[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is invest talk, independent thinking, shared success.
[SPEAKER_02]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_02]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_00]: Good afternoon fellow investors and welcome back to
[SPEAKER_00]: I'm excited for today's show.
[SPEAKER_00]: It's going to be a good one.
[SPEAKER_00]: We're going to do our best to help you become a better investor and to your financial investment questions.
[SPEAKER_00]: Bring you some topics that are important so we think are important to you.
[SPEAKER_00]: But most importantly, like I said, it's just about you and your journey that's with the show is about and lots of talk about during this hour.
[SPEAKER_00]: And in just a bit, we'll talk about today's market performance and run down the show topics
[SPEAKER_06]: So I had a question on GL and G. I've seen multiple reports and some really like it and some not so much.
[SPEAKER_06]: It's done well lately.
[SPEAKER_06]: It's an LNG stock with storage and an export.
[SPEAKER_06]: That was my question.
[SPEAKER_06]: This is John from Fresno.
[SPEAKER_06]: Thank you.
[SPEAKER_00]: We're going to go along our LNG owns and operates looking for natural gas carriers, floating storage, and re-gasification units.
[SPEAKER_00]: So not the terminals, but the ships that actually you load the LNG onto and take it to its destination.
[SPEAKER_00]: As you would imagine, their business is of late is doing pretty well.
[SPEAKER_00]: But what's interesting is that profits are actually
[SPEAKER_00]: I mean, $4.38 in 2022 and down to 157, then 135, then 133 last year, this year only so to make 81 cents.
[SPEAKER_00]: Then 78 cents next year.
[SPEAKER_00]: So where's the beef?
[SPEAKER_00]: Why is their business struggling with profitability when revenue growth is so pretty good?
[SPEAKER_00]: I think it just
[SPEAKER_00]: low profitability, these amount of debt in their balance, she'd about $2 billion, $2.5 billion in debt, negative free cash, low even in this environment.
[SPEAKER_00]: With the demand for LNG, it's got a rock in it.
[SPEAKER_00]: So where is the beef here?
[SPEAKER_00]: Now the chart is good, but is that more sentiment than anything else?
[SPEAKER_00]: I think so.
[SPEAKER_00]: That's what it's telling me.
[SPEAKER_00]: So if you want to make this a momentum play, sure.
[SPEAKER_00]: a bet on hostilities and they're on continuing that's fine with me as well that's your view but this is not an investment this is a story it is a narrative but it's not an investment not at least a good investment over the longer term because if I go zoom back out this is something you should do with almost any stock has a stock been generally being up or down
[SPEAKER_00]: And it's continued to be out of decline.
[SPEAKER_00]: And if you look at the Shares Outstanding, can you just go up into the right?
[SPEAKER_00]: 23,56 million Shares Outstanding, now 101 million Shares Outstanding, outstanding.
[SPEAKER_00]: It's just a low profit business.
[SPEAKER_00]: I don't like low profit businesses.
[SPEAKER_00]: I like businesses that have good cash flow, good balance sheets, et cetera.
[SPEAKER_00]: So as a trade, yes, as an investment, no.
[SPEAKER_00]: It's important to delineate the two, because you can be right in the short term, but wrong in the long term and vice versa.
[SPEAKER_00]: So you need to step back.
[SPEAKER_00]: What is your time horizon here?
[SPEAKER_00]: What's happened in Vester, are you, are you a trader?
[SPEAKER_00]: Or are you a investor?
[SPEAKER_00]: We have a great show for you today.
[SPEAKER_00]: We talked about the 2020-26 gold price forecast yesterday.
[SPEAKER_00]: We looked into the safe haven, it was a safe haven or a victim.
[SPEAKER_00]: rate a victim of rate in certain excuse me, and we also answer a listener question on a wingstop, ticker W-I-N-G.
[SPEAKER_00]: If you missed that, go check it out the best way to never miss a show as the follow and best talk wherever you get your podcast.
[SPEAKER_00]: So that was yesterday, but today, in the next 45 minutes or so, we're going to cover a lot, mainly our main focus point, which is that Goldman Sachs is shifting its rate forecast.
[SPEAKER_00]: Are they right?
[SPEAKER_00]: And they're not the only major
[SPEAKER_00]: What is the path forward for Fed policy?
[SPEAKER_00]: This assumption has been, Kevin Orch coming in and they're going to lower rates, and that's certainly going to be possible, but we're going to dig into that.
[SPEAKER_00]: A little bit more is that true are we actually going to get rate hikes before we get rate cuts?
[SPEAKER_00]: We have other topics on the docket as well.
