[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_01]: Independent Thinking, shared success.
[SPEAKER_01]: Invest Talk is May possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.
[SPEAKER_01]: Here is KPP Financial Portfolio Manager, Luke Guerrero,
[SPEAKER_00]: Good afternoon, fellow investors, and welcome back to Invest Talk.
[SPEAKER_00]: I'm your host, Luke Guerrero, and today's Friday, December 19th, 2020, five.
[SPEAKER_00]: And I don't know if you know this, but I will remind you, this is the last full trading week of the year.
[SPEAKER_00]: It is crazy.
[SPEAKER_00]: There's just one more abbreviated full week in 2025.
[SPEAKER_00]: And so, because of this, and we say this over and over, now is not the time to lose focus.
[SPEAKER_00]: With that in mind, our objective today is the same as each and every day.
[SPEAKER_00]: To try and help you become a better investor.
[SPEAKER_00]: We want to help you understand market dynamics, and especially how they affect your report folios.
[SPEAKER_00]: To that end, as always, we bring a mixture of educational items of actionable material that most importantly, you provide us.
[SPEAKER_00]: with the finance and investment questions on the top of your mind.
[SPEAKER_00]: Now this year we did do something a bit new for you.
[SPEAKER_00]: We produced the first ever in Vestock holiday special and a drop exclusively on our YouTube channel.
[SPEAKER_00]: Yes, sir, today.
[SPEAKER_00]: It's fun.
[SPEAKER_00]: It's a fun end of your episode.
[SPEAKER_00]: We're Justin and I look back at the biggest market themes of 2025 and highlight a few lessons which will carry forward into 2026.
[SPEAKER_00]: We also selected a color question of the year, which we discussed in depth.
[SPEAKER_00]: The Investor Quality Special is free to watch, so head over to YouTube, and search Investor with two T's, or use the link in today's show notes.
[SPEAKER_00]: And while you're there, don't forget to hit subscribe and hit the bell.
[SPEAKER_00]: Now, just a bit, we'll talk about today's market performance and run down that show topics for you.
[SPEAKER_05]: But first, let's tackle this color question now.
[SPEAKER_05]: symbol TT.
[SPEAKER_05]: And I'm wondering what you guys think are good entry point would be.
[SPEAKER_05]: Thank you.
[SPEAKER_00]: Ticker TT is trained technology that is TRA and E not TRAIN.
[SPEAKER_00]: And trained technology is a global industrial and climate solutions company.
[SPEAKER_00]: They're based in Ireland and they are listed on the New York Stock Exchange.
[SPEAKER_00]: Now taking a look at this company, right?
[SPEAKER_00]: It is a fairly fairly large company.
[SPEAKER_00]: Here today, it's a 5.5% up 3.43% over the past 52 weeks, but down 4.1% in the past three months.
[SPEAKER_00]: Now, it's an 86 billion dollar market cap company that really doesn't have that much debt.
[SPEAKER_00]: Only 4.759 billion dollars in debt as of their fiscal year and December 2024.
[SPEAKER_00]: Revenue growth.
[SPEAKER_00]: bit moving the positive direction since 2020 when Revenue is about 12 billion, now projected to be 21.2 billion at the end of 2025.
[SPEAKER_00]: So significant improvement there.
[SPEAKER_00]: This long-term average is only 3.6% why because pre-pandemic in 2019, Revenue is at 16.5 billion.
[SPEAKER_00]: But the same time net income, growing at 13.6% on an annualized basis, which is pretty solid.
[SPEAKER_00]: margins.
[SPEAKER_00]: Great, even to margin, 20.3% net margin, 13.1% in 2024 projected to grow to 13.8.
[SPEAKER_00]: And return on equity, get this 35, 35.9% is what it was last year.
[SPEAKER_00]: Taking a slight dip to 34, but still pretty reasonable.
[SPEAKER_00]: So you might be asking yourself,
[SPEAKER_00]: Why is this company called train that is not about trains?
[SPEAKER_00]: Trading at 26.1 times price to forward-looking earnings, 29 times price to cashflow?
[SPEAKER_00]: Well, it's because they're commercial each-of-ack business.
[SPEAKER_00]: It's had some pretty strong resilient performance, revenues, grown from it, EPS has grown from it, and so you've seen this consistent.
[SPEAKER_00]: earnings upgrades and therefore analysts upgrades as well.
[SPEAKER_00]: Now from a strength perspective, it's been pretty weak here today, right?
