[SPEAKER_03]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is invest talk, independent thinking, shared success.
[SPEAKER_03]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_03]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_01]: Good afternoon fellow investors and welcome back to Invest Talk this is our Monday.
[SPEAKER_01]: March 23rd, 2026 edition of Invest Talk, and OEs, as it seems in 2026, there's lots of talk about it, lots of one pack with what's going on in the market, we had a nice bounce today.
[SPEAKER_01]: If you look at my, if you watched my weekend video, you'll know that it was titled Are We Set Up For Bounce, and there was a reason for that.
[SPEAKER_01]: You probably go check that out and subscribe to our YouTube channel.
[SPEAKER_01]: But then the less, I
[SPEAKER_01]: this was somewhat of a predictable bounce in markets and question for investors, at least in the near term, is will this stick, or is this just going to be a short-term bounce for this week?
[SPEAKER_01]: We have a five-day pause, it seems, on major hostilities in the
[SPEAKER_01]: So we'll be talking about that for this hour and much, much more.
[SPEAKER_01]: We'll be answering your finance and investment questions.
[SPEAKER_01]: So anything money related, we're here for it.
[SPEAKER_01]: I'll bring you actionable data and insights across the market on different topics.
[SPEAKER_01]: I've those set up here.
[SPEAKER_01]: But once again, this is going to be about you.
[SPEAKER_01]: Your questions, your concerns, and my answers.
[SPEAKER_01]: And just to be able to talk about today's market performance and run down the short topics, but first, let's tackle this color question now.
[SPEAKER_04]: I just know that from calling today about interactive brokers, ticker, I, B, K, R, you need this to be a good company to hold on to.
[SPEAKER_04]: I've had it in my portfolio for not very long by months, thank you very much.
[SPEAKER_01]: Looking at interactive brokers, IBKR is the symbol.
[SPEAKER_01]: earnings are exactly 13% this year, 10% next year.
[SPEAKER_01]: Now those estimates are coming down a little bit as the market has gotten a bit rockier.
[SPEAKER_01]: So there's some correlation here with the broader market.
[SPEAKER_01]: But if you're, if you're largely bullish, then they're going to continue to do fairly well, their profits are profit metrics are solid return equity run 23 and a half percent and return an invested capital on 11 percent that return equity has been fairly steady for a couple of years now and near and all time high so your argument could be what maybe they're over earning but.
[SPEAKER_01]: I think overall, this is in a good place.
[SPEAKER_01]: They don't have much debt on their balance sheet, very good cash flow.
[SPEAKER_01]: And what are they doing with that cash flow?
[SPEAKER_01]: They're paying out a little bit of a dividend around 13% dividend you pay out to ratio, excuse me.
[SPEAKER_01]: But they're not buying back shares.
[SPEAKER_01]: Shares continue to go up.
[SPEAKER_01]: And that worries me a little bit.
[SPEAKER_01]: I rather than be taking that cash flow and once again buying back shares, but they're not really doing that.
[SPEAKER_01]: But their free cash flow is very strong.
[SPEAKER_01]: The relative strength is good.
[SPEAKER_01]: You have a 85 relative strength.
[SPEAKER_01]: So one of the better performing stocks over the past year.
[SPEAKER_01]: So overall, I like it.
[SPEAKER_01]: I would hold on to it.
[SPEAKER_01]: It hits, it's used by a lot of individual investors at more and more.
[SPEAKER_01]: And it's one of those bigger brokers that Brookaged Institute has consolidated over the years, the handful of names from.
[SPEAKER_01]: You're kind of got your fidelity Schwabs, that's who we use, and then interactive brokers, E-Trade, and then it's hard to find any major ones beyond those four.
[SPEAKER_01]: So it's in that club.
[SPEAKER_01]: It's technology is maybe not as good as some of the others, but a lot of people do like interactive brokers.
[SPEAKER_01]: So I'm going to stick with that stock IVKR.
[SPEAKER_01]: Nobby had a chance to participate in our Invest Talk Market Madness Contest, and we had some winners for today, and we're going if you want to check out our preview or review of the first half around one, we had that video up over the weekend on YouTube channel as well, I'm of another one here coming up tomorrow, so to close that round one tomorrow is the last region of round one and Wednesday, we'll actually, I believe,
[SPEAKER_01]: Thursday, we are on to round two.
[SPEAKER_01]: I've got a lot of ground to cover over the next 45 minutes or so in time for meeting.
[SPEAKER_01]: I'll get to all of it.
[SPEAKER_01]: Our main focus point is about the flight to safety assets, still working in 2026 and it's a lot about where money is flowing.