[SPEAKER_00]: So with AI and the economy, the fact that it's distorting the economy in many ways.
[SPEAKER_00]: What does that ultimately mean for near-term profits, near-term opportunities in the market, but also what does it mean medium to long-term as well?
[SPEAKER_00]: And then how are businesses thinking about AI in their workforce?
[SPEAKER_00]: It's usually two questions that need to be answered.
[SPEAKER_00]: Is do you laugh workers or do you actually just have them do more and become more productive?
[SPEAKER_00]: What you're seeing is more often than not, it's actually the latter.
[SPEAKER_00]: And then if we have time, we'll talk about why $100 oil
[SPEAKER_00]: a breaking point for the market, and what level that might be at.
[SPEAKER_00]: Then we have voice bank calls, one is on, Mikado Libre, M-E-L-I, as well as Shwap, Shwab's U.S. dividend equity, T-F-S-C-H-D, and of course we have questions that came in via the comment section over on the Best Talk YouTube channel as well.
[SPEAKER_00]: But we're going to head to a break, and most importantly, we'll always be your live questions.
[SPEAKER_00]: The Don't Has Date to Reach Out.
[SPEAKER_00]: and leave your message on the Investock Voice Bank or if you're listening via the live stream.
[SPEAKER_00]: On our website or possibly on AM1220 the Bay Area, you can go right now at 8.899 chart.
[SPEAKER_00]: Hang on, cause I'll talk about today's market activity in the next segment.
[SPEAKER_01]: Your questions are free.
[SPEAKER_01]: The answers are unbiased.
[SPEAKER_01]: Justin Klein is here now.
[SPEAKER_01]: Ready to take your calls live.
[SPEAKER_01]: Invest talk.
[SPEAKER_01]: 88899 chart.
[SPEAKER_00]: Let's pivot and talk about today's market.
[SPEAKER_00]: It was a nice little bounce back day after a modest sell off yesterday.
[SPEAKER_00]: S&P up a little over half percent NASDAQ.
[SPEAKER_00]: Bounce back the most up 1.2 percent.
[SPEAKER_00]: on the day, despite what was another worrisome inflation report.
[SPEAKER_00]: So yesterday we had CPI, but I always say what is more telling is PPI, what is PPI?
[SPEAKER_00]: Well, it's producer price index.
[SPEAKER_00]: CPI is consumer price index and you go look through history, PPI usually feeds
[SPEAKER_00]: Because if you're setting your prices, most businesses don't change their prices like that overnight.
[SPEAKER_00]: They see a durable trend in their costs, and then they eventually pass that through over, you know, numbers of weeks.
[SPEAKER_00]: And so core PPI, this is excluding food and energy, was up 1% month over month.
[SPEAKER_00]: I didn't sound like a lot, but that was 0.3% above,
[SPEAKER_00]: a consensus was 0.3%, so much higher.
[SPEAKER_00]: March is data was revised up from 0.1% to 0.2%.
[SPEAKER_00]: Annualized, this is 5.2% month over month.
[SPEAKER_00]: Consensus will supposed to be 4.3%.
[SPEAKER_00]: So nearly 1 percentage point higher than the market was expecting.
[SPEAKER_00]: This is the highest since December of 2022.
[SPEAKER_00]: The broad PPI, which includes food and energy, up 1.4% month over month, double the 0.7% that was expected.
[SPEAKER_00]: March was also revised from 0.2 to 0.7 month over month.
[SPEAKER_00]: Analyze, six percent.
[SPEAKER_00]: Consensible supposed to be five percent.
[SPEAKER_00]: So in 1% more than the market was expecting that once again, the highest since December of 2022.
[SPEAKER_00]: So this is,
[SPEAKER_00]: going to impact the CPI print for next month and month after.
[SPEAKER_00]: The good news, the final demand continues to be strong.
[SPEAKER_00]: This is clearly around AI, which we'll talk about a little bit later.
[SPEAKER_00]: Trade was up 2.7% month over a month, transportation and warehousing up 5% month over a month.
[SPEAKER_00]: So demand is good, but inflation is even stronger.
[SPEAKER_00]: So this is why you saw the 10 year now over 5% yield.
[SPEAKER_00]: I think as that creeps higher and especially if that's it, 10 year, 30 years over 5, 10 year still around 4 and a half, but creeping higher.
[SPEAKER_00]: And this is once again probably the biggest risk in markets, which we'll talk to you a little bit later, which is what is the path for the Fed?
[SPEAKER_00]: What else do we see?
[SPEAKER_00]: 10 year yield hit the highest level since July last year.