[SPEAKER_00]: It's under performance industry by 24.8%, and that was on the back of stellar, not just 2023 and 2024 performance, but performance going all the way back to
[SPEAKER_00]: They also benefit and not just from the AI build out, but from their climate-focused solutions segment, which has done particularly well as well, but there is a bit of risk here, right?
[SPEAKER_00]: Performance versus their peers slowing down a bit.
[SPEAKER_00]: Valuations look a little high.
[SPEAKER_00]: They are a cyclical name as well.
[SPEAKER_00]: I think what the market is telling you with this pricing is that, well, certainly they have not broken out.
[SPEAKER_00]: There has not been some sort of catalyst that has driven performance higher, revenue growth, slowing, net income growth, slowing as well.
[SPEAKER_00]: So for now, I think I would keep this on my watch list.
[SPEAKER_00]: But I like the idea.
[SPEAKER_00]: I like the theme.
[SPEAKER_00]: I certainly like the industry.
[SPEAKER_00]: That is, Train Technologies PLC, Ticker TT.
[SPEAKER_00]: Let's talk a little bit about the markets today, US stocks, a bit higher ending just off of their best levels, as MP500 Nasdaq both posted modest weekly gains, erasing some declines that we saw earlier in the week.
[SPEAKER_00]: Big Tech, mostly higher within video being the big standout amongst that group.
[SPEAKER_00]: We also saw Momentum, growth factor names, retail investor favorites, high beta names, all leading the way.
[SPEAKER_00]: Other performers included networking and communications, money center banks, IBs, biotech and managed care.
[SPEAKER_00]: On the downside though, under performers included athletic
[SPEAKER_00]: On the outside treasuries, a bit weaker yields were up anywhere from three to four basis points.
[SPEAKER_00]: Dollar index up 20.
[SPEAKER_00]: We did see some yen weakness, the big story there in FX, a somewhat less hawkish bank of Japan, rate cut than expected.
[SPEAKER_00]: Gold though, finished up 50 basis points in crude oil, settling up 90 basis points, though still off 1.6% for the week.
[SPEAKER_00]: Overall, I mean, volumes were a bit elevated, you did have option expiration, but other than that, pretty quiet trading session.
[SPEAKER_00]: We had better AI sentiment seeming to be the go-to excuse for the strength that we saw did drive that big momentum out performance that we just talked about.
[SPEAKER_00]: Also some discussion about how markets have entered a very favorable seasonal period the Santa Claus rally as we go towards the end of the year.
[SPEAKER_00]: On the earnings calendar, a bit of mixed takeaways again, Nike, the big story hit by softer guidance.
[SPEAKER_00]: We also saw a bit of a hawkish shift in the global rate impulse, the Bank of Japan delivering on a widely expected 25 basis point tightening.
[SPEAKER_00]: On the data side, final December University of Michigan Consumer sentiment index dipped to 52.9 from the preliminary 53.3 number.
[SPEAKER_00]: Bipalow consensus, but still ahead of the November 551 rating.
[SPEAKER_00]: Release also noted, year ahead inflation expectations dropped for the fourth consecutive month to 4.2%.
[SPEAKER_00]: The lowest reading in 11 months, but five year expectations still remained at the 3.2% level.
[SPEAKER_00]: November existing home sales came in right at the 4.13 million mark.
[SPEAKER_00]: A bit better than October's upperly revised 4.11 million.
[SPEAKER_00]: Looking ahead to next week, it is a holiday short and week December 22nd is gonna be fairly quiet in terms of data, though there will be some treasury auctioning.
[SPEAKER_00]: Other than that, though, I mean, there is a short day on Wednesday and obviously a closure on Thursday.
[SPEAKER_00]: All right, we got a lot of going to cover in the next 45 minutes or so.
[SPEAKER_00]: And here's a little bit of what we have planned.
[SPEAKER_00]: My main focus point concerns this important story, de-dollarization risks of the weaponized dollar.
[SPEAKER_00]: The main question is, is the dollar's global dominance ending?
[SPEAKER_00]: So we're going to break down the real risks of de-dollarization and how geopolitical sanctions could punish US heavy portfolios.
[SPEAKER_00]: Also,
[SPEAKER_00]: We'll touch on the latest CPI report, which came out yesterday, and all the data issues when you dove deeper, and how that might linger for quite some time.
[SPEAKER_00]: We'll also touch on how private funds that are suddenly trying to get liquidity becoming public, well, their valuations are slipping.
[SPEAKER_00]: Should we have time at the end of the show?
