[SPEAKER_04]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_04]: Here's your host, Justin Klein.
[SPEAKER_03]: Good afternoon fellow investors and welcome back to Invest Talk.
[SPEAKER_03]: This is our Monday, June 29th, 2020, 6th edition of Invest Talk.
[SPEAKER_03]: And there's a lot of moving parts in today's market.
[SPEAKER_03]: And understandably, you might have several questions.
[SPEAKER_03]: Money related, hopefully.
[SPEAKER_03]: maybe about the broader equity markets, a different asset class, particular company, a sector, we're here for all of it.
[SPEAKER_03]: So I'm just inclined in my goal each every weekday, longflukes, is to help you come a better investor, help you unpack the portfolio dynamics that are present in today's market.
[SPEAKER_03]: Now, just a bit, we'll be answering some of your finance and investment questions.
[SPEAKER_03]: We'll give you some topics to keep top of mind for you so that you have better perspective within this market.
[SPEAKER_03]: A lot of hype, there's a lot of headlines.
[SPEAKER_03]: It's easy to get distracted.
[SPEAKER_03]: our job is to keep you focused with the feet on the ground, not high in the sky, emotional decisions.
[SPEAKER_03]: Don't hesitate to give us a call.
[SPEAKER_03]: 889 chart is the number to connect with us 24 hours a day seven days a week.
[SPEAKER_03]: Now tomorrow we will be hosting our new wealth webinar.
[SPEAKER_03]: Best of
[SPEAKER_03]: how to invest for your income needs.
[SPEAKER_03]: It's free to join, but you must register by heading over to investtalk.com.
[SPEAKER_03]: So make sure you're going to join, you want to go register right now.
[SPEAKER_03]: Now in just a bit, we're going to talk about today's Mark performance and run down the show topics with the arm.
[SPEAKER_03]: The first let's tackle this color question.
[SPEAKER_01]: Now.
[SPEAKER_01]: not just in the component today about ticker SBSW.
[SPEAKER_01]: I believe it's a bad NA still water.
[SPEAKER_01]: Wonder if you think this is a good company to hold on to or if I should take some profits or sell out of it completely.
[SPEAKER_01]: Thank you for your time, bye.
[SPEAKER_03]: Looking at Savanya still water out of South Africa.
[SPEAKER_03]: This is mainly a gold miner, but they do.
[SPEAKER_03]: Mine for other minerals like nickel, chrome, copper, cobalt, et cetera.
[SPEAKER_03]: So they're fairly well diversified.
[SPEAKER_03]: They have some battery metals along with those precious metals that platinum et cetera.
[SPEAKER_03]: Okay, so it's fairly well diversified, like I said.
[SPEAKER_03]: Ernings this year are expected to be $2.80 and $86.
[SPEAKER_03]: That would be an almost an all time pattern.
[SPEAKER_03]: And it had very large drawdown from those years when it was trading, let's say 2021 is trading up around 20 bucks, then it fell as low as $3 just recently, earlier last year, rallied recently back to 20 and now back to $8.70, so you can see that large volatility in the
[SPEAKER_03]: Good cash flow, good profit margins.
[SPEAKER_03]: Let's look at their debt real quick.
[SPEAKER_03]: That doesn't look too bad.
[SPEAKER_03]: I think this is a very high risk play within the material space.
[SPEAKER_03]: You're getting that foreign currency risk with obviously South America or South Africa, excuse me.
[SPEAKER_03]: And you can see how volatile can be from 21 all the way down to eight, but if it's going to make $2 and change even next year, that's about four times forward looking earnings.
[SPEAKER_03]: So overall, I kind of like it, but understand the risk this is going to be wildly volatile.
[SPEAKER_03]: You need you paired for that, because what happens in these type of situations is that you put good into it for the upside, but they don't understand that downside volatility and then they start to realize that downside volatility, they get shaken out of it at the wrong time.
[SPEAKER_03]: Let me give you a major support.
[SPEAKER_03]: Yeah, about 7.25, that would be the next major sport level.
[SPEAKER_03]: It's at 8.62 today.
[SPEAKER_03]: So another 10, 15% potential downside before major major support.
[SPEAKER_03]: So I'd be looking at that number to potentially get out if it gets well below that.
[SPEAKER_03]: But this is a good, I think, entry point, based on the valuation based on the fact that I like these exposure to these type of metals over the long term.
