[SPEAKER_03]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_03]: Here's your host, Justin Klein.
[SPEAKER_01]: Good afternoon fellow investors.
[SPEAKER_01]: And welcome back to Invest Talk.
[SPEAKER_01]: This is a Thursday, June 25th, 2026 edition of Invest Talk.
[SPEAKER_01]: We're back for another episode.
[SPEAKER_01]: Markets are moving in a new way, then they have for, really since the bottom in March.
[SPEAKER_01]: And that tells you, we under our under new leadership.
[SPEAKER_01]: It's a big move in the Mac 7.
[SPEAKER_01]: The downside, but the rest of the market held up nicely, so very interesting times we are now living in.
[SPEAKER_01]: This means a lot to your portfolio, whether you're indexing because obviously you're very heavily weighted towards those big max seven names or maybe you hold them directly.
[SPEAKER_01]: What type of exposure do you have is something you have to always grasp what is your portfolio look like where are the risks that you know right do you should always have you should always know what risks are out there whether that's some sort of cyclical risk and markets.
[SPEAKER_01]: whether that is some change in the way a certain sector you're exposed to is operating, could be multiple expansion or contraction because of interest rates.
[SPEAKER_01]: There are a lot of different risks that are out there, but also rewards.
[SPEAKER_01]: inflationary environment, I just go up earnings, go up, but it tends to help those sectors.
[SPEAKER_01]: Some more than others, which is something we're going to talk about here later in a little bit, which is about inflation and wage, all of that.
[SPEAKER_01]: But I'll get to that a little more in a bit, uh, just a reminder that this show is about you up.
[SPEAKER_01]: I can talk about whatever's on my mind.
[SPEAKER_01]: I've seen risk is the top of my mind right now,
[SPEAKER_01]: So we're going to be answering your finance and investment questions.
[SPEAKER_01]: We're going to bring you data and perspective so that you can make better decisions with your money.
[SPEAKER_01]: Speaking of data and perspective, our new wealth webinar is almost here.
[SPEAKER_01]: It's coming up next week.
[SPEAKER_01]: Tuesday, June 30th, 12 to 1 pm, civic time, just five days away.
[SPEAKER_01]: The title is beyond the yield.
[SPEAKER_01]: How to invest for your income needs.
[SPEAKER_01]: It's free, but you must register over at investtalk.com.
[SPEAKER_01]: Now, just a bit, we'll talk about today's Mark performance as always and run down the show topics with the hour, but let's tackle this first call a question now.
[SPEAKER_06]: Hi, Justin and Luke.
[SPEAKER_06]: This is Rosario from Central Valley in California.
[SPEAKER_06]: I would like to know your long-term look on ESX.
[SPEAKER_06]: 66.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: He asks, this is Philip 66.
[SPEAKER_01]: This is the name I believe Warren invested in.
[SPEAKER_01]: Some years ago was a big holding.
[SPEAKER_01]: It fell out of bed in 2024 and 2025 when Let's see, let me go to a weekly chart here.
[SPEAKER_01]: had a pretty big drawdown, yeah, from a higher on 172, 173, all the way down to a low in the spring of last year to about $90 per share.
[SPEAKER_01]: So a pretty big drop, nearly 50%, but it's rallied since, now up to 171, kind of back to those highs, recent high, though, was all the way up to $1.90 in change.
[SPEAKER_01]: And then there's 17 in change next year.
[SPEAKER_01]: So growth certainly slowing, but on 171 dollar stock, well, you're talking about eight by the 10 times multiple, which historically is relatively cheap.
[SPEAKER_01]: The issue though with Philips 66, if I'm in out there, is
[SPEAKER_01]: It's businesses up and down that what do they do?
[SPEAKER_01]: They process transport, store, and market fuels, and other related products.
[SPEAKER_01]: So if mainstream business, chemicals, refining, renewable fuels, et cetera.
[SPEAKER_01]: This is something I talked about.
[SPEAKER_01]: I think it was, there's been a lot of a week I believe.
[SPEAKER_01]: But how I'm starting to think about energy names or oil names in general with this lack of a spike in oil prices?
[SPEAKER_01]: The real value, the real good businesses within the oil supply chain, the petrochemical supply chain is actually in these type of businesses, refining, refining products, transporting the end product or the the oil from the well or the natural gas from the well.
[SPEAKER_01]: Those tend to be better businesses than those big EMP companies, expiration and production
[SPEAKER_01]: So this is the type of name I would like.
