[SPEAKER_00]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_00]: Independent Thinking, shared success.
[SPEAKER_00]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_00]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_03]: Good afternoon fellow investors and welcome back to Invest Talk.
[SPEAKER_03]: This is our Thursday, May 14th, 2026 edition and I'm excited to have this hour with you, a lot to unpack in today's show.
[SPEAKER_03]: Have a wonderful show for you.
[SPEAKER_03]: So let's just get right to it.
[SPEAKER_03]: We'll answer our first caller, question, yeah.
[SPEAKER_05]: Hi, Justin and Luke.
[SPEAKER_05]: I was interested in purchasing some.
[SPEAKER_05]: Super Micron computer symbol is FMCI and I'd just like to get your opinion on the stack.
[SPEAKER_05]: Thank you.
[SPEAKER_03]: Looking at Super Micros the name that's been hot and cold and then hot again over the past few years.
[SPEAKER_03]: It was one of those early AI garlings as companies were ramping up their infrastructure spending and they needed more servers and all of that.
[SPEAKER_03]: And it hit a peak back in 2024 of well over $100 per share.
[SPEAKER_03]: But then it crashed and hit a low, when was this?
[SPEAKER_03]: 2024, the fall of around $18 per share.
[SPEAKER_03]: Now it's at 33, so rallies in STEM, but it's been a very choppy couple of years.
[SPEAKER_03]: They've had issues with accounting.
[SPEAKER_03]: And that to me is always a big red flag.
[SPEAKER_03]: And they don't really have and in competitive advantage.
[SPEAKER_03]: That's why they had to turn to accounting gimmicks to make themselves look better than they really are.
[SPEAKER_03]: And then you had, I think there was another lot, and that's something else recently where it dropped you that was back in March for get exactly what that news item was.
[SPEAKER_03]: But it had something additional to do with management, management being, gee, I think they had a lawsuit was it, lawsuit from Ernest Gation, from the SEC, something like that I honestly I can't remember off the top of my head at the digging to the history of the news here going all the way back to March.
[SPEAKER_03]: My point is that there's a lot of smoke here.
[SPEAKER_03]: There are a lot of red flags with this business.
[SPEAKER_03]: Let me look at the published numbers and earnings expectations.
[SPEAKER_03]: They look relatively rosy.
[SPEAKER_03]: They look pretty good.
[SPEAKER_03]: Problem is we know with earnings, earnings can be manipulated very easily.
[SPEAKER_03]: So what do I want to look at, I want to look at things like cash flows and cash flows have gone negative negative six pointy billion dollars trailing twelve months.
[SPEAKER_03]: Another argue is because of growth, blah, blah, blah.
[SPEAKER_03]: But once again, you're not getting, I'm not giving you the benefit of the doubt when you constantly break the law.
[SPEAKER_03]: When you aren't forthright with shareholders.
[SPEAKER_03]: And then on top of that.
[SPEAKER_03]: It's in a downtrend.
[SPEAKER_03]: It's been in a downtrend for basically since the fall when it peaked about at about $61 per share.
[SPEAKER_03]: And yeah, it's rallied a little bit recently, but the whole space has, but it's still underperforming the broader tech industry.
[SPEAKER_03]: And that is what the market, that's a signal the market is sending.
[SPEAKER_03]: There are issues here.
[SPEAKER_03]: They have a lot of debt in their balance sheet about eight billion dollars in debt in a $19 billion market cap.
[SPEAKER_03]: That's not nothing, especially with this negative cash flow.
[SPEAKER_03]: So this is one of those names where you have to dig deeper, dig deeper than just those headlines with earnings, et cetera.
[SPEAKER_03]: This is where qualitative analysis comes in.
[SPEAKER_03]: Not just quantitative.
[SPEAKER_03]: Quantitative does show some red flags once again, but many ways, this is more qualitative.
[SPEAKER_03]: It's analyzing leadership.
[SPEAKER_03]: It's analyzing the economic mode
[SPEAKER_03]: that they might have.
[SPEAKER_03]: And the reality is, if you look at their operating margins, they're pretty meager.
[SPEAKER_03]: So I pass on super micro SMC I.
[SPEAKER_03]: Thanks for the call.
[SPEAKER_03]: Appreciate you.
[SPEAKER_03]: Do you have a great show for you?
[SPEAKER_03]: Today, but yesterday, we looked into this question.
[SPEAKER_03]: Is Goldman Sachs right about the Fed rate cut forecast?
[SPEAKER_03]: We discussed what a longer wait for rate relief means for your upon portfolio, mortgages, as well as stock valuations?
[SPEAKER_03]: We also answer questions about a ticker symbol, SCHD, this is Schwabius, dividend equity ETF.
[SPEAKER_03]: If you happen to miss it, go check it out.
[SPEAKER_03]: Best way to get every show is by following us.
[SPEAKER_03]: Following a best thought wherever you get your podcast, so make sure you check out yesterday's show.
[SPEAKER_03]: It was a great one.