[SPEAKER_01]: from a jurisdictional standpoint.
[SPEAKER_01]: It's something a lot of people can talk about.
[SPEAKER_01]: It's not just, you know, treasuries are in the gold, et cetera, but also where in the world is the money.
[SPEAKER_01]: Had it, we'll talk about that.
[SPEAKER_01]: In addition, we have other topics.
[SPEAKER_01]: One is regards to the oil companies, the big oil companies.
[SPEAKER_01]: They're making a lot of money from a high oil prices, but a lot of them are losing from their plants
[SPEAKER_01]: all of the hostilities in the Middle East, and then $5 diesel, turning truckers, but will soon be felt across the economy.
[SPEAKER_01]: So what will you feel?
[SPEAKER_01]: What impact will it have beyond just the truckers?
[SPEAKER_01]: Because that will feed through into transportation costs for all types of goods and services, so we'll dig into that.
[SPEAKER_01]: or nearly 30,000 common stocks over the past hundred years from 1926 to 2025.
[SPEAKER_01]: And there's some issues that statistics there.
[SPEAKER_01]: Well, what works and what doesn't?
[SPEAKER_01]: so hopefully dig into that story.
[SPEAKER_01]: We also have voice bank calls on hurts as well as micron technology and you, and then we have some questions that came in via the our YouTube channel as well.
[SPEAKER_01]: And before I say, welcome, you're finding some investment questions right now at eight and eight ninety nine chart, but we're going to head into a quick break.
[SPEAKER_01]: Please remember you can call, any time, leave your question on the investor's voice bank.
[SPEAKER_01]: If you're listening via our live stream or possibly an AM1220 in the Bay Area, you can call right now at 88899 chart.
[SPEAKER_01]: And up next, I'll comment on today's market activities.
[SPEAKER_00]: When you tell your friends about Investork and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investorkos Justin Klein.
[SPEAKER_00]: Parallel investing means Justin invests right alongside KPP Financial clients.
[SPEAKER_00]: He makes the same trade for KPP Financial on the same day at the same price and the same percentages as KPP clients.
[SPEAKER_00]: There's no front running and no special treatment.
[SPEAKER_00]: In this way, Justin and KPP Financial share the same risks and the same potential for success.
[SPEAKER_00]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.
[SPEAKER_00]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.
[SPEAKER_00]: And you can learn more anytime at InvestTalk.com.
[SPEAKER_00]: Millions of downloads have proved there's value in every invest talk podcast call any time 24 seven invest talk 888 99 chart
[SPEAKER_01]: 899 chart, 89924278.
[SPEAKER_01]: So I could do an asker question on today's show.
[SPEAKER_01]: Let's take a look at the market and it was a bounce back day.
[SPEAKER_01]: You have the NASDAQ of 1.4% S&P up a little over 1%.
[SPEAKER_01]: We did fade throughout the day, so that was notable.
[SPEAKER_01]: It wasn't a super strong rally.
[SPEAKER_01]: In that sense, you would like to see as close near the high end of the day.
[SPEAKER_01]: And you could see some fall through tomorrow that would be healthy.
[SPEAKER_01]: My guess though is we get, we go into a chopier period because there's no guarantee that these hostilities are going to end in the short term.
[SPEAKER_01]: So the question is, what do you do with this balance?
[SPEAKER_01]: Well, you probably use it to adjust your portfolio, maybe trim some names that had some relative weakness.
[SPEAKER_01]: Maybe you're overweight, et cetera.
[SPEAKER_01]: And find what's working.
[SPEAKER_01]: Find what's working in this market.
[SPEAKER_01]: And today was a day where he had names like Microsoft and Google were barely up.
[SPEAKER_01]: Same with Yavoli and Johnson and Johnson.
[SPEAKER_01]: Those are some bigger names that were kind of flat.
[SPEAKER_01]: You only had names like Tesla and Palens here, those were up.
[SPEAKER_01]: So kind of the riskier names in the market were stronger.
[SPEAKER_01]: Overall, that's generally a positive.
[SPEAKER_01]: But you also had Costco down.
[SPEAKER_01]: So certainly a lot of some laggers there for sure.
[SPEAKER_01]: And on the consumer staple side, a lot of names that were flat to down.
[SPEAKER_01]: I think that's reflecting the higher fuel costs that remain in the market, remaining the economy, even though oil prices were down a little bit today.
[SPEAKER_01]: It still remains relatively elevated.
[SPEAKER_01]: You saw WCI in the down 10.4% doesn't biggest the client since March and Brent was down 12.2.
[SPEAKER_01]: but ultimately we're still very elevated and I expect a very, very choppy period going forward.
