They separated some years back.

[SPEAKER_07]: Basically, PM fill Morris is filled more international.

[SPEAKER_07]: They are basically the cigarette business of Fill Morris outside of the United States.

[SPEAKER_07]: Altria.

[SPEAKER_07]: was spun off, and it was the domestic side.

[SPEAKER_07]: You'd growth of cigarette usage around the world, and obviously, here in the United States, cigarette usage has been declining for a number of decades.

[SPEAKER_07]: So, no, they're not the same company.

[SPEAKER_07]: Now, Philip Morris has a lead in smoke list tobacco.

[SPEAKER_07]: And that's why they've been growing stronger, and that's why the stock performance has been very good.

[SPEAKER_07]: It's been one of our biggest and most consistent holdings for a number of years now.

[SPEAKER_07]: I think when we've had say at least three years, five years, it's been a long time.

[SPEAKER_07]: We love the business, and you can just look at it and total return this year.

[SPEAKER_07]: It's up 30.76% total return last year, 37.96% year before that, 33.56%.

[SPEAKER_07]: In 2023, it was down 2% so even in a bad year, it was a very minor downturn.

[SPEAKER_07]: And in a year when the market was really bad, in 2022, it was up 11.84%.

[SPEAKER_07]: So you can see it's a consistent total return performer.

[SPEAKER_07]: We're big fans of it.

[SPEAKER_07]: It's five year return is over 18%.

[SPEAKER_07]: And you're lies.

[SPEAKER_07]: So yeah, we're big fans of it.

[SPEAKER_07]: And this is a good lesson to everyone out there around

[SPEAKER_07]: It's not just about demand.

[SPEAKER_07]: Everyone needs to focus on demand and supply.

[SPEAKER_07]: This is most commonly discussed in regards to the commodity industry, but this can be any industry.

[SPEAKER_07]: And the cigarette industry is a perfect example of this.

[SPEAKER_07]: Any taboo kind of industry, maybe a boring industry and industry that is viewed as old and staggy, nobody wants to get into right?

[SPEAKER_07]: How many new cigarette companies have you seen launch in the past 20 years?

[SPEAKER_07]: Probably zero, right?

[SPEAKER_07]: So despite an industry where profits are very, very high, profit margins are very high.

[SPEAKER_07]: And the user base is sticky.

[SPEAKER_07]: So you think it's a good business, but nobody wants to get into it.

[SPEAKER_07]: So that leaves the Philip Morris in the world in the altitudes of the world, too.

[SPEAKER_07]: to get you to raise prices, to keep margins very high, return invested capital to fill more, it's 27%, they've invested in its moccas tobacco, and they've had the cash flow to do that, they buy it back shares, they pay a dividend, write it on free per cent, they'll raise that dividend over time.

[SPEAKER_07]: So, one near full business, no matter how you feel about cigarettes, or smoke this tobacco, or whatever, this is a great business and a great form of company, and we continue to own it.

[SPEAKER_07]: Those are Vestock, I'm Justin Klein, we have one goal here, each and every week, they help you achieve your own version of Fage and Freedom, and work continues after this final break.

[SPEAKER_07]: Which questions in right now, it's 8 a.m., 90 by a.m.

[SPEAKER_06]: The weekend is here or almost here, but you've got finance and investment questions, so step up and call in.

[SPEAKER_06]: Invest talk.

[SPEAKER_06]: 888 99 chart.

[SPEAKER_03]: Hey, and that's talk.

[SPEAKER_03]: Just a quick question about a stock that popped up in my portfolio.

[SPEAKER_03]: It is THRM.

[SPEAKER_03]: Jen Thirm Inc.

[SPEAKER_03]: I never bought it.

[SPEAKER_03]: I'm not sure why it popped up or how it popped up.

[SPEAKER_03]: Um, maybe you guys can look into that for me.

[SPEAKER_03]: Thank you.

[SPEAKER_03]: Bye.

[SPEAKER_07]: THRM.

[SPEAKER_07]: Oh, okay.

[SPEAKER_07]: Is this?

[SPEAKER_07]: Do you own Modine?

[SPEAKER_07]: That would be my question because it looks like.

[SPEAKER_07]: Yeah, it spun it off.

[SPEAKER_07]: That was in late July.

[SPEAKER_07]: It looks like.

[SPEAKER_07]: Yeah, so if you own Modine, this was spun off.

[SPEAKER_07]: It looks like for Modine.

[SPEAKER_07]: Emotion is in the AI space as well, though this is around thermo management, I would imagine, yeah, thermal management solutions.