[SPEAKER_00]: There we go.
[SPEAKER_00]: Dollar index, a 0.2% gold finished a 0.4 silver up 4.4% you're starting to see silver out perform gold, both are strong though.
[SPEAKER_00]: Bitcoin features off 1.7% WTI created a down 1.1 on optimism around the meeting between President Trump and President G and China over the weekend.
[SPEAKER_00]: So that was the market today.
[SPEAKER_00]: We're in option X.
[SPEAKER_00]: So I'm going to get a, I will reserve judgment on what's going on in the market, probably until we get into next week, past the opx and more news coming out of what's happening in China.
[SPEAKER_00]: Now from time to time, we'll receive questions via web form from the best talk to our comment.
[SPEAKER_00]: Here's one that came in earlier.
[SPEAKER_00]: Robert says is Bentley Systems, BSY.
[SPEAKER_00]: bsy on the list of software companies that you consider a good opportunity right now interesting bsy of software in general is a space that there's going to be some massive losers I think there's going to be a decent amount that muddle through but then I think there are others that have more diverse ecosystem around
[SPEAKER_00]: both software and hardware.
[SPEAKER_00]: I think those are the bigger winners.
[SPEAKER_00]: This is Bentley System provisions, software solutions for infrastructure engineering, enable the work of civil structural, geotechnical, plant engineering practitioners, so around industrial facilities.
[SPEAKER_00]: Take a look at earnings.
[SPEAKER_00]: earnings expected to be a dollar 38 this year from up to from a dollar 21 last year.
[SPEAKER_00]: Estimates are coming down, but make a dollar 56 next year.
[SPEAKER_00]: So based on forward looking earnings, currently trading at $31 per share, this is, at a more reasonable valuation that it's really been in a while.
[SPEAKER_00]: And that's the go public in 20 was at 2020 back in was only making 64 cents and it's pretty much at that IPO price.
[SPEAKER_00]: But the trend is clearly lower like most of these stocks.
[SPEAKER_00]: Now how much is that AI-driven?
[SPEAKER_00]: That's a tougher question.
[SPEAKER_00]: They have a good balance sheet.
[SPEAKER_00]: Free cash flow is 491 million, but that is down recently.
[SPEAKER_00]: So if I look at there, if I go to their free cash flow per quarter, was 187 million last quarter, which was pretty robust.
[SPEAKER_00]: But year of a year, it is starting to,
[SPEAKER_00]: decelerate.
[SPEAKER_00]: So I would keep this on my watchlist.
[SPEAKER_00]: I wouldn't be buying this yet.
[SPEAKER_00]: The technicals remain pretty weak.
[SPEAKER_00]: I would dig into this a little bit further.
[SPEAKER_00]: You really have to understand what solution it is solving for a software perspective.
[SPEAKER_00]: And if you are comfortable with the fact that that will maintain that AI won't disrupt it, then it could be opportunity.
[SPEAKER_00]: But I would also wait for the chart to firm up or the market to confirm
[SPEAKER_00]: That's right now.
[SPEAKER_00]: Just watch it.
[SPEAKER_00]: Those in best thought?
[SPEAKER_00]: Now, closing on 63 million downloads, thanks to you, paying on Richard from Santa Clarita.
[SPEAKER_00]: Has a question next.
[SPEAKER_01]: 24-7, Rainer Shine, there's always value in the Invest Talk podcast.
[SPEAKER_01]: 888-99, chart.
[SPEAKER_00]: We're going to go connect with Richard in Santa Clarita, looking at Jacob's solutions, correct?
[SPEAKER_09]: Yes, that's correct.
[SPEAKER_09]: I was going to ask you,
[SPEAKER_09]: and these inflationary, this inflationary environment.
[SPEAKER_09]: This is a company that, you know, I've had a pretty broad swing in terms of its stock price.
[SPEAKER_09]: It's really dropped recently.
[SPEAKER_09]: I mean, I think it's been to size like 168.
[SPEAKER_09]: And I've seen it over the, over the few years.
[SPEAKER_09]: It goes up and down, not huge swings, but just wondering at this point,
[SPEAKER_09]: Is this a good investment in this inflationary environment we're, you know, getting into?
[SPEAKER_00]: Well, here's the issue is that mainly they provide analytics technical and scientific consulting services.
[SPEAKER_00]: So the market is starting to say, or at least the message that I'm seeing on the chart, which is this is rolled over considerably, it peaked back in October.
[SPEAKER_00]: and $16570 per share, now we're at $177 per share.