[SPEAKER_01]: Bitcoin is up 1.2% silver down 0.4% dollar down 0.6% and gold if it's down 3.7% but a lot of gold miners were up big.
[SPEAKER_01]: So I thought that was a note.
[SPEAKER_01]: You had treasures a bit stronger.
[SPEAKER_01]: You had the 10 year.
[SPEAKER_01]: hit 4% earlier this week that in the down five basis points.
[SPEAKER_01]: So a little bit of optimism around the Treasury market as a whole, you've seen the move index move pretty higher.
[SPEAKER_01]: And that is
[SPEAKER_01]: not a good sign.
[SPEAKER_01]: You definitely want to see calm in the charging market and the moving next is basically a measure of calm.
[SPEAKER_01]: It hit 110 for the first time since May of last year.
[SPEAKER_01]: Now 140 and 50 that's where things get rough and probably the veggies to step in.
[SPEAKER_01]: However, it's something I'm continuing to watch to see if that heads higher today.
[SPEAKER_01]: It headed a bit lower, closed around 98, so that was good.
[SPEAKER_01]: But overall, I'll still be watching that.
[SPEAKER_01]: So that was the market today.
[SPEAKER_01]: I expect a very choppy headline driven week ahead.
[SPEAKER_01]: So let's pivot over to a YouTube comment question.
[SPEAKER_01]: Selena Reese says, what are your thoughts on long-term hold in X, Y, L, X, Y, L.
[SPEAKER_01]: been a pay-down debt increase for cash flow per share and have strong international growth potential.
[SPEAKER_01]: They make water equipment and provide services for water and waste water applications to the water industry.
[SPEAKER_01]: X, Y, L. Zylam is the name of the company we've talked about this in the past.
[SPEAKER_01]: It's certainly pulled back as of late.
[SPEAKER_01]: Let me pull up these charts here.
[SPEAKER_01]: We're trying to equity around 8.4% solid, not amazing.
[SPEAKER_01]: Free cash flow is out of 873 million on about a $30 billion market cap.
[SPEAKER_01]: What about a 3% free cash flow yield?
[SPEAKER_01]: Okay, but certainly not amazing earnings.
[SPEAKER_01]: I expect to be up 8% this year, 10% next year.
[SPEAKER_01]: So decent growth, but once again, not gangbusters here.
[SPEAKER_01]: How much do you want to pay for a name with, okay, profitability, no debt, which is good, decent, free cashily, but nothing frankly to write home about.
[SPEAKER_01]: It's enterprise value, but it's right around 14.
[SPEAKER_01]: Over the last 10 years, that is on the low end of the range, but I don't love the technicals.
[SPEAKER_01]: Let me zoom out here.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: I mean, it is making a series of higher highs and higher lows, it's kind of marching up,
[SPEAKER_01]: pretty large pullback down 22% from its 52-high, which for this type of name is a strong pullback.
[SPEAKER_01]: This is a good support.
[SPEAKER_01]: Let me draw a trend line here.
[SPEAKER_01]: I would buy this down around one 10, now we're at one 25, when 20 right now.
[SPEAKER_01]: So I think there's some more downside to go.
[SPEAKER_01]: If you want to step in here, I'm fine with that.
[SPEAKER_01]: Maybe sell some puts down around one 10, one 10 strike.
[SPEAKER_01]: That's not a bad idea as well.
[SPEAKER_01]: So that's the way I would play this name,
[SPEAKER_01]: Let's play a quick question now.
[SPEAKER_08]: Hi, I was calling regarding the WD40 company, Whiskey Delta Box truck, Charlie.
[SPEAKER_08]: I'll just curious to see if this would be a good entry point.
[SPEAKER_08]: And if this is a good company to invest in, appreciate it.
[SPEAKER_01]: Looking at WD40, WDFC, excuse me, that is the name.
[SPEAKER_01]: but carpet fresh, spot shot, 111, a lot of home cleaning brown brands.
[SPEAKER_01]: So we say, return equity around 35% you certainly like that level of profitability.
[SPEAKER_01]: No debt of its balance sheet, free cash flow, right around 80 million on a three billion dollar market cap.
[SPEAKER_01]: So once again, about a three percent free cash flow yield, that's okay.
[SPEAKER_01]: Dividend is certainly sustainable with the lack of debt, paying back, buying back shares, excuse me.
[SPEAKER_01]: And the chart overall is
[SPEAKER_01]: Hold back to pretty good support.
[SPEAKER_01]: So I'm actually, I'm gonna give this one a thumbs up WDFC, smaller cap name, not gonna be a huge grower in fact earnings has been at 9% this year and then back up 8% next year.