[SPEAKER_03]: But today, today is today.
[SPEAKER_03]: We have a lot of ground to cover over the next 45 minutes in time permitting will get to all of it.
[SPEAKER_03]: Our main focus point today is about the dollar outlook.
[SPEAKER_03]: Strength, weakness, what's driving it.
[SPEAKER_03]: The dollar cuts some safe haven demand recently from the Iran War Fears, but selling pressure continues.
[SPEAKER_03]: It remains in a downtrend over the last number of months.
[SPEAKER_03]: Through unpack what dollar swings be for international investments, commodities, and the average American investor.
[SPEAKER_03]: We also have the topics on the docket.
[SPEAKER_03]: Number one, I love this.
[SPEAKER_03]: There are a bunch of new funds that are called auto-collable ETFs.
[SPEAKER_03]: And they might say, 12, 14, 16% yield.
[SPEAKER_03]: But as usual, the devil's in the details.
[SPEAKER_03]: And it's important to understand what the way that these quote unquote yields are produced.
[SPEAKER_03]: The reality is that there are some big risks.
[SPEAKER_03]: But what are those risks?
[SPEAKER_03]: Let's talk about that.
[SPEAKER_03]: We have the largest reduction in oil supply of the last call it 100 years.
[SPEAKER_03]: Oil prices are up, but they're not up nearly as much as everyone had feared.
[SPEAKER_03]: How, why?
[SPEAKER_03]: Why is that happening?
[SPEAKER_03]: Let's talk about it.
[SPEAKER_03]: And then if we have time, we'll talk about America's productivity boom.
[SPEAKER_03]: This is under-appreciated, also one of the reasons why the market continues to move higher.
[SPEAKER_03]: We also have voice bank calls, one is on Brown in Brown, Bureau, and then Gen Co.
[SPEAKER_03]: Shipping, GNK.
[SPEAKER_03]: And of course, as always, questions that came in via the comment section over on the Invest talking YouTube channel.
[SPEAKER_03]: But most importantly, as always, we'll be your live calls, running to a break, and up next, I'll look into today's market activity.
[SPEAKER_03]: And once again, take your live calls at 88899 chart.
[SPEAKER_04]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_04]: Now the torch has been passed and a new generation of hosts is on the job.
[SPEAKER_04]: Justin Klein and Luke Guerrero.
[SPEAKER_04]: So when you've got finance and investment questions, don't forget to call in Vestock.
[SPEAKER_04]: 888-99, chart.
[SPEAKER_03]: It did 99 chart, it did 99, 2, 4, 2, 7, it's how you get through and ask your question on today's show.
[SPEAKER_03]: Let's go take a look at the market today.
[SPEAKER_03]: It was another day in the green as that up nearly 1% S&P up about three quarters of 1% same with the Dow.
[SPEAKER_03]: Large cap growth certainly was the leader here.
[SPEAKER_03]: You had Cisco up about 13% on the day, luckily a name that we own for clients on good
[SPEAKER_03]: some of the positive sentiment within tech and video 4% broad come up five hardware semiconductors they continue to be very strong.
[SPEAKER_03]: You have some strength also out of
[SPEAKER_03]: The financial services, names like Polymanagement, Coinbase was strong, interactive brokers, strong, they're going to express up 1% in the day.
[SPEAKER_03]: So some nice gains there, capital 1 up over 2%, then you had industrial.
[SPEAKER_03]: So Plymaterials did report after the bell, and that was a good earnings report, Gevernova, had a good day.
[SPEAKER_03]: But kind of mixed elsewhere for being honest.
[SPEAKER_03]: So still a very positive day, but kind of mixed overall.
[SPEAKER_03]: You had retail sales come in at consensus, 0.5% month over month.
[SPEAKER_03]: That was down from marches revised level of 1.6% x autos.
[SPEAKER_03]: This was up 0.7% month over month, because that was 0.6.
[SPEAKER_03]: So you know, in line to slight beat overall, the initial job was claims.
[SPEAKER_03]: That came at 211,000 to consensus was 205.
[SPEAKER_03]: You've had a number of months of continued decline in initial jobless claims.
[SPEAKER_03]: So that little increase, little surprise, just kind of a one-off, not necessarily a trend.
[SPEAKER_03]: The market continues to watch what's going on in China with President Trump over there, meeting with President G. What comes out of that, we'll certainly move markets to some degree is that something to do with the Middle East, is it something to do with Taiwan?
[SPEAKER_03]: Is it more business deals?
[SPEAKER_03]: a bunch of big tech executives, CEOs, truly business will be discussed there, why they're there.
[SPEAKER_03]: So that will be something to watch for over the weekend.
[SPEAKER_03]: I think that's when we'll get some more data.
[SPEAKER_03]: Tomorrow is OPEX, and I think you'll get a lot more, maybe free movement of the market or volatility potentially in both directions, starting next week, once we get a resolution to this deal.
[SPEAKER_03]: So that's what we're at.