[SPEAKER_00]: So down considerably from its 52 week high, even as earnings expectations can do to rise for this year and next year.
[SPEAKER_00]: But the signal is that, and I can do a lot of these consulting services that will use SERP what their need really.
[SPEAKER_00]: And so I always say, I listen to the market.
[SPEAKER_00]: Now is this that support?
[SPEAKER_00]: Yeah, it's at the support from March of last year.
[SPEAKER_00]: Liberation Day lows.
[SPEAKER_00]: But the market's at new highs.
[SPEAKER_00]: So look at the relative strength here.
[SPEAKER_00]: It's pretty bad.
[SPEAKER_00]: So you'd have to be very confident that their consulting services are still needed in the era of AI.
[SPEAKER_00]: Not just for the next year or two years, because that's what you're gonna see a lot is that these companies are fine for this year.
[SPEAKER_00]: They're fine for next year.
[SPEAKER_00]: But as more and more companies and institutions in general, I'm talking maybe government as well, start to implement AI into their practice.
[SPEAKER_00]: Well, maybe that can replace a lot of what these,
[SPEAKER_00]: knowledge-based workers do, knowledge companies do, like you're consulting firm.
[SPEAKER_00]: So that's the signal I'm getting.
[SPEAKER_00]: You have to really understand what they do and say there's no way that AI can do this.
[SPEAKER_00]: Right now the market is telling you that yes AI can do the vast majority of what they do and in three years, five years, ten years time they're going to lose the majority
[SPEAKER_00]: Do you have a deep understanding of Jacobs?
[SPEAKER_09]: No, not a deep understanding.
[SPEAKER_00]: Yeah, so that's what you would have to have for me to be confident this, that you're gonna fade the narrative that the market is pricing in here.
[SPEAKER_00]: The narrative is this is a business that does not have staying power in the world of AI.
[SPEAKER_00]: All right, great, thank you very much.
[SPEAKER_00]: No problem, thanks for the call.
[SPEAKER_00]: And this is, it's going to become very difficult with the average investor to navigate the landmines.
[SPEAKER_00]: It's going to be so much disruption.
[SPEAKER_00]: Just think of the internet in the late 90s.
[SPEAKER_00]: And how many businesses it disrupted?
[SPEAKER_00]: Businesses like the yellow pages.
[SPEAKER_00]: Landline phones.
[SPEAKER_00]: I can go on and on to the businesses that
[SPEAKER_00]: doing well throughout most of the 90s and even through the year 2000.
[SPEAKER_00]: But as time went on, and the internet kind of proliferated throughout every industry, suddenly those businesses died that disappeared.
[SPEAKER_00]: And that's going to happen in the age of AI as well.
[SPEAKER_05]: Those people back to the Vestock Voice Bank, you know, the number of eight, eight, nine, nine chart.
[SPEAKER_05]: How do I calibrate?
[SPEAKER_05]: Figure M-E-L-I, 100% of my portfolio, down about 15%, if you've recently had earnings, honestly, if you guys would see it by seller fold, or if I should be cost averaging down, before it's your answer on the podcast.
[SPEAKER_05]: Thank you.
[SPEAKER_05]: Bye.
[SPEAKER_00]: All right, looking at Makoto, Libre, M-E-L-I, so starting to $58 in 50 cents, next year at 44%, earnings up to 3% this year to $4.40 in 63 cents, but it's a $1,500 stock.
[SPEAKER_00]: If you go based on this year's earnings, it's about 40 times, next year's earnings, it's closer to 30 times, it's an either way you slice it as expensive.
[SPEAKER_00]: Stock, no, what do they do?
[SPEAKER_00]: This is out of Brazil from memory correctly.
[SPEAKER_00]: And they're kind of like the Amazon in Brazil.
[SPEAKER_00]: Maybe commerce platform, financial technology, logistics, and an advertising business, revenue growth is slowing, but the issue, once again, like a lot in this market is that it's
[SPEAKER_00]: you have a downtrend and this downtrend is not something I would get in front of.
[SPEAKER_00]: I would want to see some strength.
[SPEAKER_00]: You have new 52-week lows this week.
[SPEAKER_00]: You do have a high spike in volume that could be a signal that maybe there's capitulation but I'm not buying it quite yet.
[SPEAKER_00]: Still pretty expensive multiples are contracting in this market and so I would pass on it.
[SPEAKER_00]: Now the next investor talk will look into the story.
[SPEAKER_00]: U.S. Dollar Outlook, 2026, Strength, Weakness, and what's driving it.
[SPEAKER_00]: That's tomorrow, but for now I'm Justin Klein.