[SPEAKER_01]: But still, over the last 10 years or so, they've been grinding out earnings growth.
[SPEAKER_01]: So I'm gonna give WD40 WDFC eight thumbs up.
[SPEAKER_01]: We're heading to a break, we thank you for helping us achieve more than 62 million downloads in our history, so give me a call with your questions now at 88899 chart.
[SPEAKER_00]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_00]: Now the torch has been passed and a new generation of hosts is on the job, Justin Klein and Luke Guerrero.
[SPEAKER_00]: So when you've got finance and investment questions, don't forget to call in Vestock, 888-99-Chark.
[SPEAKER_01]: We're going to go talk to Frank in Fremont, looking at Costco.
[SPEAKER_07]: Hey, how's it going?
[SPEAKER_01]: Doing pretty well, do you own Costco or something you're looking to pick up?
[SPEAKER_07]: Well, I bought Costco about a week ago because I thought it had gone down quite a bit.
[SPEAKER_07]: I've been looking at it the last few years.
[SPEAKER_07]: It goes up and down quite a bit.
[SPEAKER_07]: I know it was at a high, about a year ago,
[SPEAKER_07]: and now today it's at 960 but you know only a few years ago it was below 500 so I was just wondering if you think it's a good company by Costco I really like the company I know they do well with membership renewals and I like the company overall I was just wondering if you think it's built too high or if it's a good company by right now.
[SPEAKER_01]: Well, you're right, the Costco is a great business and a big part of their profits is just recurring revenue from their memberships, which I remember.
[SPEAKER_01]: And if you've listened to the show long enough, you probably know Luke is a big fan of Costco.
[SPEAKER_01]: And so their business is very strong, very consistent.
[SPEAKER_01]: And you got to love that.
[SPEAKER_01]: Their profitability, return equity around 30% free cashlor on $9 billion, net cash on their balance sheet, but a market cap of $428 billion.
[SPEAKER_01]: a free cash flow yield, right around 2%.
[SPEAKER_01]: Now the issue here is the multiple is trading it.
[SPEAKER_01]: It's trading at about 50 times trailing earnings.
[SPEAKER_01]: And if you go even based on next year's earnings of expect to be $22.50, you're still talking a 40 mid 40s multiple.
[SPEAKER_01]: That's pretty high.
[SPEAKER_01]: And if you look at other metrics like enterprise value to EBITDA, that's from 31.
[SPEAKER_01]: Historically, this isn't cheap until that's closer to the high teens.
[SPEAKER_01]: So I would be very patient on it.
[SPEAKER_01]: And if you look at the chart, like you said, it topped back earlier last year, about a little over $1,000 per share, and it's certainly been in a choppy downward pattern since then.
[SPEAKER_01]: It had a recent low around 850 or so, bounced to about 1,000, 20, and like you said now around 1965.
[SPEAKER_01]: And the relits of weakness today, I thought was notable.
[SPEAKER_01]: Actually, down on the day that was up.
[SPEAKER_01]: So I actually think this is headed lower, it needs to be a reasonable multiple, I'm happy to pay a premium to the market for this name, but am I paying double?
[SPEAKER_01]: The market multiple for a company whose earnings growth is, it's good, it's around 10% or so, but it's, it's not massive.
[SPEAKER_01]: And certainly there's some risk here from a
[SPEAKER_01]: cyclical standpoint that if higher fuel costs inflation just hurt the consumer enough they'll pull back on spending in a good amount of cost goes revenue comes from discretionary items like TVs and home audio things like that.
[SPEAKER_01]: So I would be very patient on it.
[SPEAKER_01]: I probably wouldn't own this until let me give you a number because they do want to
[SPEAKER_07]: Oh, wow.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: I would not shock me to see that get there in the next couple of years.
[SPEAKER_01]: So other than like Costco, it's just if you have higher interest rates, that typically shrinks multiples in the markets, you have higher inflation, that shrinks multiples in the markets.
[SPEAKER_01]: You know, a stagnation environment which we're increasingly like we're going into makes high multiple names a lot more vulnerable.
[SPEAKER_01]: and this is exactly one of those.
[SPEAKER_01]: So it's nothing against Costco.
[SPEAKER_01]: It's just, it's been bed up to levels that are just unreasonable from evaluation standpoint.
[SPEAKER_07]: Yeah, understand.
[SPEAKER_07]: You never know how, you know, people are going to react or, you know, they might just keep going higher.
[SPEAKER_07]: You never know how to keep going.
[SPEAKER_01]: It could.
[SPEAKER_01]: But I'm looking at the chart as well.
[SPEAKER_01]: So it's not just the fundamentals.