[SPEAKER_00]: We'll touch on how central banks globally are starting
[SPEAKER_00]: We also have some voice bank calls ready to play, including one on monetizing the debt and another on Nike ticker NKE.
[SPEAKER_00]: As well as some questions that came in from the comment section of the Invest talking YouTube channel.
[SPEAKER_00]: And of course, I welcome your findings to invest in questions now, or any time throughout the show.
[SPEAKER_00]: We're going to do break.
[SPEAKER_00]: Still to come, my main focus point on de-dollarization and the risk that really all of us as US investors may face, and hopefully, hopefully, some live calls.
[SPEAKER_00]: Stay with me, and if you feel like talking, give me a call at 888-99-Chut.
[SPEAKER_04]: For the holidays, KPP Financial is excited to introduce a high-value limited time offer, the holiday estate bundle.
[SPEAKER_04]: It's specifically designed to help new households quickly establish a solid foundation for their financial and personal legacies before the year ends.
[SPEAKER_04]: When you begin a financial relationship with KPP Financial and complete your onboarding by December 31, 2025, you'll receive essential estate planning documents as an added benefit, and it's all powered by our trusted partner, Truston Will.
[SPEAKER_04]: Learn more about the holiday estate bundle now at investtalk.com, and while you're there, fill out a portfolio review to get started.
[SPEAKER_04]: and now the phone lines are open and waiting for your finance and investment questions 88899 chart.
[SPEAKER_04]: The Invest Talk Phone lines never close and now Luke Guerrero is here taking your calls live.
[SPEAKER_04]: Invest Talk 88899 chart.
[SPEAKER_00]: What are the risks of a weaponized dollar?
[SPEAKER_00]: Well, a quiet but very important shift is underway in global finance and it starts with a simple data point, four in central banks are holding fewer U.S. bonds that they have in decades.
[SPEAKER_00]: And then decline has re-added concerns about whether global demand for dollar-denominated assets is slowly eroding.
[SPEAKER_00]: Now the US dollar still sits at the center of global trade reserves and capital markets, but its dominance is no longer taken for granted.
[SPEAKER_00]: For decades, the dollar's role as the world's reserve currency has been a pillar of American economic power as well as financial stability.
[SPEAKER_00]: And this status traces back to the Bretwood system that coming out of the Second World War when currencies were pegged to the dollar and the dollar was tied to gold.
[SPEAKER_00]: Now even after the gold standard ended in the 1970s,
[SPEAKER_00]: The dollar retained its dominance.
[SPEAKER_00]: Why?
[SPEAKER_00]: Because stability, liquidity, and trust in U.S. institutions.
[SPEAKER_00]: Today, the dollar remains involved in roughly 88%.
[SPEAKER_00]: 88% of global foreign exchange transactions.
[SPEAKER_00]: An astonishing level of market penetration that you really can't see with any other currency.
[SPEAKER_00]: This dominance really gives the United States some meaningful advantages, including lower borrowing costs and the ability to sustain higher levels of national debt.
[SPEAKER_00]: It also makes imports cheaper for American consumers and supports purchasing power and living standards.
[SPEAKER_00]: Now, perhaps the most important dollar dominance, the most importantly, dollar dominance gives Washington extraordinary leverage through financial sanctions.
[SPEAKER_00]: Because dollar transactions clear through US banks, the government can monitor, restrict, or even freeze access for sanctioned entities.
[SPEAKER_00]: And that power was on full display after Russia's invasion of the Ukraine when sanctions disrupted the vast majority of Russia's foreign exchange activities.
[SPEAKER_00]: Now, on surprisingly, that leverage has some countries uncomfortable.
[SPEAKER_00]: with their reliance on the dollar.
[SPEAKER_00]: China, Russia, they've been leading efforts to reduce dollar exposure, selling more trade and reminbee and building alternative payment systems.
[SPEAKER_00]: China in particular has tried to internationalize.
[SPEAKER_00]: There may be, by expanding bilateral trade agreements as well as financial infrastructure.
[SPEAKER_00]: Now these efforts were to gain traction, ie reduce global demand for dollars, we'll get push up borrowing costs for the US government, a weaker dollar would also make servicing America's large debt load more expensive over time.
[SPEAKER_00]: That said, the shift away from the dollar has been gradual, not sudden.
[SPEAKER_00]: And it's not resulted in any major currency stepping in as a clear replacement.
[SPEAKER_00]: The dollar share of global reserves has slipped from about 65% to roughly 57% over the past decade.
[SPEAKER_00]: But the Euro'd yen, the pound.
[SPEAKER_00]: They've not meaningfully filled the gap.