[SPEAKER_00]: We are ready to take your calls anytime and eight and eight and nine you may ensure.
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[SPEAKER_00]: Our main focus point today is about Goldman Sachs and other major investment banks changing their rates fed rate forecast.
[SPEAKER_00]: Mainly, it's about steady for longer, shall we say.
[SPEAKER_00]: Now, for most of this year, the excitation was one Kevin Worsh comes on board, starting
[SPEAKER_00]: But there's always been the question of, can he sell that to the board?
[SPEAKER_00]: Remember, this is a board.
[SPEAKER_00]: It's not one man or woman.
[SPEAKER_00]: It's about 12 people that vote.
[SPEAKER_00]: And last meeting, there was eight to four split.
[SPEAKER_00]: They were talking about the statement that an easing bias, but a handful said, no, we don't think we should have an easing bias.
[SPEAKER_00]: It should be more neutral because of the inflation outlook.
[SPEAKER_00]: And since then, like I said, big, big banks like Bank of America, global research as well as Goldman Sachs, they're starting to say, no, they'll remain the federal remain on hold for the rest of the year, and then maybe cut rates, be a basis next summer.
[SPEAKER_00]: Goldman says in December of this year and then March of next year, which is pushed back from their September rate cutting rate cut forecast prior.
[SPEAKER_00]: But once again, they're not the only Wall Street Bank that's saying this, why?
[SPEAKER_00]: Because the data, that is simple.
[SPEAKER_00]: We just talked about the inflation, both CPI yesterday, PPI this today, but also Friday's employment report.
[SPEAKER_00]: It was a bit better than expected, unemployment rate was steady at 4.3%.
[SPEAKER_00]: So the labor market is relatively okay.
[SPEAKER_00]: And then the inflation picture is getting hotter.
[SPEAKER_00]: So where is the impetus for major rate cuts?
[SPEAKER_00]: Now, Goldman is saying, Well, he should, or actually is BFA, said that cut should play the employee next summer, I think that over a year from now, when inflation is much closer to target, which does make a bit of sense.
[SPEAKER_00]: Maybe you get through this, or you get through a resolution of the war, the damage of all the infrastructure and the higher cost of all these inputs now across the economy, maybe that wears off in a year.
[SPEAKER_00]: But that's a year from now.
[SPEAKER_00]: Very difficult.
[SPEAKER_00]: to understand where the geopolitics will head between now and then, how supply chains will heal if at all, between now and then.
[SPEAKER_00]: So to me, that's a giant shot in the dark.
[SPEAKER_00]: Those three, let's turn to markets.
[SPEAKER_00]: What are the markets saying?
[SPEAKER_00]: Because usually, like with stock recommendations, upgrades and downgrades, usually is investment banks, actually late to the game.
[SPEAKER_00]: What does Trump say about,
[SPEAKER_00]: the Fed always late or Powell always late, Powell or something like that.
[SPEAKER_00]: Well, these investments are notoriously late about almost everything.
[SPEAKER_00]: They don't move the recommendation until the market's already moved and guess what the market is already pricing in.
[SPEAKER_00]: But they're say about a third of one percent, third of one percent, yeah, third of one percent, chance.
[SPEAKER_00]: that there will be a rate hike or two between now and your end.
[SPEAKER_00]: There's only a point seven percent chance.
[SPEAKER_00]: This is what the market is pricing in.
[SPEAKER_00]: Now, there's only a point seven percent chance.
[SPEAKER_00]: There will be a rate cup between now and your end.
[SPEAKER_00]: There's a 67 and a half percent chance.
[SPEAKER_00]: There will be no rate cut.
[SPEAKER_00]: They'll just keep it steady.
[SPEAKER_00]: And I could see that.
[SPEAKER_00]: I think that's still the most likely option that makes sense because you're gonna have a fed share that's going to have an easing bias.
[SPEAKER_00]: The rest of the committee is most likely going to shift towards a more hawkish stance as the year goes on, as these inflation figures continue to spiral to the upside.
[SPEAKER_00]: Question is that, what point does Kevin Worst say, yeah, know what?
[SPEAKER_00]: You're right, this inflation research isn't going the way we must raise rates.
[SPEAKER_00]: And ultimately, this will have an impact on, I really across the economy as well as
[SPEAKER_00]: You're already seeing, as I said earlier, the 10 year at the highest level in what's in September or July of last year, since last summer call it, 30 or now over 5%.
[SPEAKER_00]: So if your own duration have warned about this, that you don't want to own a lot of duration in your bond portfolio.
[SPEAKER_00]: So to impact that, but it will also impact what?