[SPEAKER_01]: And this looks like a very top-y week chart since that high earlier
[SPEAKER_01]: So to me, this is probably a multi-year correction in price and in time and having the fundamentals catch up with the price at the very least.
[SPEAKER_01]: And ultimately, if you hit a recessionary environment, I think this also would hurt their earnings, bring multiples down considerably, and probably bring it down to at least the 750 level and maybe all the way to 60.
[SPEAKER_07]: OK. All right, that sounds good.
[SPEAKER_07]: I'm getting close patient with it, but I appreciate your input.
[SPEAKER_07]: I like that a lot.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: No problem.
[SPEAKER_01]: Thanks for the call, Frank.
[SPEAKER_01]: We're heading into a quick break and I want to remind you that at KP Financial, we practice parallel investing, which means we invest right alongside our clients.
[SPEAKER_01]: So if you have any questions on that, how that works, how we execute it.
[SPEAKER_01]: head over to investtalk.com, read more about it, and submit your portfolio review.
[SPEAKER_01]: Our next investor talk will look into the story.
[SPEAKER_01]: Prediction market platforms, how polymarket and sports betting are reshaping finance.
[SPEAKER_01]: Major league baseball's exclusive partnership with polymarket signals that the growing acceptance of prediction markets in mainstream finance, these platforms are evolving from niche betting sites to legitimate forecasting tools that could reshape how markets
[SPEAKER_01]: and uncertainty.
[SPEAKER_01]: We'll dig into that story tomorrow, but for now, I'm Justin Klein and we are ready to take your calls anytime on 8-899 chart.
[SPEAKER_03]: Invest talk is ready 24-7 for your finance and investment questions.
[SPEAKER_10]: I'm hoping you'll give me your take on or Matt Technologies ORA.
[SPEAKER_04]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?
[SPEAKER_03]: Don't forget to call, Invest Talk, 888-99 chart.
[SPEAKER_00]: best dog phone lines never closed.
[SPEAKER_00]: And now Justin Klein is here taking your calls live in Vest talk 88899 chart.
[SPEAKER_01]: 88899 chart 99924278 so you get to ask your question on today's show.
[SPEAKER_01]: Our main focus point is about flight to safety assets.
[SPEAKER_01]: What's still working in this environment?
[SPEAKER_01]: That's typically its treasuries and if you are investing in short-term treasuries, that's still done fairly well.
[SPEAKER_01]: You don't have to worry too much about the duration of a stare, even though you look at something like an SHY that's the one-to-three year treasuries bond, ETF that did go from 83 recently,
[SPEAKER_01]: That's over about a month period.
[SPEAKER_01]: So there was some decline in price about a half a percent or so there.
[SPEAKER_01]: But nothing major, that's still relatively safe.
[SPEAKER_01]: Now you go to ultra short term treasury bills.
[SPEAKER_01]: That's, there's no volatility there.
[SPEAKER_01]: But for a lot of people, they think treasuries, they want yield.
[SPEAKER_01]: They want, they think that 10 year treasury yield.
[SPEAKER_01]: And that is where volatility certainly picked up an immaterial way.
[SPEAKER_01]: The IIF went from 98 all the way to 95 as of the last month.
[SPEAKER_01]: So it's not really working as a flight to safety.
[SPEAKER_01]: And Golds pulled back as well.
[SPEAKER_01]: The Sunley was overbought earlier this year and needed a bit of a refresh, so that should be expected, but goes back to the understanding of what you own.
[SPEAKER_01]: And understanding that volatility,
[SPEAKER_01]: in that asset class, typically does not change over short periods of time.
[SPEAKER_01]: Maybe over long periods of time, but over short periods of time, usually doesn't usually act similar to what it has in the past, which is gold or any commodities are subject to large price swings.
[SPEAKER_01]: and you have to know that you have to expect that.
[SPEAKER_01]: But let's talk about a shift, it not just the asset class, but jurisdiction.
[SPEAKER_01]: And this is big when it comes to those in the Middle East, assets in the Middle East, because this is changing the calculus.
[SPEAKER_01]: This war, this conflict, is changing the calculus for a lot of people, especially in Dubai, the tax free place,
[SPEAKER_01]: a ton of wealthy people flock there because of that tax status, but now you've seen Iranian drones hit major landmarks in Dubai, including the Burj, a barjal, a rob hotel, where the largest hotels in the world, airports have been damaged, and the altar rich are looking for an exit.
[SPEAKER_01]: Now, in 2025, the UAE brought in $63 billion in wealth, $63 billion in wealth.