[SPEAKER_01]: Now, my big issue here is if you have a minute of debt, the return equity 14.5% which is good, it's blow their five year average about 17%.
[SPEAKER_01]: So historically, the other kind of under-earning a bit.
[SPEAKER_01]: So I'd like to buy companies that are under-earning but getting back to longer-term profitability.
[SPEAKER_01]: So I think that's good.
[SPEAKER_01]: The amount of shares that's standing continue to go down.
[SPEAKER_01]: They're buying back shares with that cash flow.
[SPEAKER_01]: But I would like them to repair that balance sheet of bits.
[SPEAKER_01]: That's my biggest worry is that they've about $20, that's at $21, $22 billion in net debt on the balance sheet on the $68 billion market cap.
[SPEAKER_01]: Not crazy, but also not nothing here.
[SPEAKER_01]: My advice here is, you're looking in the right place.
[SPEAKER_01]: I just probably would be my number one choice within the refining business, the midstream business.
[SPEAKER_01]: I'd be looking elsewhere within the same area of the energy patch.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: And with a great show, yesterday we looked into the story about FedSpeak versus Geopolitics, which forces actually drive markets more, but reserved for geopolitics and we also answered listener questions on the idea of owning physical gold and silver versus say paper, gold and silver through an ETF or something like that.
[SPEAKER_01]: If you missed it, go check it out.
[SPEAKER_01]: Best way to get every show is to follow and best talk wherever you get your podcast.
[SPEAKER_01]: Now, we've got a lot of ground to cover over the next 45 minutes or so in time permitting, we'll get to all of it.
[SPEAKER_01]: Our main focus point is about minimum wage and inflation.
[SPEAKER_01]: And what higher labor costs really mean for your portfolio.
[SPEAKER_01]: Raising minimum wage has been a political winner for years, but is now running into stiffness as inflation concerns take center stage.
[SPEAKER_01]: So for investors,
[SPEAKER_01]: The debate cuts between the heart of corporate margins because we were spending power and the Fed's inflation fighting mandate.
[SPEAKER_01]: So we're going to look at how minimum wage actually impacts the economy and different sectors.
[SPEAKER_01]: We also have other topics on the docket.
[SPEAKER_01]: What is about the SpaceX bond to sale?
[SPEAKER_01]: There's a saying that the bond market is smarter than the stock market.
[SPEAKER_01]: Why is that?
[SPEAKER_01]: the retail investor doesn't usually invest in the bond market, at least not directly.
[SPEAKER_01]: They're usually buying a fund of some type, but they're oftentimes directly investing in the retail market.
[SPEAKER_01]: So when bonds are issued, they're scrutinized a little bit more.
[SPEAKER_01]: So what is this saying about SpaceX?
[SPEAKER_01]: Also stable coins.
[SPEAKER_01]: I want to highlight this because of STRC.
[SPEAKER_01]: That's that strategy preferred stock issuance that came out in July, promising 12-13% is supposed to be super safe.
[SPEAKER_01]: Well, it's moved from power value around $100 down to $75 and change today, which means that.
[SPEAKER_01]: Anyway, that bought it.
[SPEAKER_01]: picking that they're going to get this great yield, they're no longer very happy because their principle has been cut by a quarter.
[SPEAKER_01]: The yield doesn't help you very much.
[SPEAKER_01]: And your net return is negative.
[SPEAKER_01]: And this is another example of not about the yield.
[SPEAKER_01]: It's about the total return is about the risk that you are taking.
[SPEAKER_01]: and stablecoins in many ways have similar types of rest, not quite as high of resources with that.
[SPEAKER_01]: But I wanna look at that because it's very, very important for you all to look at the situation and learn.
[SPEAKER_01]: Sometimes you learn the hard ways, sometimes you just observe and you learn by other people's mistakes.
[SPEAKER_01]: So we'll dig into that story as well.
[SPEAKER_01]: We also have, we're going to answer voice questions on service now as well as the wheels strategy.
[SPEAKER_01]: We also have some questions that came in via the comment section on the invest stock YouTube channel as well.
[SPEAKER_01]: But we're going to head to a quick break.
[SPEAKER_01]: Please remember you can call any time and leave your question on the invest stock voice bank if you're listening via our live stream or an aim till 20 to 30 you can call right now at 88899 chart up next I'll comment on today's market activity.
[SPEAKER_03]: This is Investor.
[SPEAKER_03]: Now closing in on 63 million downloads.