[SPEAKER_00]: housing market, mortgage rates, mortgage rates are priced off the 10 year, so you're already seeing a sell-off in housing stocks, for example, why because what's going to real estate is a reliant on these low interest rates.
[SPEAKER_00]: The current mortgage rate is that 30 year, 6.54% that's up from a recent low around 6%.
[SPEAKER_00]: So we're up already a half a percent in just a matter
[SPEAKER_00]: material.
[SPEAKER_00]: The real money real higher cost of capital.
[SPEAKER_00]: And then the third is what most of us are maybe concerned about or wonder which is equity valuations.
[SPEAKER_00]: Remember 22 when you had that retracted downturn because the Fed was on it hiking cycle and the market rolled over before the Fed actually raised rates.
[SPEAKER_00]: And it was mainly in the NASDAQ NASDAQ NASDAQ NASDAQ NASDAQ
[SPEAKER_00]: The market hasn't reacted.
[SPEAKER_00]: Now, part of it is earnings are going up for a lot of these big tech names.
[SPEAKER_00]: So right now, the market is ignoring this higher cost gap, but at some point, if you do see rates continue to move higher, because that's what inflation is now researching.
[SPEAKER_00]: Well, that could shift the narrative.
[SPEAKER_00]: It could shift.
[SPEAKER_00]: us into a more risk-off environment.
[SPEAKER_00]: And so as long as this drags on in the Middle East, that's is a creeping possibility.
[SPEAKER_00]: Let's head over to a YouTube comment question.
[SPEAKER_00]: Talk to Navine says, great job, very informative.
[SPEAKER_00]: Could you please share your thoughts on Autodesk, ADSK?
[SPEAKER_00]: A quick follow-up.
[SPEAKER_00]: But do you say free portfolio review has that work?
[SPEAKER_00]: Would like to know the steps of free portfolio.
[SPEAKER_00]: If you want to head to our website, click on the Get My Review to profile your view form, just fill that out, then we will intake your latest statements or a spreadsheet of all of your positions.
[SPEAKER_00]: We put that into our system running an analysis and report, we schedule a video conference call, share my screen, go over the report, pros, cons, talk about goals, see if there's
[SPEAKER_00]: Anyway, we can help God, no big deal and overall just give that analysis of where your portfolio sits in conjunction to the risks in the market as well as most importantly, your risk tolerance level are you above it or you below it.
[SPEAKER_00]: Are you at it?
[SPEAKER_00]: Look at all that so that's that.
[SPEAKER_00]: But let's get into Autodesk ADSK another one of those software names.
[SPEAKER_00]: Now, this is actually one of those software names.
[SPEAKER_00]: I would be a little bit more.
[SPEAKER_00]: Bullish on.
[SPEAKER_00]: Yeah, it's an end downtrend.
[SPEAKER_00]: It's well, a drink though is a bit better than the broader sector.
[SPEAKER_00]: And for everyone else out there, if you don't know what Autodesk does, they design and develop multimedia, software products mainly for product design.
[SPEAKER_00]: So if you're trying to mock up the design of a new product, no matter what that is, Autodesk is typically the go-to, computer-aided design.
[SPEAKER_00]: AutoCAD is their main, he's the software they have other ones as well.
[SPEAKER_00]: Big business, $48 billion market cap pretty much no debt in this balance sheet, $2.3, $2.4 billion in free cash flow.
[SPEAKER_00]: Return equity 40% free cash flows at an all-time high.
[SPEAKER_00]: What are they doing with that cash flow?
[SPEAKER_00]: They are.
[SPEAKER_00]: Not paying a dividend, but are they buying back shares?
[SPEAKER_00]: They are doing it.
[SPEAKER_00]: earnings for this year is supposed to be up 19% after being up 20% last year.
[SPEAKER_00]: It's supposed to earn $14 next year, and a $231 stock.
[SPEAKER_00]: Through talking about a high teens multiple, going forward with a clean balance sheet, and I think a more defensible mode.
[SPEAKER_00]: If you were an engineer, you were trained on this software.
[SPEAKER_00]: in school, it's kind of the go-to with industry standard.
[SPEAKER_00]: It can take a long time for competitors to, I think, mock up even with AI, a true competitor.
[SPEAKER_00]: And even then, it's going to have the same, you know, are the end users, are they going to want to switch?
[SPEAKER_00]: Learn this whole new piece of software that it's, you know, think about computer design.
[SPEAKER_00]: It can be complex.
[SPEAKER_00]: You want to go and learn a whole new interface.
[SPEAKER_00]: Probably not.