[SPEAKER_01]: So there's a ton of wealthy there, 98, 100 millionaires move there last year.
[SPEAKER_01]: I've been there, but I know a lot of friends that I do have some friends that live there, I know a lot of friends that go there, and I've heard some pretty crazy stories, pretty interesting stories.
[SPEAKER_01]: And it's not shocking to hear that charter companies have been overwhelmed with evacuation requests during this conflict, some flights costing up to $350,000.
[SPEAKER_01]: You can afford it if it's to save your life, you're going to spend it.
[SPEAKER_01]: Now this has made many of those wealthy individuals rethink their relocation to the UA in Dubai.
[SPEAKER_01]: Now, where are they going, or where are their assets going most importantly?
[SPEAKER_01]: That is Switzerland, per usual.
[SPEAKER_01]: The more than it does in bankers and financial advisors, managing over a trillion dollars in assets of the expected Switzerland to pull a significant amount of new money from the Middle East.
[SPEAKER_01]: Like about banks, family offices, high net worth individuals, all currently looking to move assets.
[SPEAKER_01]: First, it's going to be cash, and followed by stocks and bonds after that.
[SPEAKER_01]: And you know this is true because the Swiss Frank recently searched the strongest level against the euro since 2015.
[SPEAKER_01]: And Switzerland's second largest private bank by AUM asses in her management reported a record high number in asses in her magic at the end of last year.
[SPEAKER_01]: And they expect trillions and trillions more.
[SPEAKER_01]: how much money moves will depends on how long the war lasts.
[SPEAKER_01]: But for now, this was Frank remains.
[SPEAKER_01]: Probably the second best safe haven asset over the dollar is getting some safe haven bids, but I think that's more to do with a shift in fed policy.
[SPEAKER_01]: Expectations from rate cuts to now likely rate increases and that's notable as well.
[SPEAKER_01]: So this is in motion and underappreciated so if you're looking for a long term currency to hold if you're worried about the dollar, worried about
[SPEAKER_01]: Our fiscal situation, you think the new Fed chairman will become very dovish and actually cut rates, which are weak in the dollar, then this was Frank is definitely up there with the best currencies, most of the attractive currencies in the world.
[SPEAKER_01]: Now you've got time, you want answers?
[SPEAKER_01]: Let's roll in a listener question now from eight and eight.
[SPEAKER_06]: Hey, my introduction.
[SPEAKER_06]: Nelson Philadelphia here, calling about super micro computers.
[SPEAKER_06]: ticker, F and the CI, it's a level of shift company and it's down close to 30% after hours.
[SPEAKER_06]: I believe there were a few executives that were probably six to China or some kind of news like that, where it was internal.
[SPEAKER_06]: I'm not sure about the fundamentals of the company, how she changed due to this and with one of her fifth would be a good opportunity to pick
[SPEAKER_06]: Oh, man, I was really changed, so hopefully that this news on the 30s definitely is just past seasons at the pop, and we found sure.
[SPEAKER_06]: I mean, you know your thoughts?
[SPEAKER_06]: Love what you guys do on the show.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: Looking at super micro computer and last week, the stock did plunge about 30 plus percent on a news.
[SPEAKER_01]: This is on Friday that believe that we're arrested if a member
[SPEAKER_01]: But there were some executives that were arrested because they were selling band chips to China, which we put controls on that, export controls on that and they've gone around that.
[SPEAKER_01]: And obviously that was illegal.
[SPEAKER_01]: So that was one big problem.
[SPEAKER_01]: And this comes after sometime, I believe it was last year, maybe it was the year before, I can't remember the exact date.
[SPEAKER_01]: But there was some issues with accounting.
[SPEAKER_01]: County.
[SPEAKER_01]: And so what you're seeing here is a pattern of breaking the law.
[SPEAKER_01]: And this is the name that peaked at 123 dollars per share or so back in 2024.
[SPEAKER_01]: And fell all the way as of the fall of 2024 down to about 17 bucks bounce back to around 16
[SPEAKER_01]: So this is a long term now downtrend.
[SPEAKER_01]: It's been a couple of years.
[SPEAKER_01]: I don't invest in these names.
[SPEAKER_01]: I don't invest in companies that have accounting issues.
[SPEAKER_01]: I don't invest in companies whose executives are breaking the law.
[SPEAKER_01]: Because I tell you a lot about their business ethics and how much you can actually trust what they're telling the public.
[SPEAKER_01]: about these earnings, about its profitability, about its orders and there's nothing special about really what they do.
[SPEAKER_01]: So I don't care what the fundamentals say.
[SPEAKER_01]: When you see a backdrop of corporate activity like this, you want to run far away.