[SPEAKER_03]: It was a great show on Friday.
[SPEAKER_03]: We looked into the story.
[SPEAKER_03]: Should you had your currency rest?
[SPEAKER_03]: The dollar, yeah, and Ruby, and it's shift in global order.
[SPEAKER_03]: We also asked answer questions about the plight materials submitted through a comment over on a YouTube channel.
[SPEAKER_03]: And if you happen to miss out on the episode, the best way to get every show is to follow and best talk wherever you get your podcasts.
[SPEAKER_03]: Now, we have a lot of ground to cover over the next 45 minutes or so.
[SPEAKER_03]: Time permitting.
[SPEAKER_03]: We'll get to all of it.
[SPEAKER_03]: Our main focus point is about
[SPEAKER_03]: The biggest risk of the SpaceX IPO, this is one of the most exciting events of this year, we've had a lot of volatility as of late over the first couple of weeks of trading.
[SPEAKER_03]: So what are the major risks to investing in this damn, but also the broader market?
[SPEAKER_03]: And what does this tell you about this current bull run?
[SPEAKER_03]: and whether it will end anytime soon.
[SPEAKER_03]: So we'll talk about that.
[SPEAKER_03]: We also have other topics on the docket.
[SPEAKER_03]: One is in regards to the profit boom and how it relates to government spending, consumer spending, and what's these you expect going forward based on things like the savings rate, deficit, et cetera.
[SPEAKER_03]: And we also wanna talk about AI exuberance.
[SPEAKER_03]: This is from the Bank of International Settlements,
[SPEAKER_03]: they put out a report, they're annual economic report, that was on Sunday, and it laid out the risks of the current AI exuberance.
[SPEAKER_03]: So what is that telling you?
[SPEAKER_03]: What is that telling us about the future path of markets, the economy, etc., in light of what's going on with AI capex spent?
[SPEAKER_03]: We also have questions that were submitted via voice bank, one is about automatic given to
[SPEAKER_03]: Putnum, large cap value, PYX, and mutual fund.
[SPEAKER_03]: We also have some questions that came in via the comment section on the Invest.YouTube channel.
[SPEAKER_03]: But we're going to head into a quick break.
[SPEAKER_03]: So please remember you can call any time.
[SPEAKER_03]: Leave your question on the Invest.Voice Bank.
[SPEAKER_03]: If you're a live stream or an aim to hold 1220 in the Bay Area, you can call right now at 888-99 chart.
[SPEAKER_03]: Up next, comment on today's market activity.
[SPEAKER_04]: The wait is almost over beyond the yield how to invest for your income needs.
[SPEAKER_04]: And all new in Vestock, wealth webinar, tomorrow, noon to one Pacific time, online in free of charge, pre-register at investock.com.
[SPEAKER_03]: It hit 99 chart, it hit 992427, it's how you get through and ask your question on today's show.
[SPEAKER_03]: Take a look at the market overall.
[SPEAKER_03]: It was a nice bounce back day, NASDAQ up over 2% S&P up over 1% Dow, only about 6% of 1%.
[SPEAKER_03]: You had names like Google Amazon, Tesla, those had some nice gains, Tesla up eight and a half, Google up nearly five, Amazon 3.2.
[SPEAKER_03]: Apple was down slightly, and video up a little over 1%.
[SPEAKER_03]: You had some strength out of a lot of the names that sold off on Friday.
[SPEAKER_03]: Nice bounce back for names like Western digital, corning, Kaley 10 core, applied materials, land research, those were names that were very, very strong on the day.
[SPEAKER_03]: You had cell-offs in communications services while the, uh, all the,
[SPEAKER_03]: Telecom names, maybe some worries around maybe Starlink, competing with some of the AT&T and Verizon's of the world.
[SPEAKER_03]: I'm not sure, I believe that, but that's at least the narrative right now.
[SPEAKER_03]: The finance base was a bit mixed, but overall it was just that bounce back in those names that sold off on Friday.
[SPEAKER_03]: So we'll see, this is just a counter-trained bounce or do we get some stickiness to,
[SPEAKER_03]: This this market overall the the rotation and breadth is widening out.
[SPEAKER_03]: That's overall a positive But today wasn't one of those days.