[SPEAKER_00]: So of the software names, this is up there with some of the, I think, the more defensible pieces of software.
[SPEAKER_00]: And I think their economic mode is real.
[SPEAKER_00]: So I've got a lot of calls on software names, and this would be my favorite of the bunch, not only because of the relative strength, but also the type of software that they produce.
[SPEAKER_03]: just in a little mat for Minneapolis calling you guys.
[SPEAKER_03]: I just heard the other day Luke talking about gold and what it's doing or not doing I guess that is.
[SPEAKER_03]: And if I understood that right, it's gold kind of I guess in a neutral phase right now until maybe the war ends or gets closed up or the Fed does something and
[SPEAKER_03]: his discussion on it.
[SPEAKER_03]: My concern is I currently own any am numont and also gdx which is a gold mining one that I believe you guys own.
[SPEAKER_03]: I loaded up on gold I guess one was going great and things were good.
[SPEAKER_03]: I'm wondering should I dump one of them completely?
[SPEAKER_03]: I'm thinking maybe any am even though
[SPEAKER_03]: but right now just use the money for something else and maybe keep a GX.
[SPEAKER_03]: I was thinking if that'd be the thumbs up one.
[SPEAKER_03]: I know you guys all not in some of your portfolios so that might be the better of the two.
[SPEAKER_03]: What are your thoughts on this move?
[SPEAKER_03]: Thank you.
[SPEAKER_03]: Look forward to hearing your information.
[SPEAKER_00]: Now, we don't own either four of GDX or NM for our clients, we own a lot of the names within GDX, and maybe we talk about GDX as a proxy for gold miners in general, we own once again, a lot of the names within it.
[SPEAKER_00]: But what's happening now in gold, in gold miners, it's just the shopping sideways, the underlying demand is still very strong, geopolitical, uncertainty, and the diversification of
[SPEAKER_00]: essentially balance sheets around the world is pushing away from treasuries one of the reasons why you're seeing rates go up and into harder assets gold and silver.
[SPEAKER_00]: And so I think longer term to still the the the the uptrend that will continue.
[SPEAKER_00]: Mark got a bit over bot earlier in the year and like most things it takes some time for that sentiment to be burned off.
[SPEAKER_00]: And usually it burns off with a correction or a consolidation period.
[SPEAKER_00]: And that's what you're seeing right now.
[SPEAKER_00]: Silver's been attempting to break out recent or has, you know, had a little bit of a breakout recently, which usually is a tell for the broader precious metals market.
[SPEAKER_00]: And so absolutely not.
[SPEAKER_00]: I would not be selling these names.
[SPEAKER_00]: It's just going through a consolidation period if you can't.
[SPEAKER_00]: Some of the, you know, it's just basically a choppy sideways pattern over three months now.
[SPEAKER_00]: That's not a big deal.
[SPEAKER_00]: That's normal.
[SPEAKER_00]: It's healthy.
[SPEAKER_00]: It's fresh.
[SPEAKER_00]: It still remains above all the major moving averages, which from a technical perspective, it's fine.
[SPEAKER_00]: The backdrop of once again, a exploding deficit domestically, a geopolitical environment that is becoming even more contentious and complex.
[SPEAKER_00]: They're all the reasons why gold and silver rallied over the past two years considerably remains today.
[SPEAKER_00]: So absolutely there's really no reason to sell it unless you are over two overweight the particular sector doesn't sound like you are, but I would hold both new month and GDX.
[SPEAKER_07]: Those squeeze in one more quick question now.
[SPEAKER_08]: I actually owned 100 shares of it, and was wondering, should I buy more?
[SPEAKER_08]: So just wanted to know what you guys thought about it.
[SPEAKER_08]: Thank you, and to go to the good work.
[SPEAKER_00]: Looking at Rio Tinto, one of the largest mining companies in the world about what's the market cap?
[SPEAKER_00]: 184 billion?
[SPEAKER_00]: The lot.
[SPEAKER_00]: It's in a strong uptrend at a 52-week high at the close today, earning so to be $8 and 13 cents next year, $112 stock, so mid-teens multiple.
[SPEAKER_00]: The issue is that it doesn't sound expensive, but historically mining stocks tend to trade at relatively low multiples.
[SPEAKER_00]: However, we're entering a new era where hard assets are more important, they're being valued more.
[SPEAKER_00]: is the core crux of their business, or their profitability.
[SPEAKER_00]: But the other two, which would be aluminum and copper,
[SPEAKER_00]: Luminums about 29% of the revenue, copper's 23%, so those I do like longer term.