[SPEAKER_00]: Instead, smaller allocations have flowed into non-traditional reserve currencies, including the Chinese
[SPEAKER_00]: Even so, there are maybe faces, major obstacles, including capital controls, limited transparency, and far smaller and less liquid bond markets than the United States.
[SPEAKER_00]: The US Treasury Market remains unmatched, in not just size, but also depth and reliability which is why global investors still return to it during times of crisis.
[SPEAKER_00]: Now for individual investors wondering whether this trend means they should hold foreign currencies, the answer is usually about diversification, not abandonment of the dollar.
[SPEAKER_00]: Select exposure to developed markets, or foreign bonds can reduce risk, but no alternative today offers the dollar's combination of liquidity, rule of law, and scale.
[SPEAKER_00]: The decline in reserve share also does not mean U.S. sanctions are suddenly going to lose effectiveness.
[SPEAKER_00]: As long as the dollar remains central to global payments, banking, sanctions remain significant power for the United States.
[SPEAKER_00]: Where dealerization could matter more is the margins, gradually reducing how universally effective those tools are over time.
[SPEAKER_00]: Global investors were demeaningfully shifted away from the dollar.
[SPEAKER_00]: US assets, most at risk, would probably be longer-ation bonds, and sectors rely on foreign capital flows.
[SPEAKER_00]: Higher interest rates would definitely pressure bond prices and potentially weigh on equity valuations that are tied to this cheap financing.
[SPEAKER_00]: For now, this is less about imminent regime change.
[SPEAKER_00]: We have seen this slowly move over time and more about a slow warning signal.
[SPEAKER_00]: With that, Reminbee replaced me, right?
[SPEAKER_00]: You're seeing it constantly, over time, gain more and more share of global trade.
[SPEAKER_00]: But in recent years, it's actually not pulling that share from the dollar, but from other currencies.
[SPEAKER_00]: And so, the dollar still dominates.
[SPEAKER_00]: But maintaining that dominance,
[SPEAKER_00]: will and always has dependent on policy stability, institutional trust, and most importantly, confidence in the US financial system.
[SPEAKER_00]: On the next investor talk, we're going to dig into another exciting topic.
[SPEAKER_00]: It's going to be about active management's edge in fixed income.
[SPEAKER_00]: Passive bond funds, well, they are a bit broken.
[SPEAKER_00]: So we're gonna expose why the current high yield high volatility market is proving that active managers offer better risk mitigation and a measurable edge.
[SPEAKER_00]: That's Monday, but for now, I'm Lucquerera ready to take your calls at 88, 99 chart.
[SPEAKER_04]: The weekend is here or almost here, but you've got an answer to investment questions, so step up and call in.
[SPEAKER_04]: Invest talk, 888-99 chart.
[SPEAKER_02]: I just didn't look happy holidays.
[SPEAKER_02]: Thanks again for taking my call.
[SPEAKER_02]: I just love your opinion on Nike ticker in KEE.
[SPEAKER_02]: You know, it's been on my watch list for quite a while and I'm just wondering if it's kind of found a bottom down here in that load to mid 50 range and it is now's a good time to maybe start entering with a small position or maybe even start writing some puts
[SPEAKER_02]: on it, just love your opinion, or is it just too much headwinds at the moment for Nike where it's more of a wait and see.
[SPEAKER_02]: Thanks again, I'll listen on the podcast.
[SPEAKER_00]: Nike has had, what's on a rough time?
[SPEAKER_00]: 2022 is down 30%, 2023 was down 7, 2024 was down 30, and this year's down 22.4% as well as being
[SPEAKER_00]: Now, I'm sure everybody knows about what is one of the most widely known athletic apparel companies, right?
[SPEAKER_00]: Nike has been dominant in interlacing itself in most sports leagues.
[SPEAKER_00]: It is everywhere.
[SPEAKER_00]: But doesn't matter much if it doesn't translate to revenue.
[SPEAKER_00]: Revenue has fallen since 2024.
[SPEAKER_00]: because they're fiscal year ends in May.
[SPEAKER_00]: So it's down from 51.3 billion to 46.4 billion in May 2025, projected to stay relatively steady, but we want growth.
[SPEAKER_00]: The same time, net margins, half of what they used to be.
[SPEAKER_00]: Net income, down from a peak of six billion in 2022, projected to only be 2.3 billion in this upcoming year.
[SPEAKER_00]: So why is it down?
[SPEAKER_00]: Well, they recently had earnings and they had to guide lower.
[SPEAKER_00]: Why?