[SPEAKER_07]: I think this is a name that has less is less tied to AI.

[SPEAKER_07]: It's more around, it looks like medical thermal management.

[SPEAKER_07]: So he started to analyze these on the fly sometimes, especially smaller names.

[SPEAKER_07]: Yeah, it's automotive, climate, and comfort systems, cable technology, battery performance solutions, valve systems, and medical segment as well.

[SPEAKER_07]: So, and if you look at the performance of the business, it's been kind of an end downtrend as a blade.

[SPEAKER_07]: That's what the stock is following in front of the high of 48 all the way to 29.

[SPEAKER_07]: And also, here's something else.

[SPEAKER_07]: This is a lesson for everyone around spin-offs.

[SPEAKER_07]: underperform in the first year.

[SPEAKER_07]: And actually, there are a lot of potential good investments good opportunities in these spin-offs.

[SPEAKER_07]: Why do they enter perform?

[SPEAKER_07]: Well, because just this perfect example, what happens?

[SPEAKER_07]: You own a name, maybe you don't pay too much attention to these names.

[SPEAKER_07]: And then one spins it off.

[SPEAKER_07]: And it's a name you've never heard of.

[SPEAKER_07]: It sits in your portfolio.

[SPEAKER_07]: You don't really understand what it does.

[SPEAKER_07]: You probably, it's probably a

[SPEAKER_07]: kind of a non-core business that maybe it doesn't, it's not attractive to the average shareholder.

[SPEAKER_07]: And they just spin it off.

[SPEAKER_07]: And what do you do with it?

[SPEAKER_07]: Something you don't understand or didn't want to buy in the first place where you just sell it.

[SPEAKER_07]: And so they tend to underperform, tends to be in a downtrend.

[SPEAKER_07]: Until all of those people kind of shed the shares that know nothing about the business.

[SPEAKER_07]: Doesn't use the bad business?

[SPEAKER_07]: Just maybe a business that isn't that exciting.

[SPEAKER_07]: And then eventually those weak hands are gone and now it's able to kind of trade freely and under less downward pressure.

[SPEAKER_07]: And so this is not a shock.

[SPEAKER_07]: This is gone from a high of 46 after the spin off to 29 now.

[SPEAKER_07]: Now it doesn't mean I would probably own it near a term because it is very weak and will probably continue to underperform for a period of time.

[SPEAKER_07]: But this is the type of name that I'd have in my watch list.

[SPEAKER_07]: to see when all the sellers are gone, there's a bunch of capitulation, and nobody wants to own it anymore.

[SPEAKER_07]: And if the business still solid underneath the surface, then you might wanna pick it up, but don't expect it to perform well over the short term.

[SPEAKER_07]: Well, that about does it.

[SPEAKER_07]: I think we are tapped out for today.

[SPEAKER_07]: Appreciate you all, appreciate you all tuning.

[SPEAKER_07]: And I wanna just highlight once again our retirement summit coming up, I'm excited for it.

[SPEAKER_07]: So I'd see some of you, who haven't seen in person for a number of years now.

[SPEAKER_07]: We're back and we do a lot of webinars, but it's always good to meet face to face.

[SPEAKER_07]: Answer your questions.

[SPEAKER_07]: We love answer your questions hearing your voice mails answering questions that are submitted to YouTube or website or whatever, but in person there's the back and forth and that dynamic just really can't be replicated.

[SPEAKER_07]: And so we're excited to help all of you kind of unpack some really important topics and put it all together.

[SPEAKER_07]: in a plan how to think about it as a broader plan.

[SPEAKER_07]: So, I'm excited for that.

[SPEAKER_07]: And if you want to register once again, only a handful of spots left before we start a wheelist.

[SPEAKER_07]: So, you're going to register head over to investtalk.com right now.

[SPEAKER_07]: I'm Justin Klein.

[SPEAKER_07]: Reminding of cake, beef financials, parallel investing.

[SPEAKER_07]: When we make a trade for our clients, make the same trade for ourselves.

[SPEAKER_07]: Same day, same percentage, same price.

[SPEAKER_07]: No friend running, no special treatment vest we invest right alongside our clients, which are the same risk and potential for success and you can learn more by thinking over to invest.com and please, thank you for your friends and family about our free podcast downloads, but you where they can find any time that iTunes or Spotify and be sure to rate and review on iTunes as well.

[SPEAKER_07]: We appreciate that.

[SPEAKER_07]: Independent thinking should success, it's the best talk.

[SPEAKER_07]: Enjoy your weekend.

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