[SPEAKER_00]: Now, I would like a little bit more a pure play within the copper or aluminum space, but this is a good diversified play, overall.
[SPEAKER_00]: So I like it, so I'm a favorite within the commodity space, the natural resource space,
[SPEAKER_00]: But you can't argue with the momentum, you can't argue with the fact that, like I said, harder, come use with harder assets, are starting to be revalued, hiring a world of geopolitical uncertainty.
[SPEAKER_00]: But when I buy more, it depends on my exposure to that to resources and to reevalve together, overall and bullish on this long term.
[SPEAKER_00]: This is Invest Doc, I'm just inclined, we have one goal here each and every week.
[SPEAKER_00]: They help you achieve your own version of financial fruit freedom.
[SPEAKER_00]: It's good to questions in right now at 8.89 chart.
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[SPEAKER_00]: Looking at SCHD, this is a very popular ETF, especially if you're a Schwab customer.
[SPEAKER_00]: Obviously, we custody a Schwab now fidelity as well.
[SPEAKER_00]: But I always say this is interesting that the color asks it's a Schwab high dividend ETF.
[SPEAKER_00]: Well, it's not, it's just the U.S. dividend equity ETF.
[SPEAKER_00]: And there's the couple issues that I with it.
[SPEAKER_00]: Is this the U.S. and there's a lot of value abroad as well.
[SPEAKER_00]: So I would want to make sure I have foreign exposure.
[SPEAKER_00]: So if we're just trying to gain domestic dividend exposure, this is a decent way to do it.
[SPEAKER_00]: Now it is dividend investing in general is just value investing.
[SPEAKER_00]: And you can see if you go look at Morningstar, it's deep value, kind of a blend between mid and large cap.
[SPEAKER_00]: Be looking at sector allocation.
[SPEAKER_00]: It's all about 18% consumer defensive, 19% which is, that's an issue because a lot of those names are struggling in inflationary environments.
[SPEAKER_00]: health care is also 18% another area that doesn't do well in inflationary environments.
[SPEAKER_00]: You're going to be overweight things like basic materials.
[SPEAKER_00]: This is 0%.
[SPEAKER_00]: You're going to be overweight things like financial services, which is 9% but that's the category and the value sector is 19%.
[SPEAKER_00]: You're going to be overweight industrials, which is 7%.
[SPEAKER_00]: It's barely low, below the S&P and below the category, it's 12%.
[SPEAKER_00]: So that's my issue here is I don't like the sector allocation.
[SPEAKER_00]: You're not getting
[SPEAKER_00]: really great, a great hedge against the inflationary environment.
[SPEAKER_00]: The good news is it is performing well recently.
[SPEAKER_00]: That's kind of the positive.
[SPEAKER_00]: But overall, you know, last year was only up 4% is the 90th Prince out.
[SPEAKER_00]: It did horribly up last year.
[SPEAKER_00]: So yes, it's bounced back this year, it's doing great, but it's only been three months.
[SPEAKER_00]: And then if you zoom out to like the five year,
[SPEAKER_00]: returns 8.6% which is once again in the bottom quartile, 81% down, meaning only 19 funds in this category which would be large cap value are outperforming over that time period.
[SPEAKER_00]: Is it only 19, sorry, 19% of funds are doing worse than that, excuse me.
[SPEAKER_00]: There we go.
[SPEAKER_00]: That's a better way to put it.
[SPEAKER_00]: Only 19% of funds over a five year period are doing worse than this within the category.
[SPEAKER_00]: It means 81% of the funds within this category.
[SPEAKER_00]: Large cap value are doing better.
[SPEAKER_00]: And so, as I always say, and this is something we're going to hit on our next webinar.
[SPEAKER_00]: It's going to have the end of June.
[SPEAKER_00]: We're going to talk about income.
[SPEAKER_00]: A lot of these income funds, dividend funds, is that you don't want to just focus on the name.
[SPEAKER_00]: You want to focus on the structure.
[SPEAKER_00]: How is it allocated?
[SPEAKER_00]: That really how you want to allocate your portfolio?
[SPEAKER_00]: And how does that mix with the rest of your portfolio as well?
[SPEAKER_00]: So, you know, I'm kind of so hum on this.
[SPEAKER_00]: Not the best, not the worst, but certainly not great.
[SPEAKER_00]: Yeah, it has a low expense ratio, but once again, I rather pay a little bit more for real performance because like I said, even with that low cost, the five-year return is poor.
[SPEAKER_00]: Thank you all for tuning in, I'm Justin Klein, reminding you about cake, be financials, parallel investing,
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