[SPEAKER_00]: Because not only is US demand sluggish, but Chinese demand is sluggish as well and that's a big part of their business.
[SPEAKER_00]: If you are looking at this, if you are looking at this chart, going back to 2021, a business model, terrible.
[SPEAKER_00]: So, if you're asking, has it found a bottom?
[SPEAKER_00]: Or is it a wait and see?
[SPEAKER_00]: Definitely wait and see.
[SPEAKER_00]: That is NKE Nike Inc.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: I want to briefly mention the newest KPP Premium Newsletter which will be distributed to all of our subscribers tomorrow.
[SPEAKER_00]: This week in the KPP Insight section we did a discussion and update after the recent inflation numbers, what it all means to the market and what it means heading into 2026.
[SPEAKER_00]: The stock idea section we mentioned a content delivery network, as well as a manufacturing company.
[SPEAKER_00]: and in the portfolio management section we touched on avoiding behavioral traps for the average investor.
[SPEAKER_00]: If you're interested in learning more, visit us at investtalk.com and hit subscribe.
[SPEAKER_00]: The newsletter will hit your inbox on Saturday afternoons.
[SPEAKER_00]: It's like we have a fresh YouTube question, so why don't we tackle that right now?
[SPEAKER_00]: And it is on ticker FPI, ticker FPI, which is farmland, partners, and gets us, what are your thoughts on FPI, a real estate investment trust, that holds a row crop farmland, so that corn, soybeans, wheat, cotton, et cetera, in the United States as a tangible asset with shrinking supply.
[SPEAKER_00]: Tariffs are hanging on the sector, but that could lead to more opportunities for these folks to buy land in the short run.
[SPEAKER_00]: Well, it is a real estate investment trust which tends to be invested in for exposure to real states, an asset class that tends to move differently from equities, but also for consistent dividends, right?
[SPEAKER_00]: That's one of the reasons why people invest in REITs as income.
[SPEAKER_00]: So as you'd expect, as REITs have fallen, other investments that are producing income are going to be where income seeking investors put their money.
[SPEAKER_00]: That is not for the case for this name.
[SPEAKER_00]: This name was down 5.8% last year, underperforming the S&P by 29 and its industry by 6.5.
[SPEAKER_00]: It's down 14.6% this year, underperforming by 30, the S&P, underperforming to industry by about 12.
[SPEAKER_00]: And so the reason why the question is, is why?
[SPEAKER_00]: Right?
[SPEAKER_00]: The dividend has shown a bit of growth over time.
[SPEAKER_00]: But yields have been a bit low compared to their peers.
[SPEAKER_00]: There also are a bit of risks here.
[SPEAKER_00]: Farmland rents and values decline if crop prices fall.
[SPEAKER_00]: They are also a pretty small name as well, right?
[SPEAKER_00]: It's a $456 million market cap name.
[SPEAKER_00]: that's sitting on $170 million in debt.
[SPEAKER_00]: This is this industry is broadly supported by debt and in a time where the cost of debt has been high for quite some time.
[SPEAKER_00]: That's where you start to see a lot of heightened volatility.
[SPEAKER_00]: So, you know, I like your idea here.
[SPEAKER_00]: Certainly the farms, farmers are in a bit of a position, right?
[SPEAKER_00]: We've seen that with how the government now wants to effectively send them bailout money from the frictions caused by the tariffs in the first place.
[SPEAKER_00]: but given the macro headwinds, given that this is a very, very small company, I think the risks here are just outsized and for that reason, I wouldn't buy farmland partners to your FPI.
[SPEAKER_00]: Thanks for watching.
[SPEAKER_00]: Why don't we talk a little bit about CPI?
[SPEAKER_00]: The reason being that economists are cautioning that November's sharp drop in inflation may be more about bad data than real economic relief.
[SPEAKER_00]: The Labor Department released a report after a prolonged government shut down that effectively prevented staff from collecting prices the way they normally do.
[SPEAKER_00]: With those CPI reported all for October, many analysts believe no members figures likely understated actual price increases.
[SPEAKER_00]: Those disruptions may also linger for months, it makes it harder for markets and policy mayors to assess inflation during a period of major policy shifts on trade, on immigration, and on fiscal spending.
[SPEAKER_00]: The
[SPEAKER_00]: Problems also highlight deeper strength at the Bureau of Labor Statistics which has faced staffing shortages, leadership turmoil and really frankly under invested resource management or rather resource allocation for well over a decade.
[SPEAKER_00]: One last-in-consequence is a bit technical.