[SPEAKER_03]: You did have Core PPI, I have 1% month over month, the highest since March of 2022.
[SPEAKER_03]: It's another headline that continues to worry markets,
[SPEAKER_03]: as inflation continues.
[SPEAKER_03]: Higher.
[SPEAKER_03]: So that was the market today.
[SPEAKER_03]: And we'll learn more tomorrow as we close the week.
[SPEAKER_03]: Let's go answer a YouTube comment question.
[SPEAKER_03]: Abogado says, I just in a loop, the listing to you guys for years, I had a question regarding TGO energy, TGO, TIGGO, TY, GEO is the symbol.
[SPEAKER_03]: So it is probably pronounced tiger.
[SPEAKER_03]: It's a solar panel company that reported significant, turn around to positive free cash flow with projected 20% annualized revenue growth through the end of 2020.
[SPEAKER_03]: Six, what is your thoughts on this stock?
[SPEAKER_03]: Steve, in Dali, daily city, Dali city, Dali city.
[SPEAKER_03]: Interesting one.
[SPEAKER_03]: Small company with Mark Kappa of 293 million, so Mrs. Borderline microcap.
[SPEAKER_03]: Historically, he's lost money.
[SPEAKER_03]: But this year and next year, earnings are expected to turn positive, four cents and earnings this year, and then 14 cents next year.
[SPEAKER_03]: Now I like solar, I do think it's an under-appreciated area of the market right now.
[SPEAKER_03]: So many companies aren't starting to realize, maybe there's the longer term disruption in the supply of oil and oil and gas.
[SPEAKER_03]: And therefore, it makes more sense to,
[SPEAKER_03]: Maybe you put in solar, especially at a commercial level.
[SPEAKER_03]: Problem is, is this really the name you want to tie yourself to?
[SPEAKER_03]: Return equity right now is 19% that's good.
[SPEAKER_03]: But it's been deeply negative for most of the last few years.
[SPEAKER_03]: Cash flow just turned positive, but then dip down again last quarter.
[SPEAKER_03]: If a good balance sheet, that's the biggest positive here.
[SPEAKER_03]: It's not like they're levered up or anything like that.
[SPEAKER_03]: But I just rather have more consistency to the businesses that I own.
[SPEAKER_03]: So I like the area that you're looking at.
[SPEAKER_03]: I just don't really like this horse.
[SPEAKER_03]: I'm gonna like this name because the history of just losing money.
[SPEAKER_03]: So being for the high, high risk play, we've potentially more upside.
[SPEAKER_03]: Yeah, this might be the horse for you, but as an investment, you're looking for the best solar stock to own.
[SPEAKER_03]: I think this is far from the best.
[SPEAKER_03]: Now the next and best talk we'll look into the story.
[SPEAKER_03]: AI is next chapter, is the NASDAQ 30,000 Rally Sustainable Or, Dangerous Hight.
[SPEAKER_03]: And it was Dan Aides's calling for the NASDAQ 30,000 is the AI rally expands beyond the original handful of winners.
[SPEAKER_03]: We dig into weather, the broadening Aetrade is built on solid earnings fundamentals or euphoria is getting ahead of reality, that is for tomorrow, but now I'm ready for your calls and eight and eight ninety nine chart.
[SPEAKER_04]: Every investor is working to build a secure financial future.
[SPEAKER_04]: The more you learn about how the market works, the better your chances for success, in Vestark, 888-99 chart.
[SPEAKER_02]: Hello and this top, I'm coming in with a question we got in GenCo, shipping, and trading.
[SPEAKER_02]: the symbol is G and K. I currently hold the stock got into it at $21.00 a share and now it's gone above that and was wondering do you think it has more upside or is it time to get out?
[SPEAKER_02]: I like the dividend that it pays but just wondering maybe
[SPEAKER_02]: is a time to get into something else.
[SPEAKER_02]: So I'll be listening for the podcast for the answer.
[SPEAKER_02]: Thank you.
[SPEAKER_03]: Looking at GNK GenCo shipping trading.
[SPEAKER_03]: And this is a transportation company, a transport iron ore, coal, green, steel products, other dry bulk items.
[SPEAKER_03]: So they're a dry bulk carrier, shipping carrier.
[SPEAKER_03]: As you'd imagine, their business is all over the world.
[SPEAKER_03]: meaning earnings are up and down sideways all around day four dollars in twenty twenty one then sixty seven cents in twenty twenty three then lost money in twenty twenty five and so to make two ten this year it's just really all over the board free cash flow remains negative the dividend is going to go up and down so you don't buy this name for the dividend really it's kind of a little boost but the problem is that historically
[SPEAKER_03]: Number of shares outstanding continue to go up and up and up.
[SPEAKER_03]: They just grind higher.
[SPEAKER_03]: And as the stock goes up, they're gonna sell more.
[SPEAKER_03]: Now sold off, the last couple days.
[SPEAKER_03]: The technicals are okay right now.