[SPEAKER_03]: And Justin Klein is here taking your questions live.
[SPEAKER_03]: 88899 chart.
[SPEAKER_01]: All right, let's go take another look at the market today.
[SPEAKER_01]: It was a mixed bag once again, the Dow, eaked out a small game, the S&P was flat.
[SPEAKER_01]: And then the Nasdaq was down nearly half a percent.
[SPEAKER_01]: So very, very interesting day of markets.
[SPEAKER_01]: You had names like Apple, Microsoft, Meta, Amazon, down to three, four percent, six percent on Apple.
[SPEAKER_01]: And video also down, broad calm down, Tesla was roughly flat with down slightly.
[SPEAKER_01]: Then you had strength out of names like applied materials, land, research, et cetera.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because you had micron earnings that were better than expected.
[SPEAKER_01]: So nice move there at 15% sandus was up 22% to the hardware names were strong.
[SPEAKER_01]: And that's why a lot of those max seven names were weak
[SPEAKER_01]: It looks like the the prices of the inputs to AI and just tech hardware in general is going up and that it Apple announced that they're raising their prices so that is is probably going to hurt demand a little bit.
[SPEAKER_03]: Invest Talk.
[SPEAKER_03]: Tell your friends they can listen live, download the free podcast, or watch Invest Talk on our YouTube channel, and they can leave their finance and investment questions any time on 888-99 chart.
[SPEAKER_01]: 888-99 chart in at 992-4278.
[SPEAKER_01]: So you get through and ask your question on today's show.
[SPEAKER_01]: Let's talk a
[SPEAKER_01]: the equity, if that's what everyone's talking about, but what about the $25 billion bond sale?
[SPEAKER_01]: So they raised $86 billion from their IPO, but the chief investment officer over at Aliens warned that this is bordering on bubble territory.
[SPEAKER_01]: And the bond offering is a sign of that.
[SPEAKER_01]: And it's a sign that Wall Street isn't, I think, quite being honest with
[SPEAKER_01]: Why because while they've up the amount of the bond from 20 to 25 billion dollars of the issuance, SpaceX had to pay a higher borrowing cost than similar rated companies.
[SPEAKER_01]: And that's the market saying that you need that that rating that it's getting, which is investment grade, probably shouldn't be investment grade.
[SPEAKER_01]: Well, equity investors have their head in the sky
[SPEAKER_01]: With SpaceX, bond investors, they don't really care much about that.
[SPEAKER_01]: They want their coupon.
[SPEAKER_01]: Remember that bond investors care about their principle.
[SPEAKER_01]: They don't care about the asymmetric upside of owning equity.
[SPEAKER_01]: They do not care about that.
[SPEAKER_01]: They want to make sure that they have a sound enough business.
[SPEAKER_01]: through that they can pay that coupon consistently over the period of time that the bond has been issued for.
[SPEAKER_01]: So, bond investors are far less forgiving.
[SPEAKER_01]: And this comes at a time when investment grade companies are borrowing at just 0.8% above US government bond yields.
[SPEAKER_01]: That's close to the lowest spread in decades.
[SPEAKER_01]: And so, when you are wondering,
[SPEAKER_01]: One of the smart investors doing in relation to a particular company, go look at the bonds, go look out, they are being priced.
[SPEAKER_01]: What are those transactions looking like?
[SPEAKER_01]: Are they trading like other similarly related companies?
[SPEAKER_01]: If their bonds had already been issued for a long period of time, are they trading near
[SPEAKER_01]: or are they down into the 70s or below?
[SPEAKER_01]: When then the 70s are below, then suddenly that is a high risk of default, which puts you the equity investor at high risk.
[SPEAKER_01]: So I wanted to highlight that.
[SPEAKER_01]: Let's keep things going and play another listen to a question from A to the 99 chart.
[SPEAKER_07]: This is Alan calling from Hayward, California.
[SPEAKER_07]: I just wanted to know if you think Lakeland industries is a good investment.
[SPEAKER_07]: would you consider it a growth or value stock and why they produce protective work gear for firefighters, electricians, etc.
[SPEAKER_07]: Yeah, just want to know what you think.
[SPEAKER_07]: That's Larry Apple Kelly Edward.
[SPEAKER_07]: Thank you.
[SPEAKER_01]: Hey, looking at Lake Land Industries.
[SPEAKER_01]: This is a name that boom during COVID.