[SPEAKER_00]: Without October data, the Bureau of Labor Statistics may not be able to calculate a year over your inflation rate for October 20, 26, and the issues with the data may persist into next year's calculations as well.
[SPEAKER_00]: Now, diving in, right, housing was the biggest concern.
[SPEAKER_00]: Since it makes up roughly one-third of the consumer price index and relies on staggered data collection,
[SPEAKER_00]: Because the BLS surveys, only about 1-6th of rancidge month, a single misdata point can distort housing inflation for up to the next 6 months.
[SPEAKER_00]: In order to fill the gap, the agency appeared to have assumed zero rent inflation for October, a placeholder that economists say will skew future readings until enough data rolls in.
[SPEAKER_00]: Other distortions stem from the late price checks in November, which may have overstated the impact of black Friday discounts.
[SPEAKER_00]: Now, some categories like gasoline and cars, those are going to be less affected, because their prices come from external data sources rather than in-person service.
[SPEAKER_00]: But overall, for good reason, economists are wanting that inflation data will carry a large margin of uncertainty well into the next year, complicating, fed decisions, and leaving investors such as yourselves, flying with an imperfect instrument.
[SPEAKER_00]: It's keeping things rolling and answer another caller question now.
[SPEAKER_03]: I'm calling from San Bernardino, California.
[SPEAKER_03]: I'm wondering what it means to monetize the debt.
[SPEAKER_00]: And is that something I can use?
[SPEAKER_00]: Thank you.
[SPEAKER_00]: OK, doc.
[SPEAKER_00]: What does monetizing the debt mean?
[SPEAKER_00]: Because I think that's something that we have mentioned on this show.
[SPEAKER_00]: often, right?
[SPEAKER_00]: Government monetizes its debt when it finances it by having its central bank essentially create money to buy government bonds effectively turning debt into newly created money.
[SPEAKER_00]: What it can do over time is it can keep interest rates lower, it can make funding a bit easier, but over use risks to things, inflation as well as currency weakness.
[SPEAKER_00]: Now, can you monetize your debt?
[SPEAKER_00]: Well, if you are issuing debt and printing money, then you're probably breaking the law.
[SPEAKER_00]: You're definitely breaking the law.
[SPEAKER_00]: So the answer is no.
[SPEAKER_00]: Only governments with a central bank like the US Treasury Federal Reserve can monetize their debt.
[SPEAKER_00]: So if you find yourself in a position where debt is becoming a burden,
[SPEAKER_00]: Think less about monetization, which you can't do, and think more about managing it smartly which you should.
[SPEAKER_00]: This is in Vestock, now with more than 62 million downloads, and we're going to tackle more of your questions in 30 seconds.
[SPEAKER_00]: So hang on.
[SPEAKER_00]: Hello investors, Lou Guerrero here with a quick heads up and an invite.
[SPEAKER_00]: This year, we're doing something brand new.
[SPEAKER_00]: The first ever
[SPEAKER_00]: And it drops December 18th exclusively on our YouTube channel.
[SPEAKER_00]: It's going to be a fun end of your episode where we look back at the biggest market themes of 2025.
[SPEAKER_00]: Highlight a few lessons were carrying into 2026 and choose the caller question of the year.
[SPEAKER_00]: Plus, a couple surprises you won't get in our regular format.
[SPEAKER_00]: To watch the invest on college special, head over to YouTube and search Invest Talk with two T's, or use the link in today's show notes.
[SPEAKER_06]: And while you're there, subscribe and hit the bell so you don't miss it on December 18.
[SPEAKER_00]: So I had to laugh a bit with the, with the turd in the punchbowl.
[SPEAKER_00]: That is a very funny way of phrasing it.
[SPEAKER_00]: So Equinoire, Tigre E, Q and R, is an integrated energy company out of Canada.
[SPEAKER_00]: Now what they do is they explore, they produce, they transport, they refine, and they market, petroleum, and petroleum derived products.
[SPEAKER_00]: Now let's do a $2.5 billion market cap.
[SPEAKER_00]: Now I'm sorry, $57 billion market cap name, sometimes it's difficult to read line by line.
[SPEAKER_00]: And revenue growth has been stellar, right?
[SPEAKER_00]: Up 11.1% on an annualized basis, going back to 2019.
[SPEAKER_00]: The same time net income, up 36.6%.
[SPEAKER_00]: going back to 2019 as well, margins.
[SPEAKER_00]: Pretty decent, 38.3% EBITDA margin.
[SPEAKER_00]: Return on equity was 19.3% last year, sitting at 15.9% this year.