[SPEAKER_09]: Those tackle another voicemail
[SPEAKER_09]: I curious on your take on the turnaround narrative story of the stock at this reclaimed a four dollar price target on news that the travel industry demand is increased per American airlines and delta airlines.
[SPEAKER_09]: This was a bill acumen investment back in April of 25 for
[SPEAKER_09]: rental car industry long term and heard from a start perspective.
[UNKNOWN]: Thanks.
[SPEAKER_01]: Well, I think we answer this question last week.
[SPEAKER_01]: But I'll do it again.
[SPEAKER_01]: And basically, I don't think that hurts is going to pull out of the level of debt that it carries about $18 billion in net debt and as negative free cash flow.
[SPEAKER_01]: Certainly the costs of travel are going up because of oil prices and jet fuel prices.
[SPEAKER_01]: You have the issue with the TSA funding all of that that's going to weigh on their business and that's why earnings are expected to be negative again this year after losing a bunch of money last year and the year before.
[SPEAKER_01]: So I don't care what Bill Akman does doesn't matter to me.
[SPEAKER_01]: This is not a name you want to touch.
[SPEAKER_01]: Let's touch a bit on the oil industry.
[SPEAKER_01]: It's in the news right now in a big, big way.
[SPEAKER_01]: And you think that high oil prices are gonna help everybody within the industry.
[SPEAKER_01]: And I would say most, but not all, because one of the reasons for oil prices being so high is that facilities around the Middle East are being pit and damaged in many of them,
[SPEAKER_01]: summarizes that better than the recent Iranian missile attack on the Pearl Gastalica facility in Qatar.
[SPEAKER_01]: This was Shell's Crown Jewel, and it was so heavily damaged that it's expected to be shut down for at least one year.
[SPEAKER_01]: And Shell isn't the only one that's exposed, Exxon heavily exposed as well.
[SPEAKER_01]: They have more at stake in Qatar than any other big oil company.
[SPEAKER_01]: Around one fifth of its oil and gas production comes from the Middle East overall.
[SPEAKER_01]: Chevron has big gas assets across off the coast of Israel that has been shut down.
[SPEAKER_01]: Conoco Phillips has Qatari gas assets.
[SPEAKER_01]: and about 17% of total energy's annual operating comes from comes from oil and gas that moves through the straights of our moves.
[SPEAKER_01]: So these are facilities that cost billions of dollars.
[SPEAKER_01]: In fact, the pearl facility shells pearl facility costs $20 billion to build and is the largest in the world that turns gas into liquid petroleum products and is a crown jewel of shell, one of the top-performing assets.
[SPEAKER_01]: So over the past decade, the largest US and European oil companies have pulled back spending on exploring new oil frontiers, new big projects, and really doubled down on the Middle East, because our Saudi Arabia and the UAE, and that's helped their profits in a material way, but it's left them obviously exposed to geopolitical risks.
[SPEAKER_01]: Exxon itself is expected to lose about five billion dollars in revenue from their Cotari natural gas facility.
[SPEAKER_01]: And they think that could take five years to bring back online.
[SPEAKER_01]: My five billion sounds a lot, Exxon last year at $330 billion in revenue.
[SPEAKER_01]: So that's less than 2% of the revenue.
[SPEAKER_01]: But they've, Exxon is evacuated, it's non-essential staff from the Middle East earlier this month.
[SPEAKER_01]: That means a lot of facilities are coming off of line, offline.
[SPEAKER_01]: And it's not just a big boy.
[SPEAKER_01]: Some of the medium and small players as well, oxymilp petroleum has a large deck in UAE's Shah gas field, based extended suspended production after an Iranian drone attack.
[SPEAKER_01]: And then the oil service companies, Baker Hughes, Schlumberge, all provide oil and gas equipment across the Middle East.
[SPEAKER_01]: Exxon is up almost 5% to start of the war, shell up nine, Conoco Phillips up 12, so far it's not damaging their stocks, but if it's a short live, I could see those have some pretty decent reversals because these all price have to stay elevated for them to make it a profits to make up for these damages and their cost to rebuild that.
[SPEAKER_01]: A lot of shale producers from Eog kind of resources, they were looking overseas for investment opportunities when they got pulled back from U.S. shale fields because it didn't seem like there were a lot of great shale opportunities domestically.
[SPEAKER_01]: Lucky for a lot of them, they didn't deploy a lot of capital over there.
[SPEAKER_01]: So they're a bit more immune.
[SPEAKER_01]: So it's certainly a mixed bag when you're looking at
[SPEAKER_01]: The oil industry, you have to look at their exposure to the Middle East and the damage that is being caused there.