[SPEAKER_01]: They went from 41 cents a share in earnings in 2019 to $4.31 in 2020, and they had a huge overhang where earnings basically marched lower until they lost money in 2024 and 2025.
[SPEAKER_01]: And they're even expected to lose money this year now.
[SPEAKER_01]: Is that because maybe they produced the overcapacity?
[SPEAKER_01]: This is probably one of those situations where
[SPEAKER_01]: Hey, they need to meet demand for productive gear during a pandemic increase capacity.
[SPEAKER_01]: Well, that's great for that time period to meet demand, but then when the demand disappears, now they have all this excess overhead expense.
[SPEAKER_01]: It's on the margins.
[SPEAKER_01]: They're now negative.
[SPEAKER_01]: The operating margins are negative 4%.
[SPEAKER_01]: they weren't big margins but January of 2020 the margins are about five and a half percent then it went all the way up to 27 percent but now back to negative so market cap is what are we at only a hundred million there we got a hundred millions still very small still marching the lower I'm assuming let's say are they issuing a bunch of shares because
[SPEAKER_01]: Yeah, they're issuing more shares.
[SPEAKER_01]: They did that 2024.
[SPEAKER_01]: It's been marching higher ever since.
[SPEAKER_01]: I would not be buying this.
[SPEAKER_01]: The chart is terrible, the business is terrible.
[SPEAKER_01]: Until they can write size there overhead, this is the name I think is just going to go lower.
[SPEAKER_01]: It would be a growth.
[SPEAKER_01]: If you're asking whether it's a growth stock or if you price like a growth stock, because it doesn't make any money.
[SPEAKER_01]: When companies make money,
[SPEAKER_01]: It's hard to price it, and they have some debt, $30 million in debt on a, or a $25 million in debt on a $107 million market cap, they have to carry that debt.
[SPEAKER_01]: So I would run far away from this thing.
[SPEAKER_01]: Thanks for your call.
[SPEAKER_01]: Now we're going to do a break.
[SPEAKER_01]: I'm ready for whatever's on your mind.
[SPEAKER_01]: So give me call now at 8.899 shirt.
[SPEAKER_01]: at KPP Financial.
[SPEAKER_01]: Accountability means more than advice.
[SPEAKER_01]: It means we invest alongside you.
[SPEAKER_01]: Through our parallel investing approach, when we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.
[SPEAKER_01]: same day, same price, same percentage.
[SPEAKER_01]: If your portfolio moves, ours does too.
[SPEAKER_01]: That is alignment, that is transparency.
[SPEAKER_01]: That is the KPP difference.
[SPEAKER_01]: Visit investtalk.com to get your free portfolio review.
[SPEAKER_03]: It's coming up fast and all new in Vestalk, wealth webinar beyond the yield, how to invest for your income needs.
[SPEAKER_03]: This coming Tuesday, June 30th, noon to one Pacific Time, online in free of charge, but you must pre-register at investalk.com.
[SPEAKER_01]: On the next invest stock, we'll look into this story.
[SPEAKER_01]: Should you hedge currency risk the dollar yen and rupee in a shifting global order?
[SPEAKER_01]: The dollar held steady after the Iran talks while the British pound dropped them, political upheaval.
[SPEAKER_01]: Japanese yen, in the year to 40 year low, and the near rupee snapped a winning streak all in the same week.
[SPEAKER_01]: So currency moves of this magnitude have real implications for international investment returns.
[SPEAKER_01]: Inflation.
[SPEAKER_01]: and the relative attractiveness of global markets.
[SPEAKER_01]: That story will be for tomorrow, but for now, I'm Justin Klein.
[SPEAKER_01]: And right take your calls at 8.909 chart.
[SPEAKER_01]: And with that said, it's hit on our main focus point on the day.
[SPEAKER_01]: And that is about minimum wage and inflation.
[SPEAKER_01]: What higher labor costs really mean for the economy in your portfolio.
[SPEAKER_01]: Overall, rising minimum wage, erasing the minimum wage is
[SPEAKER_01]: But now we have an inflation environment.
[SPEAKER_01]: So there's a lot of pushback that it could intensify the inflation problem that we're facing.
[SPEAKER_01]: And historically, it's always been about corporate margins, whether the consumer can afford to pay higher prices, at places where higher minimum wage is impacts prices.
[SPEAKER_01]: And what the Fed can do about it.
[SPEAKER_01]: The minimum wage goes up, higher interest rates or tightening policy doesn't really do much.