[SPEAKER_00]: And, you know, one thing that's also benefit of, or rather one thing that is good as well is its valuation.
[SPEAKER_00]: Sitting at 8.3 times price to forward-looking earnings, price to book value 1.4 times.
[SPEAKER_00]: A lot of the price movement here is well, energy market cyclicality, production, and exploration has been pretty successful for this company.
[SPEAKER_00]: They also implemented a multi-billion-dollar share buy-back program in 2025, which is ongoing.
[SPEAKER_00]: And they also have a renewable energy and low carbon project segment, which has a lot of investment globally.
[SPEAKER_00]: They are a diversified company.
[SPEAKER_00]: about 72% of the revenue comes from Norway.
[SPEAKER_00]: So you get exposure outside of the United States, 22% of its revenue comes from the United States.
[SPEAKER_00]: Free cash flow, 8.356 billion, net operating cash flow is 20 billion last year.
[SPEAKER_00]: So this is a cash, cash, cash cow of a business here that has been on a bit of a downtrend, but has been consolidating well for the better part of the past three months.
[SPEAKER_00]: So it gives you some sort of regional diversity here, which is certainly something we like and it is very pretty well year to date compared to a lot of other energy companies.
[SPEAKER_00]: So, I like Equinoir, I think, at these prices, maybe a good time to add.
[SPEAKER_00]: That is EQNR, thanks to the call.
[SPEAKER_00]: So if we got plenty of time, let's keep things moving with another caller question.
[SPEAKER_03]: Hey Justin, I would like to know more about the company, which I've been tracking for some time.
[SPEAKER_03]: It's R-M-B-S-Rambus Inc.
[SPEAKER_03]: I see good support coming closer
[SPEAKER_03]: I would really like to have talks on this company and thank you so much for all you help.
[SPEAKER_00]: RMBS is Rambus Inc.
[SPEAKER_00]: It is a semi-conductor technology company.
[SPEAKER_00]: The designs and licenses interface, memory, security, and high-speed logic technologies.
[SPEAKER_00]: It's up to 82.36% here today, but down 5.82% over the past three months, as we've seen a bit of a rotation out of these semi-conductor names,
[SPEAKER_00]: But over the past year, in spite of that, it's still up nearly 80% revenue growth up 20% on an annualized basis.
[SPEAKER_00]: Now, it is a mid cap company, about $10 billion market cap with pretty much no debt, $24.5 million, not billion with a B, but million dollars in debt.
[SPEAKER_00]: It's margins.
[SPEAKER_00]: as you see with a lot of semiconductor companies great net margin 38.7% is which projected to be at the end of this year which ends in December.
[SPEAKER_00]: Even to margin 52.5 return equity 19.6.
[SPEAKER_00]: Now, it does look a bit expensive here, right?
[SPEAKER_00]: It has had this big run up because this strong demand for high performance memory interfaces.
[SPEAKER_00]: And so at one point it was training at 40 times price before looking earnings, 10 times price to book value.
[SPEAKER_00]: Now it's around 30 and 7.6 respectively.
[SPEAKER_00]: So it's coming down a bit.
[SPEAKER_00]: but price has been consolidating for a couple months now.
[SPEAKER_00]: It's up 5.36% today, which is certainly good, but you know you're starting to see this rotation, and a lot of these semi-names I'd be probably hesitant to buy in until the new year.
[SPEAKER_00]: So for now I would keep this on my watchlist
[SPEAKER_00]: This is in Vestock, I'm Lou Guerrero, and we have one goal here to help you achieve your financial freedom.
[SPEAKER_00]: Our work continues after our final break, so get your questions in now at 888-99 chart.
[SPEAKER_01]: Lou Guerrero is here and ready to tackle your questions.
[SPEAKER_06]: I wanted to pick your brain about Apple.
[SPEAKER_06]: What did you think about their earnings call?
[SPEAKER_06]: They're just a good time to add to my position.
[SPEAKER_01]: Call in Vestock, 888-99 chart.
[SPEAKER_04]: For the holiday's KPP Financial is excited to introduce the holiday estate bundle.
[SPEAKER_04]: When you begin a financial relationship with KPP Financial and complete your onboarding by December 31, 2025, you'll receive essential estate planning documents as an added benefit.
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[SPEAKER_04]: Learn more about the Holiday Estate Bundle now at investtalk.com and while you're there, fill out a portfolio review to get started.
[SPEAKER_04]: And now the phone lines are open and waiting for your finance and investment questions 888-99 chart.