[SPEAKER_03]: It wouldn't be in a huge rush to sell it.
[SPEAKER_03]: But I would have an out right around 23.
[SPEAKER_03]: It's the low from the 20.
[SPEAKER_03]: You'll say the low from the fourth May fourth.
[SPEAKER_03]: And that would be at what is this low.
[SPEAKER_03]: 2382, now we're at 2480, so about a dollar, so I'd give it as long as it stays above that, I think it's fine, breaks below that, then the technicals are starting to weaken a lot more and this one, this is a type of name that could easily, easily, easily drop 10, 15, 20% in a week.
[SPEAKER_03]: So I would be looking to sell this over time, or if it breaks the little excuse me,
[SPEAKER_03]: But by the time we get questions that we see via webformon, vestalk.com, and this is a very interesting one.
[SPEAKER_03]: So, I've held Edgewood Growth Fund.
[SPEAKER_03]: This is a great lesson because I actually read this earlier, but this is a great lesson for everyone out there.
[SPEAKER_03]: So, I've held Edgewood Growth Fund EGFFX in my Trishnire for more than 10 years.
[SPEAKER_03]: Recently though, it's become much more volatile on wanting what's going on under the hood.
[SPEAKER_03]: What I can tell, the fun seems heavily concentrated high growth tech and momentum stocks like Netflix and video,
[SPEAKER_03]: ASML Broadcom Shopify synopsis with only around 20 holdings.
[SPEAKER_03]: Total, the concentration appears to have helped performance in strong growth years, but also seems to amplify drawdowns and market rotates away from expensive growth stocks.
[SPEAKER_03]: How would you evaluate whether this kind of active, the managed growth fund still deserves a place in retirement account today at what point to the poor relative performance in volatile becomes a reason to move on?
[SPEAKER_03]: Thank you both.
[SPEAKER_03]: This is a love this question.
[SPEAKER_03]: I don't love it because I'm sad that he's holding it for this long, but it's a great way to understand how to analyze these type of names.
[SPEAKER_03]: Now, growth investing is done fairly well for number of years.
[SPEAKER_03]: So if you look at the performance, say it's 10-year performance, it's returned 12.56%.
[SPEAKER_03]: And a lot of you will say that's 12.56% that's pretty good.
[SPEAKER_03]: That's pretty good, right?
[SPEAKER_03]: Well, if you compare it to its category of 16.33% over that timeframe, it suddenly looks pretty bad.
[SPEAKER_03]: In fact, it's in the 91% tile over 10 years.
[SPEAKER_03]: What does that mean?
[SPEAKER_03]: It means that only 9% of growth funds.
[SPEAKER_03]: meaning funds in this similar category did worse.
[SPEAKER_03]: Only 9%, I mean 91% of funds did better.
[SPEAKER_03]: Think about that.
[SPEAKER_03]: That's how bad this has been.
[SPEAKER_03]: It shows you that portfolio concentration works great.
[SPEAKER_03]: You're good, but clearly the managers here are not good.
[SPEAKER_03]: And you know what's even worse about this is that the expense ratio is borderline a grigis.
[SPEAKER_03]: First off,
[SPEAKER_03]: The expense ratio is 1.4% that is extremely high for a mutual fund.
[SPEAKER_03]: Our average client of KBP pays less than that, and we're a full service advisor.
[SPEAKER_03]: So the performance in aggregate total looks good, but it's actually very poor compared to its peers.
[SPEAKER_03]: And then on top of that, on top of that, there's a 0.25% 12B1 fee.
[SPEAKER_03]: So whoever sold him this mutual fund is getting a quarter percent kickback of that 1.4% every single year for doing absolutely nothing.
[SPEAKER_03]: So this client, not a client of ours, this, this,
[SPEAKER_03]: person asking the question, should sell this immediately because it is an extremely high fee poor performing growth fund even if the total return looks good.
[SPEAKER_03]: It's not compared to its peers and this year it's unhorrible.
[SPEAKER_03]: It's actually down.
[SPEAKER_03]: Think about how good tech is done.
[SPEAKER_03]: Category is up.
[SPEAKER_03]: 7%.
[SPEAKER_03]: This is down 9% of here.
[SPEAKER_03]: Quite the golf.
[SPEAKER_03]: So yes, sell it.
[SPEAKER_03]: Remember to go break.
[SPEAKER_03]: Still the comment.
[SPEAKER_03]: I feel it's quite important.
[SPEAKER_03]: We're answers to your questions.
[SPEAKER_03]: So I encourage you to call it right now.
[SPEAKER_03]: On a Vestock at 8-899 chart.
[SPEAKER_04]: Sirious investors are certain to have finance and investment questions.
[SPEAKER_10]: I'm looking at an EPS, it's Goldman Sachs Nasdaq.
[SPEAKER_04]: And the best person to ask your question in the right way is you.
[SPEAKER_04]: If that would be a good hold to have in the Roth IRA for the long term horizon.