[SPEAKER_01]: So let's talk about this.
[SPEAKER_01]: Because there's a lot of opinions that just really aren't based in fact.
[SPEAKER_01]: New researchers research is showing that the past through effect on prices of the higher minimum wage is actually pretty fleeting.
[SPEAKER_01]: Also much smaller than previously thought.
[SPEAKER_01]: that are indexed to inflation and well telegraphed as well.
[SPEAKER_01]: Data from 1978 to 2015, the long period.
[SPEAKER_01]: Found that prices rose by just 0.36% for every 10 percentage point increase in the minimum wage.
[SPEAKER_01]: Not a lot of past through there.
[SPEAKER_01]: Small minimum wage increases, really don't.
[SPEAKER_01]: lead to very higher prices and they in some ways they may actually reduce prices.
[SPEAKER_01]: And most importantly, they are not a drag on the overall economy.
[SPEAKER_01]: In fact, they're actually stimulative.
[SPEAKER_01]: Why is that?
[SPEAKER_01]: Say, well, if it's pushing a price, is it, you know, higher prices, lower demand.
[SPEAKER_01]: The problem is, is that it actually increases demand.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because those on the lower end of the income bracket have a higher marginal propensity to spend, which means when they make more money, they tend to go out and spend it into the economy, whereas if more money goes to the profits for business owners, for example, those that are wealthy, they don't tend to spend anymore.
[SPEAKER_01]: If you have tens of millions of dollars and you make an extra couple thousand, because your margins are a bit better, that doesn't change your spending habits.
[SPEAKER_01]: Really what I owed it.
[SPEAKER_01]: versus if
[SPEAKER_01]: You make $12 an hour and now that goes up to $15 an hour, that extra $3 an hour is a little bit more money for you to go out to eat a little bit, maybe go to the movies, maybe spend, you know, buy that shirt that you wouldn't have before, et cetera.
[SPEAKER_01]: Maybe go on that road trip, whatever it is.
[SPEAKER_01]: So that is very, very clear.
[SPEAKER_01]: That higher minimum wage is actually stimulative to the economy.
[SPEAKER_01]: because there's negligible pass through to prices.
[SPEAKER_01]: And productivity often is much better because workers are happier.
[SPEAKER_01]: Now, it does depend on the industry.
[SPEAKER_01]: Obviously restaurants, retail trade, they have a lot of minimum wage workers.
[SPEAKER_01]: So there's a higher impact there on prices.
[SPEAKER_01]: versus obviously technology or financial industry, most of those people are on salary.
[SPEAKER_01]: So that doesn't really impact those sectors, much at all.
[SPEAKER_01]: So I want to highlight that because a lot of talk about minimum wage, but ultimately, it is stimulative to the economy.
[SPEAKER_01]: Let's go talk to Paul in Santa Rafael looking at Spotify.
[SPEAKER_09]: All right, Justin, thanks for taking my call.
[SPEAKER_09]: I want to know your opinion on Spotify.
[SPEAKER_09]: I have it as a long term hold.
[SPEAKER_09]: I'm down about 20%.
[SPEAKER_09]: from where I bought it and I want to know in your opinion would you continue to hold it or cut losses and move on?
[SPEAKER_01]: Well, I will I will start off by saying I love Spotify as a product.
[SPEAKER_01]: It's it's probably my most used app.
[SPEAKER_01]: It's my music ecosystem and I love it.
[SPEAKER_01]: And it is a good business, return equity 37% free cash flow 3.8 billion on a market cap of 93 billion.
[SPEAKER_01]: So a huge free cash flow yield, but certainly power into the upside.
[SPEAKER_01]: The problem is that the chart is headed lower.
[SPEAKER_01]: Why is that?
[SPEAKER_01]: Because it was trading at a pretty high multiple and that multiple is coming down.
[SPEAKER_01]: A lot of companies within the space, or in the growth side of the market show you say.
[SPEAKER_01]: Revenue or earnings are supposed to be up 17% this year in 24% next year to 18 dollars in two cents.
[SPEAKER_01]: However, those estimates are coming down, so that's one problem.
[SPEAKER_01]: The net cash in their balance sheet about six billion dollars there.
[SPEAKER_01]: I like that.
[SPEAKER_01]: They're doing it.
[SPEAKER_01]: They're issuing more shares.
[SPEAKER_01]: They've kind of stopped recently.
[SPEAKER_01]: That's a good thing since the fall, I've actually bought, started to buy it back a little bit of shares, that's good.