[SPEAKER_01]: And frankly, the shell, domestic shell producers are going to come out, probably looking the best.
[SPEAKER_01]: Now, this is Invest Talk, I'm Justin Klein with one goal here, each and every week, they help you achieve your own version of financial freedom, and I work continues after this final break.
[SPEAKER_01]: Good you questions in right now at 8.89 in chart.
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[SPEAKER_01]: If it gets to 170-175 in that range, that's where I pick it up.
[SPEAKER_01]: Often they could just not appreciate it.
[SPEAKER_10]: I'm hoping you'll give me your cake on format technology ORA.
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[SPEAKER_02]: and then it's been dropping like a hot potato in spite of blockbuster earnings.
[SPEAKER_02]: Now understand that it's gone up significantly in the last couple of weeks and the earnings blockbuster may have been already baked in.
[SPEAKER_02]: From a support level where do you see it going in the next couple of weeks?
[SPEAKER_02]: Do you see any risk in holding on?
[SPEAKER_02]: Should I just cut my losses and move out or hold it on for some time?
[SPEAKER_02]: I'm willing and able to hold it for a couple of months
[SPEAKER_01]: Thank you, look at the answer on the show.
[SPEAKER_01]: Well, for a name like Micron, there's certainly risk on a lot of risk.
[SPEAKER_01]: And the relative strength today, being done 4% of the day where the market was up over 1% is telling.
[SPEAKER_01]: That wasn't what Micron do.
[SPEAKER_01]: They make DRAM.
[SPEAKER_01]: They make, they make memory.
[SPEAKER_01]: And there's been a shortage of memory.
[SPEAKER_01]: And earnings are exploding.
[SPEAKER_01]: when they lost money in 2023.
[SPEAKER_01]: And pre-pandemic 2020, 2019, it made $6.29.
[SPEAKER_01]: This is all about memory prices just exploding to start the year.
[SPEAKER_01]: But most likely, this is the flash in the pan.
[SPEAKER_01]: That is the history of memory prices, as well as semiconductors in general.
[SPEAKER_01]: Very, very volatile business.
[SPEAKER_01]: And Micron and many others across the industry are expanding production, increasing supply.
[SPEAKER_01]: What happens when supply goes up?
[SPEAKER_01]: Well, prices go down.
[SPEAKER_01]: And this looks like it has topped.
[SPEAKER_01]: You had a high in late January.
[SPEAKER_01]: It pulled back a little bit, made an incremental new high recently, just last week at around
[SPEAKER_01]: and then there's MACD divergence, there's a lot of signs that this is the top in micron and most likely a lot of memory producers.
[SPEAKER_01]: It's a blue sand disc earnings last week.
[SPEAKER_01]: And it looked great, but it was not enough to rally that stock either in a material way.
[SPEAKER_01]: And they're both looking very topy.
[SPEAKER_01]: You have to understand this industry.
[SPEAKER_01]: It is extremely, extremely cyclical and very high risk.
[SPEAKER_01]: So I would be selling my crime.
[SPEAKER_01]: But lastly, I want to cover a quick study.
[SPEAKER_01]: Look at 30,000 roughly US listed public companies about past 100 years.
[SPEAKER_01]: And the average buying hold return across all stocks is over 30,000% over that time period.
[SPEAKER_01]: The median return, however, is 6.9%.
[SPEAKER_01]: The median, not the average, the median.
[SPEAKER_01]: It means the middle.
[SPEAKER_01]: Stock right in the middle of the 30,000 to 15,000 stock performance is negative 6.9%.
[SPEAKER_01]: actually earned less than treasury bills over that time period.
[SPEAKER_01]: But it was the handful of strong performers that drove the returns.
[SPEAKER_01]: The top individual performer over that period, all tree a group, which split off in the film, Morris, and he's built Morris, now it's all tree and
[SPEAKER_01]: And it was in 1926, in 2016, 89 firms drove about half of the market's total wealth creation.
[SPEAKER_01]: Think about that.
[SPEAKER_01]: And from 2017 to 2025, only 46 firms response were a response for half of the wealth creation.
[SPEAKER_01]: So what that tells you is, the majority of your names are going to buy, they're going to lose money.
[SPEAKER_01]: In good quality names, there's the quality names are the ones that rise at the top.
[SPEAKER_01]: Maybe not, in a particular week or a particular month, or even a particular year, but over time they're going to be the most consistent and they're the ones that are going to create wealth.
[SPEAKER_01]: So if you're going to sit there and keep chasing, the latest hot stock, the latest high flyer, probably going to get right, focus on quality.
[SPEAKER_01]: No, I'm Justin Klein.
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