[SPEAKER_04]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_03]: This isn't really a copper plate, this is a iron ore plate with some aluminum copper.
[SPEAKER_01]: If you're looking to eat chips that hold so few names that are so top-heavy, I think it is probably ill-advised to pay an expense ratio like this in order to get exposure that you could really get yourself.
[SPEAKER_04]: Your participation makes an invest talk better.
[SPEAKER_01]: Hey guys, Bryan from Carolina here.
[SPEAKER_01]: I'm a big fan of the show.
[SPEAKER_01]: I haven't listened up so many number five years.
[SPEAKER_04]: So don't forget to call in Vestalk.
[SPEAKER_04]: 888-99 chart.
[SPEAKER_04]: There are a few things that make KPP financial special.
[SPEAKER_04]: One of them is parallel investing.
[SPEAKER_04]: This means they invest right alongside their clients.
[SPEAKER_04]: Here's how it works.
[SPEAKER_04]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.
[SPEAKER_04]: On the same day, at the same price, and same percentage.
[SPEAKER_04]: No front running, no special treatment.
[SPEAKER_04]: Learn more about parallel investing at investtalk.com.
[SPEAKER_03]: My main focus point today is about the US dollar outlook for this year.
[SPEAKER_03]: It's been strong, it's been weak, but what is really driving it.
[SPEAKER_03]: Well, let's say this.
[SPEAKER_03]: The index is flat, roughly.
[SPEAKER_03]: But if you talk about a versus say like the euro, it's actually down on the euro.
[SPEAKER_03]: But look at the performance, see, you're today, trying to pull this up.
[SPEAKER_03]: Yeah, if you're looking at things like the Australian dollar is up 9% on the year compared to the US dollar, the Swiss franc is up 1% Canadian dollar is up about 0.2% and everything else is roughly 5%.
[SPEAKER_03]: Except for the yet, the yet is the weakest, it's been the weakest all year, but it's really only down about 1%.
[SPEAKER_03]: That's a spike.
[SPEAKER_03]: The market's starting to price in a more hawkish bet.
[SPEAKER_03]: Now the market, compared to the beginning of the years, thinking there will be one rate hike, possibly, as opposed to rate cuts.
[SPEAKER_03]: So naturally, if you saw that movement in the Fed funds expectations,
[SPEAKER_03]: the dollar was strengthened.
[SPEAKER_03]: Then it's not for that.
[SPEAKER_03]: In many ways, we're at Petro State.
[SPEAKER_03]: We produce the most oil in the world.
[SPEAKER_03]: So higher oil prices should be helping us.
[SPEAKER_03]: But they're not.
[SPEAKER_03]: We're not creating big gains in the dollar on the year.
[SPEAKER_03]: So what that tells you is that investors are no longer using the dollars to save hazelnut asset, despite what's going on around the world.
[SPEAKER_03]: It shows you that investors are starting to diversify out of the dollar and dollar to nominate assets, because remember, when you go buy, when a foreigner wants to go buy a dollar to nominate asset, they need to go buy dollars, they need to change it into dollars and that creates demand for dollars.
[SPEAKER_03]: And the fact that the dollars flat to down should tell you a lot.
[SPEAKER_03]: Payroll data that's been kind of choppy this sideways.
[SPEAKER_03]: But you have inflation data that continues to move higher, which makes the yield on longer-term treasuries, that looks so appealing.
[SPEAKER_03]: But real rates are suddenly becoming negative, especially when we look at the fed funds rate in the mid-threes,
[SPEAKER_03]: pushing into that level and probably higher by summer.
[SPEAKER_03]: So investors are looking for more yield, more hedge against inflation.
[SPEAKER_03]: And the broader macro conditions remain such that yes you're getting AI growth.
[SPEAKER_03]: But that is a very risky type of growth and not consistent growth.
[SPEAKER_03]: You're getting
[SPEAKER_03]: growth that's most likely on Stinwood's really what's happening is the big hyperscaler are unlocking a lot of balance sheet capacity.
[SPEAKER_03]: But they used to use to buy back shares now they're using it to invest in AI data centers.
[SPEAKER_03]: But how durable is that really?
[SPEAKER_03]: And everyone wants to focus on the dollar in the dollar direction, and it certainly is important, but in this world, commodities are becoming the real currency, especially gold, because that is the true testament to what is happening with the dollar.
[SPEAKER_03]: Remember, when the dollar index, we're looking at the dollar index, you're just comparing it against other fiat currencies.
[SPEAKER_03]: When you're looking at it against gold, the world's
[SPEAKER_03]: Most traditional form of safe asset and currency, it continues to go down its gold is up about eight and a half percent on the year.
[SPEAKER_03]: The broader commodity in x up 32 percent on the year.
[SPEAKER_03]: So that's what you have to pay attention to.
[SPEAKER_03]: Money is moving out of fiat currency and into harder assets, gold, silver, modities, etc.
[SPEAKER_03]: between the dollar and commodities.