[SPEAKER_01]: So I like the business, I love the product, I like the balance sheet.
[SPEAKER_01]: I think you're just going to have to be patient with this because technically it's an adount trend and I'm not seeing a ton that gives me excitement, it's gonna turn around.
[SPEAKER_01]: in the next week or two, or maybe in the other month or two.
[SPEAKER_01]: It's all to support is down around 345 currently trading at 441.
[SPEAKER_01]: So there could be another 20, 30% down from here.
[SPEAKER_01]: I think that's very, very possible, because it's still trading at what a 35 times for looking earnings, still pretty expensive in my mind.
[SPEAKER_01]: over the long-term, but I am not confident in it turning around in the short-term if that makes sense.
[SPEAKER_01]: So, I would probably do, sell some puts, down around 350, that would be a great way to kind of hedge yourself, and pick it up, pick more of it up at major support.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_09]: Okay, thanks.
[SPEAKER_01]: Let's go answer a YouTube comment question.
[SPEAKER_01]: We didn't say, can you please help me with s n e x, s is the same as an antsy, he is an Edward x as an x-ray.
[SPEAKER_01]: Stone x group.
[UNKNOWN]: That's interesting.
[SPEAKER_01]: Provide brokerage and financial services.
[SPEAKER_01]: commercial hedging, global payments, securities, physical commodities, clearing execution.
[SPEAKER_01]: Okay.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: So, physical commodities, I like that, um, global payments, earnings this year.
[SPEAKER_01]: So, to be $6.15 a from $3.93 last year, $6.27 next year.
[SPEAKER_01]: So, in an end at time where there's not a free flowing of commodities around the world.
[SPEAKER_01]: about as strong as it used to be.
[SPEAKER_01]: There's a lot of hedging going on, hedging on price volatility.
[SPEAKER_01]: That's certainly helping a name like Stonex, about $10 billion market cap, 19 and a half billion dollar, sorry, 19 and a half percent return an equity, very solid free cash flow, 10 billion, wow.
[SPEAKER_01]: Yeah, well, is that true?
[SPEAKER_01]: Mark gets 10 billion by seeing this, right?
[SPEAKER_01]: Mark gets 10.7 billion.
[SPEAKER_07]: Huh.
[SPEAKER_01]: That can't be right.
[SPEAKER_01]: The free cash flow also says 10 billion, which does not seem accurate.
[SPEAKER_01]: But the profitability is very strong, like I said.
[SPEAKER_01]: Decent amount of debt in the balance sheet that worries me some.
[SPEAKER_01]: But I love the business.
[SPEAKER_01]: I love the trajectory, and though it's a bit overbought,
[SPEAKER_01]: I would continue to buy it.
[SPEAKER_01]: That's S and E X is the symbol.
[SPEAKER_01]: Then we're gonna go to another voice-my-own question.
[SPEAKER_01]: Yeah, see that now.
[SPEAKER_00]: Hi, Justin Luke.
[SPEAKER_00]: Long time, listen to your great show here.
[SPEAKER_00]: I have for manyapolis.
[SPEAKER_00]: I have a question for you guys of like your thoughts on a stock I purchased probably at the wrong time and may when it was going way up.
[SPEAKER_00]: Now it's dropped considerably about $30, $40, ticker symbol, and oh, W service now.
[SPEAKER_00]: I've lost about $6,000 on it, and I do plan on being a long-term investor, and I know the company has good contracts, and has lots of money usually that are does makes.
[SPEAKER_00]: I don't know if this is just kind of a hiccup or a lot of profit taking, so to speak.
[SPEAKER_00]: I'm wondering if you guys feel it will come back
[SPEAKER_00]: money and still have profits on it, or if I should dump it, take the losses which I could use to help with taxes.
[SPEAKER_00]: I'm profits I've taken from Micron and Intel and so on and maybe just put the cash into something like AMGN, AMGN or GXI which I don't really have any utilities or many
[SPEAKER_00]: So just wondering what your thoughts were on that, look forward to hearing it on the show.
[SPEAKER_00]: Have a great day.
[SPEAKER_01]: Well, I will say adding healthcare right now is probably good idea if you have none.
[SPEAKER_01]: Healthcare had been on the ropes.
[SPEAKER_01]: It's starting to find some leadership in this market.
[SPEAKER_01]: So I really like that if you have some have none.
[SPEAKER_01]: Another question is now is that is now the time to sell service now to use those funds for healthcare name.