[SPEAKER_00]: The holidays are not just a time for savings as we have offered with the holiday estate bundle, but also a time for reflection.
[SPEAKER_00]: And so we here at Invest talk decided to do something brand-spanking new.
[SPEAKER_00]: And it was released, or at least part of it was released yesterday over there on our YouTube channel, search in Vestock with two teas, and in this holiday special, well, Justin, I get a little silly, right?
[SPEAKER_00]: We dress in a way that you may not normally see as a dress.
[SPEAKER_00]: We explain our clothes, you get to see my special Christmas shoes that I get to wear every year, and only around Christmas.
[SPEAKER_00]: But most importantly, we talk about what we got right, what we got wrong, and what we expect in the new year, because just as it is good for everybody to reflect on 2025 themselves, we thought we'd give you a bit of a show as well.
[SPEAKER_00]: So if you're interested, go check that out.
[SPEAKER_00]: Again, on our YouTube channel to search and best talk with two T's.
[SPEAKER_00]: Anyway,
[SPEAKER_00]: Our last story today is about how investors are getting a bit of a harsh reality check on private asset funds, and how they're nav, which stands for an asset value, may not actually be their actual value.
[SPEAKER_00]: Several formerly non-traded funds have tried to list on stock exchanges and their prices immediately plunged, suggesting that stable valuations inside private portfolios may not hold up once real buyers set the price.
[SPEAKER_00]: The core tension is simple.
[SPEAKER_00]: You can have smooth and frequently marked prices in illucared assets or you can have daily liquidity.
[SPEAKER_00]: But these recent least listings are showing you cannot reliably have both at once.
[SPEAKER_00]: The biggest example is Blue Rocks real estate portfolio which began trading on the New York Stock Exchange with a stated nav of 2436, but closed it 1470 nearly a 40% discount in a single day.
[SPEAKER_00]: A similar shock hit F.S.
[SPEAKER_00]: specialty lending, which listed with an 1867 nav and finished the first day at $14.25 per cent lower.
[SPEAKER_00]: Again, signaling public markets do not agree with the funds internal marks, and so other firms will their hesitating.
[SPEAKER_00]: After watching these massive first day discounts,
[SPEAKER_00]: Priority income fund, delayed a shareholder meeting, tied to a potential listing while blue owl previously scrapped a plan to move a private fund into a listed vehicle trading at a steep discount.
[SPEAKER_00]: What makes this so jargon is how these products were sold.
[SPEAKER_00]: Right, non-traded structures promised limited redemption windows and then escape from public market volatility.
[SPEAKER_00]: While charging fees that were often one and a half percent
[SPEAKER_00]: The old setup also benefited managers, lockups made it easier to use leverage to hold long-duration assets and to avoid forced selling until investors started asking for more liquidity when returns, softened.
[SPEAKER_00]: Now, BlueXEO argues that this can't reflect a temporary supply demand imbalance because investors who once could only redeem a slice each quarter can now sell everything instantly at whatever price the market will bear.
[SPEAKER_00]: The problem
[SPEAKER_00]: is that market price converges to nav is not guaranteed.
[SPEAKER_00]: In the entire episode, highlights how subjective price valuations can be when there's no daily trading to validate them.
[SPEAKER_00]: To be fair, many newly listed vehicles holding unusual or leveraged assets often trade below nav, reflecting on certainty, frictional costs, and skepticism about the marks, but the scale of these gaps is still a very loud signal.
[SPEAKER_00]: The broader takeaway for you is that liquidity events can expose hidden valuation risk.
[SPEAKER_00]: When private funds finally meet public pricing and scrutiny, the discount can reveal that a parent's stability was partly an illusion, created by in-frequent manager-driven appraisals.
[SPEAKER_00]: Well that concludes another episode of Invest Talk Justin and I thank you for listening and encourage you to tell your friends and family members about our free podcast downloads.
[SPEAKER_00]: You can get those at iTunes and Spotify while you're over there please be sure to leave us a rate and review.
[SPEAKER_00]: As always, if today's show made you think about your own financial picture, your investments, your taxes, whether you prepare for retirement and really if it's all working together in the best way possible.
[SPEAKER_00]: At KPB, we offer no cost portfolio reviews to help bring a little bit of clarity and confidence to your daily life.
[SPEAKER_00]: Just go to investhuck.com and click on the Portfolio Review button.
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[SPEAKER_01]: This is Invest Talk.
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[SPEAKER_01]: Invest Talk is a trademark of KPP Financial, because of the nature of the interactive dialogue inherent in the format of this program.
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