[SPEAKER_03]: Over the one year rolling basis, the dollar and commodity correlation remains negative 89%.
[SPEAKER_03]: So it just shows you, as the dollar continues to be weak, which once again, it's showing relative weakness, especially in light of the broader geopolitical situation, shows you that you want to be moving more money into these harder assets that are likely to outperform these fiat currencies.
[SPEAKER_03]: Let's go back to the investment stock voice bank at 8 a.m. And you answered.
[SPEAKER_08]: Hi, Doug from New York.
[SPEAKER_08]: Thank you for all that you do.
[SPEAKER_08]: Just wanted to follow up on your podcast about a day or two ago when you're talking about artificial intelligence, trying to be a financial advisor.
[SPEAKER_08]: I think I'm a prime example about like what happened when the war and iron happened.
[SPEAKER_08]: I asked Gemini to give me some ideas on what to invest.
[SPEAKER_08]: Thank you, me and idea of the NATO.
[SPEAKER_08]: And I invested it in it because well it seems like a legit response from AI and then well guess what it's not doing so well from anyone's I bought it.
[SPEAKER_08]: I'm actually like negative 2% overturned.
[SPEAKER_08]: Anyways, just wanted to share that with the viewers.
[SPEAKER_08]: I have a question on stock ticker j a a
[SPEAKER_08]: A, it's a C-L-O.
[SPEAKER_08]: I heard it on another podcast.
[SPEAKER_08]: I'm looking to park some cash, try to get some yield in it.
[SPEAKER_08]: I know you mentioned S-Gov, but I'm looking to see what is the difference between S-Gov and J-A-A-A?
[SPEAKER_08]: looking forward to just put some money on the side.
[SPEAKER_08]: So when there's the second to sell it and put it back into the market.
[SPEAKER_08]: Thank you for all that you do.
[SPEAKER_08]: I'm a great day.
[SPEAKER_08]: Bye.
[SPEAKER_03]: Appreciate the call.
[SPEAKER_03]: And then that's a great comment about AI's suggestion of NATO and how it's been performing.
[SPEAKER_03]: And you know, here's the thing.
[SPEAKER_03]: AI is just looking back in history.
[SPEAKER_03]: And they're giving kind of the middle of the road
[SPEAKER_03]: answer the problem is that the world is more nuanced and every situation is a bit different into this situation which you've seen in the Middle East as well as in Ukraine is that all you need is a handful of drones to protect your homeland.
[SPEAKER_03]: Maybe a handful, but a couple thousand, shall we say.
[SPEAKER_03]: And you can outsmart and outmaneuver, multi-million dollar jets.
[SPEAKER_03]: And so it's making a lot of what they're doing less relevant.
[SPEAKER_03]: A lot of these, what I say there, a lot of what the major defense contractors are doing less relevant.
[SPEAKER_03]: And I think that's what the market is.
[SPEAKER_03]: If you have that's why it's struggling, and that's what AI,
[SPEAKER_03]: can't look backwards and see.
[SPEAKER_03]: So that's why it's struggling and why you shouldn't use AI for financial advice.
[SPEAKER_03]: Now, when it comes to J.A., this is another gray one.
[SPEAKER_03]: I don't know if you, yeah, I don't know who, I think you said you heard it on the podcast.
[SPEAKER_03]: Interesting, I wonder what podcast it was.
[SPEAKER_03]: But to me, this is another one of those what I call picking up pennies in front of a steam roller.
[SPEAKER_03]: Now, this is the Janice Henderson Triple A CLO ETF.
[SPEAKER_03]: Remind you of something, some other acronym.
[SPEAKER_03]: If you know what CLO stands for, stands for collateralized loan obligations.
[SPEAKER_03]: What did I wait?
[SPEAKER_03]: What was something similar, no wait?
[SPEAKER_03]: Remember what is called the CDO?
[SPEAKER_03]: Collateralized debt obligations?
[SPEAKER_03]: What's the difference between a debt and a loan?
[SPEAKER_03]: Not really much.
[SPEAKER_03]: In this case, it is referring to something a bit different.
[SPEAKER_03]: CDO's back then were typically tied to mortgages.
[SPEAKER_03]: The issue here is that CLO's are tied to private.
[SPEAKER_03]: Credit.
[SPEAKER_03]: Now this will say, let's triple-A.
[SPEAKER_03]: But go back to OA, and there were plenty of AAA CDOs, remember, was the movie, the big short?
[SPEAKER_03]: Have they explained, they chopped up all these loans, and you had different trances, and you wouldn't lose money, unless for all the other, some level of defaults.
[SPEAKER_03]: Guess what?
[SPEAKER_03]: We got to those levels and some of those AAA loans defaulted.
[SPEAKER_03]: What's going on with private credit right now?
[SPEAKER_03]: Private equity.
[SPEAKER_03]: Is it going well?
[SPEAKER_03]: Go take a look at a chart of Apollo or KKR.
[SPEAKER_03]: Or just pull up the ETFPSP.