[SPEAKER_01]: That's a difficult question.
[SPEAKER_01]: Now, the first off, which you said was, you know, why is going down?
[SPEAKER_01]: Is it is it, it's profit taking or whatever?
[SPEAKER_01]: No, what's happening here?
[SPEAKER_01]: And this is really important for for you and everyone out there to understand is you need to understand why the these stocks are going down.
[SPEAKER_01]: What is happening within this sector is is the market speaking the truth?
[SPEAKER_01]: Is it telling you something or is it off sides?
[SPEAKER_01]: Is it wrong?
[SPEAKER_01]: And it's pretty clear, this is the software name, it's the whole space has been sold off.
[SPEAKER_01]: The space had a bit of a rally recently, but it's rolled over once again, and service now is no exception to that.
[SPEAKER_01]: Historically, service now has been a SaaS provider very low-churn, but the market is saying, well, that won't be the case going forward.
[SPEAKER_01]: The expecter needs to be at an all-time high, though, to $5 and $0.6 next year, from $4.15 this year, and $351 next year.
[SPEAKER_01]: Part of that is driven by revenue growth, even though revenue growth is slowing, but a lot of that has to do with them just taking all that cash flow $4.6 billion and buying back shares.
[SPEAKER_01]: Yeah, they were issuing shares consistently up until the end of last year and now they're going the other way.
[SPEAKER_01]: Good balance sheet, pretty much no debt, 15 and a half percent return equity.
[SPEAKER_01]: I think there's a lot of value out there.
[SPEAKER_01]: But when you say, you're a long-term investor, this is the difficult part right now.
[SPEAKER_01]: AI is very transformative to a lot of different sectors and software is top of the list there.
[SPEAKER_01]: So you can't sit here with any software name and say, oh, I'm just gonna buy it.
[SPEAKER_01]: I'm a long-term holder.
[SPEAKER_01]: Because nobody knows, not me, not you, not the analysts on Wall Street.
[SPEAKER_01]: Exactly where this is all headed, what speed as well is the industry headed in the direction of this intermediation and destruction in a way.
[SPEAKER_01]: What companies are going to really get crushed versus some may benefit a little bit from
[SPEAKER_01]: I said before, names like Salesforce, I think you're going to be hurt more and that is shown in the chart, much worse than service now, it's had a 52 week low, where service now still is above, it's 52 week low, even if it's only marginal.
[SPEAKER_01]: So that relative performance is important to watch.
[SPEAKER_01]: So of all the software names that are out there, I think service now is up there with one of the better names to hold over the, at least the medium term.
[SPEAKER_01]: It's still so much TBD to understand where this is all headed in the long term.
[SPEAKER_01]: So I cannot say to you and say, yes, service now, that's the big one.
[SPEAKER_01]: And this is the one the market's off side in.
[SPEAKER_01]: I think it's off side in the medium term, but TBD in the long term.
[SPEAKER_01]: Those invest stock, I'm just inclined with one goal here each and every weekday, so I hope you achieve your own version of financial freedom.
[SPEAKER_01]: And I'll work continues after this final break.
[SPEAKER_01]: Let's get to questions in right now at 8.99 chart.
[SPEAKER_02]: Invest talk is ready 24-7 for your finance and investment questions.
[SPEAKER_08]: I'm hoping you'll give me your cake on format technologies ORA.
[SPEAKER_04]: Is it a good idea to sell your losses in a raw IRA and just use whatever you have left to reinvest into better stocks?
[SPEAKER_02]: Don't forget to call, Invest Talk, 888-99 chart.
[SPEAKER_03]: There are a few things that make KPP financial special.
[SPEAKER_03]: One of them is parallel investing.
[SPEAKER_03]: This means they invest right alongside their clients.
[SPEAKER_03]: Here's how it works.
[SPEAKER_03]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.
[SPEAKER_03]: On the same day, at the same price, and same percentage.
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[SPEAKER_05]: I'm the stock.
[SPEAKER_05]: I wanted to ask you guys your opinion of the wheel strategy, essentially where you purchase cashier put, and then if you're assigned in the cell, call options on that position.
[SPEAKER_05]: every resistance in support levels and then you just kind of repeat it another podcast I listen to seems to think that that's a good shred as you're over the long term I'm just wondering what your guys just thoughts are and if you kind of have some data comparing it to just investing in
[SPEAKER_05]: stocks or ETFs and just holding on to them, always on the show.