[SPEAKER_03]: How are those doing?
[SPEAKER_03]: Oh, they've been in a downtrend since late summer.
[SPEAKER_03]: Are you gonna get?
[SPEAKER_03]: an SEC yield of 4.74 percent.
[SPEAKER_03]: That looks pretty good because if you'll look at S-gov which is our treasuries with no credit risk there, you're getting 3.55 percent.
[SPEAKER_03]: You're getting about what a percent and a quarter more per year.
[SPEAKER_03]: But then you're taking on that credit risk.
[SPEAKER_03]: Is that one and a quarter percent additional yields worth a potential big drop in this space?
[SPEAKER_03]: Just go look at what this ETF did back during the duration day.
[SPEAKER_03]: There was a lot of volatility.
[SPEAKER_03]: It went from a high in February of about $51.
[SPEAKER_03]: But it's because everything kind of held together.
[SPEAKER_03]: If things don't have to go hold together, there's some sort of deflationary bus, especially within private credit, where problems continue to kind of snowball and maybe come to some sort of the head.
[SPEAKER_03]: You have a Bayer Stern's moment or a Lehman moment, it's something like that.
[SPEAKER_03]: It's probably going to go down and stay down for a long period of time because guess what?
[SPEAKER_03]: Maybe those AAA loans are now impaired.
[SPEAKER_03]: That's the risk you have here.
[SPEAKER_03]: So I don't think it's worth it.
[SPEAKER_03]: It's not as to me as safe vehicle to use.
[SPEAKER_03]: There's some credit risk here that I would avoid.
[SPEAKER_03]: I would just keep it as good as just keep your life simple.
[SPEAKER_03]: Let's go answer another voicemail question now.
[SPEAKER_07]: Hey, we've got dozens of built-in buildings here.
[SPEAKER_07]: All I'm going to do about service now is pick your simple N.O.W.
[SPEAKER_07]: Let's get on my radar for a bit and we're going to have to
[SPEAKER_07]: price, feel free to come to me.
[SPEAKER_07]: I want to get your thoughts, feel that revenue is still strong, and it was just mostly, I believe, dilence a couple of weeks ago regarding the average anywhere.
[SPEAKER_07]: We want to see if you guys follow me a good time to pick up some chairs.
[SPEAKER_07]: Love what you guys do, and I'll listen on a show.
[SPEAKER_07]: Thank you.
[SPEAKER_03]: Looking at service now, did cloud-based work flow application software that automates enterprise IT operations.
[SPEAKER_03]: It was a darling for a long period of time, consisting growth, revenue growth in the 20% to 30% range earnings growth in the 30 to 40% range hit a high back in with this January of last year, that's a long go.
[SPEAKER_03]: What's the year and a half?
[SPEAKER_03]: It had a high at 230, called $240 per share.
[SPEAKER_03]: Now right, 90, 90, 50, 90, 50th close today.
[SPEAKER_03]: This clearly is going to caught up with the AI cell-off or software cell-off, shall we say.
[SPEAKER_03]: And the worry that AI is going to disrupt all of these names.
[SPEAKER_03]: But like most of the software names, you're not really getting that fear being translated to earnings expectations.
[SPEAKER_03]: In fact, earnings are this year, it's supposed to be at 18% than 22% next year.
[SPEAKER_03]: That is a slow down for the 26% growth last year and the 29% growth that you're before and the 42% growth in 2023.
[SPEAKER_03]: But it's still pretty good.
[SPEAKER_03]: Based on four looking earnings, you're talking about less than 20 times multiple.
[SPEAKER_03]: On a weekly chart, however, but it was clearly down.
[SPEAKER_03]: It's consolidating in the bear spatter and pattern for potentially another move lower.
[SPEAKER_03]: I'm getting some signs on the daily that maybe we can get to a bottom.
[SPEAKER_03]: I do think that this space in general is starting to hit an inflection point, because
[SPEAKER_03]: As I said, most of these names are not feeling it, at least the analysts aren't feeling the AI disruption.
[SPEAKER_03]: Maybe at the margins here there, but generally, their business largely stays intact and service now historically has had a very high, or certainly very low turn rate, meaning very few customers cancel.
[SPEAKER_03]: Now that might be ticking up, and there'd probably be some worry there, but overall, I think the final moment was like,
[SPEAKER_03]: Once again, longer term charts, there's still a month that's poor, it's consolidating to looks like to break down, but on the near term, daily chart, I am seeing Macti divergent and seeing some signs that we're getting to a potential bottom of the space.
[SPEAKER_03]: So I actually think it's a pretty good risk versus reward down here with free cash, what $4.6 billion, on a $93 billion market cap, $6 billion cash.
[SPEAKER_03]: I probably would take a stab out of here.
[SPEAKER_03]: Good resources for.
[SPEAKER_03]: Now we're heading into our final break.
[SPEAKER_03]: I'm ready for your calls.
[SPEAKER_03]: So give me a call now.
[SPEAKER_03]: Eight and eight.
[SPEAKER_03]: Ninety nine chart.
[SPEAKER_04]: Investor.
[SPEAKER_04]: Tell your friends they can listen live, download the free podcast, or watch Investor on our YouTube channel.
[SPEAKER_04]: And they can leave their finance and investment questions anytime on 888-99 chart.
[SPEAKER_09]: Hi, this is James Hermione York.
[SPEAKER_09]: I'm a question about Brown and Brown.
[SPEAKER_09]: Secretary-General B.
[SPEAKER_09]: All of those can are strong downtrend and his my target price.
[SPEAKER_09]: Thank you so much, have a great day.
[SPEAKER_03]: Again, Brown and Brown, BRO is the symbol.
[SPEAKER_03]: It's an insurance industry, wholesale brokerage, it's a program of service organization.
[SPEAKER_03]: So it is in the insurance industry.
[SPEAKER_03]: It's earnings, we're growing really strong.
[SPEAKER_03]: Mid 20s, 30% range up until last year, we're probably still grew 23% but earnings grew 11 in this year.
[SPEAKER_03]: Revenue's up 20, but earnings only up six.
[SPEAKER_03]: The next year, earnings up eight.
[SPEAKER_03]: So I think part of this is multiple contraction.
[SPEAKER_03]: But now, the multiples are pretty decent.
[SPEAKER_03]: Pretty good balance.
[SPEAKER_03]: She $1.4 billion in free cash flow on $1.8, $1.9 billion.
[SPEAKER_03]: Sorry, $19 billion, $19 billion in market cap.
[SPEAKER_03]: I definitely like the valuation at these levels and the support level.
[SPEAKER_03]: So this is almost the lows that we saw back in 2022 in 2023, right around $52 per share, right now we're trading at $55.
[SPEAKER_03]: I think there's,
[SPEAKER_03]: an argument here that you want to pick it up and then if it breaks below, I would say if it breaks, just call it 50 bucks.
[SPEAKER_03]: You're out.
[SPEAKER_03]: So I'm liking it after this large pullback BRL round and brown.
[SPEAKER_06]: Let's go talk to Nick and Hayward looking at into it.
[SPEAKER_06]: But I get your opinion, you think it's okay to buy here, which is long or what you're thinking is this.
[SPEAKER_06]: Thank you very much for the great show.
[SPEAKER_06]: Happy to get it.
[SPEAKER_03]: No problem.
[SPEAKER_03]: Look it into it.
[SPEAKER_03]: INTU is the symbol.
[SPEAKER_03]: This is another one of those software names that's down on it's look.
[SPEAKER_03]: And if you look at it, it's on next year's earnings, so it's got 14%, after being up
[SPEAKER_03]: ADL is stock now, so it's a mid-teens multiple growing in the mid-teens.
[SPEAKER_03]: It's in this environment that usually is pretty good.
[SPEAKER_03]: Problem is that into it, pick up TurboTax, pick up QuickBooks, all of that.
[SPEAKER_03]: These are software suites that frankly are not that complex.
[SPEAKER_03]: They're fairly simple.
[SPEAKER_03]: kind of like Salesforce in my mind, like CRMs are very simple as well, and they do things that AI is going to do very easily.
[SPEAKER_03]: To me, there's not a lot of ecosystem connection here.
[SPEAKER_03]: You can take your bank statements and have put into AI and have it runs of analysis, you can give it, you can have it ask you a bunch of questions, so
[SPEAKER_03]: 1040.
[SPEAKER_03]: All that.
[SPEAKER_03]: And so I, these are the type of names that I do worry about.
[SPEAKER_03]: Now, can't get a lift in the near term, where the whole software space gets a counter trend rally, I think we're pretty close to that in this would probably rally in conjunction.
[SPEAKER_03]: So in
[SPEAKER_03]: because I do look at a daily chart and I say, you know, back to you's improving.
[SPEAKER_03]: It's not making you lose.
[SPEAKER_03]: It's kind of found a bottom here right around the 340 through 50 range.
[SPEAKER_03]: Free cash flows 6.8 billion on a $100 billion mark gap with no debt, all time high and free cash flow.
[SPEAKER_03]: They're probably going to ring some efficiencies out of their business as well using AI.
[SPEAKER_03]: But to me, these are the type of names that I worry about five years from now, 10 years from now.
[SPEAKER_03]: So, to give you my perspective there, there's gonna be a lot of winners and losers within this space, but they're all gonna be correlated together.
[SPEAKER_03]: There's been a lot of babies being thrown out of the bath water within this space.
[SPEAKER_03]: So, do you think there's a lot of opportunities, but once again, they're down, a lot of them are down for good reasons.
[SPEAKER_03]: but a lot of them are down because they're simply softwood.
[SPEAKER_03]: But into it is not one of those names that I would time itself too long.
[SPEAKER_03]: I'm Justin Klein, my new about KPP Financials parallel investing we make the trade for our clients, make the trade for ourselves.
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