[SPEAKER_01]: Thanks, guys.
[SPEAKER_01]: But what you're talking about is selling cash cute puts not buying them.
[SPEAKER_01]: So you're selling cash cute puts and you basically say, oh, if it's stock gets to a certain price, I will buy it.
[SPEAKER_01]: I'm okay buying it because that's support or good value or whatever.
[SPEAKER_01]: And then if you get assigned it, you then sell calls, bring a more premium.
[SPEAKER_01]: And then you might sell it at or above.
[SPEAKER_01]: the price you were assigned for, and that's kind of the wheel strategy.
[SPEAKER_01]: And in theory, it sounds great.
[SPEAKER_01]: Sounds pretty simple, and it is a pretty simple strategy.
[SPEAKER_01]: But in practice, there are a lot of problems that you can run into.
[SPEAKER_01]: So a lot of it is this is about execution.
[SPEAKER_01]: It's about risk management.
[SPEAKER_01]: So if you're selling too many puts, for example,
[SPEAKER_01]: to high-enotional value, you could suddenly get margin called, you could get, you know, put on big margin, et cetera.
[SPEAKER_01]: And then there's no guarantee that that stock will go back up just because you think that it's at a good price or good support, a good value doesn't mean that it automatically will turn around, especially, you know, sectors or companies they tend to continue on in the direction that they've been going in.
[SPEAKER_01]: And vice versa.
[SPEAKER_01]: So, I'm sorry, well, that direction they'd be going in.
[SPEAKER_01]: And so, there's no guarantee the bounce back, shall we say.
[SPEAKER_01]: They could continue to go down, and yeah, you might sell the call, and I had you a little bit to the downside, but not completely.
[SPEAKER_01]: So, in theory, it works, in theory, it's nice, but it takes the right companies, so you can't just do it with any companies, especially if they're not good businesses, you wanna do it with companies that have good balance,
[SPEAKER_01]: that are at least have a profit that are stable or growing.
[SPEAKER_01]: So it's a lot about how you execute it, which companies you execute it on, and less about just the general idea of the strategy, that makes sense.
[SPEAKER_01]: Now, last thing I wanna talk about, stable coins, I wanna talk about STRC, which is the strategy was at the preferred stock.
[SPEAKER_01]: the issuance that promised 12, 13% returns, and it was fine for what the July August, the recently actually went to that come out.
[SPEAKER_01]: Those July last year, excuse me.
[SPEAKER_01]: Yeah, so it was about about a year, yeah, we're almost coming up on a year now.
[SPEAKER_01]: And it was fine for about a year, hanging right around that par of $100.
[SPEAKER_01]: And now it's rolled over in a big, big way,
[SPEAKER_01]: The underlying equity as to MSTR is now at a 52 week.
[SPEAKER_01]: Whoa, and it's showing you that when you see the big flashing double digit yields, it is not free.
[SPEAKER_01]: It is not guaranteed.
[SPEAKER_01]: I don't care what's have a marketing they throw out there at you.
[SPEAKER_01]: Risk is always around the corner.
[SPEAKER_01]: It's just a matter of About a month from now a year from now five years from now at some point that risk will be realized I say this all the time just because you buy something you make money on it There was minimal volatility You're up on it.
[SPEAKER_01]: It doesn't mean that you didn't take the risk You took risk of paid off
[SPEAKER_01]: sometimes risk does not pay off.
[SPEAKER_01]: The longer you're in a double digit yielding asset, the better chances are that you will eventually run into that risk, and that's what happened with these STRC.
[SPEAKER_01]: Investors and that happens, that's likely to happen in the stablecoin world as well.
[SPEAKER_01]: You've seen that multiple times where...
[SPEAKER_01]: Actually, over the last, in 2023 alone, Moody's showed that 69 stable coins depacked from that $1 per coin value, happened with USDC when there was the Silicon Valley bank crisis.
[SPEAKER_01]: And so that is another area where there's a lot of risk and you have to make sure you understand the risk that you are taking.
[SPEAKER_01]: Nothing is free when you get big yields.
[SPEAKER_01]: Even though the price looks stable now, it won't always be stable.
[SPEAKER_01]: Despite the name's stable.
[SPEAKER_01]: I'm Justin Clyde, reminding you about K, could be financials parallel investing when make a trade for our clients, make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatment we invest right alongside our clients.
[SPEAKER_01]: We should the same risk and potential for success and you can learn more by heading over tune best talk.com.
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