[SPEAKER_03]: It was very very concentrated in those Technames those hardware names that had been selling off for most of last week you did get some Supreme court decisions that might affect things on the economic front
[SPEAKER_03]: This gives me the political front, the political front, but not really the economic front.
[SPEAKER_03]: You had treasuries, they were mixed, yields were up at one of the two basis points on the front and signaling a bit of a tighter fed policy going forward.
[SPEAKER_03]: Dollar was off 1.3%, sorry, not 1.3%, 0.3% on the day.
[SPEAKER_03]: The yen continues to sell off a 40 year low versus the dollar.
[SPEAKER_03]: that ultimately another reason for the market staying point.
[SPEAKER_03]: No, you know, you hadn't carried trade unwind in the offing like we saw a couple of years ago.
[SPEAKER_03]: Gold finished down 1.4% silver 1.7% in the red Bitcoin was up about 1% in choppy trading.
[SPEAKER_03]: You still are getting a lot of pressure on Bitcoin in general from what's going on with
[SPEAKER_03]: of financial shenanigans that are starting to come home to roost within that space and another reason why I think Bitcoin really made in the bear market for some time.
[SPEAKER_03]: WTI crewed up 2.2% on the day back above $7.00 a barrel as they date on in the middle at least looks to be
[SPEAKER_03]: Unhold, at least for a little while, we'll see how that goes, flare-ups are continuing, and that was really the big story over the weekends.
[SPEAKER_03]: Those are the market today to start off a fresh week.
[SPEAKER_03]: The event at that time, we've seen questions via web form from vestalk.com.
[SPEAKER_03]: Here's when they came there earlier.
[SPEAKER_03]: Because I think about getting back, I'm thinking about getting back into Las Vegas Sand, L, VS is the symbol at what price level would you start accumulating shares Las Vegas Sand?
[SPEAKER_03]: So let me pull up some of the numbers here.
[SPEAKER_03]: So this is interesting because this has been innate pretty strong downtrend ever since a high ride around.
[SPEAKER_03]: What is that about?
[SPEAKER_03]: $70 or so.
[SPEAKER_03]: Yeah, 70 in change back in December.
[SPEAKER_03]: Now we're already down to 46 in change.
[SPEAKER_03]: And less than six months, this has had quite the downtrend.
[SPEAKER_03]: I'm 34% from it's 52 week high.
[SPEAKER_03]: earnings expectations for this year and next year continue to come down, although still three dollars in change, but it is,
[SPEAKER_03]: is that mid-teens multiple which based on a company that's looking to grow earnings and revenue in the mid to high single digits, that's probably a fair multiple to trade at.
[SPEAKER_03]: So I don't think it's expensive or cheap at these levels, I think it's fairly valued.
[SPEAKER_03]: And I will say it is at support right around $40 to $5.
[SPEAKER_03]: But we've been here for a few days now.
[SPEAKER_03]: We try to rally on Friday, sold off again today.
[SPEAKER_03]: not really the reaction I like to see near major support.
[SPEAKER_03]: So to me, this needs the head probably lower and probably closer to 40 to say $42.
[SPEAKER_03]: That's a much better technical support level.
[SPEAKER_03]: The question for me though, is, do you wanna get into a name that in a Las Vegas in general has been struggling
[SPEAKER_03]: China consumers continue to struggle to remember this is as much if not more a play on China.
[SPEAKER_03]: As it is on Las Vegas, you know, it's called Las Vegas Sands.
[SPEAKER_03]: But if you look at the revenue comes from, it's almost all Macau.
[SPEAKER_03]: You're talking about 43% is Marina Basans in Macau, the Venetian in Macau, the Lendonirian
[SPEAKER_03]: right in in other areas actually Singapore is at the top one about 43%.
[SPEAKER_03]: So that I think that's the issue is China continues to have their domestic troubles economically.
[SPEAKER_03]: And so that is why this is in a downtrend.
[SPEAKER_03]: I would be very patient with it 42 would be the first level that I would get in if you want to get in it for the long term, but there's no guarantee it's going to stop going down there.
[SPEAKER_03]: It was in Vestock, now closing in on 63 million downloads, thanks to you, hang on, and work continues.
[SPEAKER_03]: So, give me a call now at 8.99 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_08]: And I'm calling in with a quick question about automatic dividend reinvestment programs.
[SPEAKER_08]: We have a couple stocks that we have set up to automatically reinvest and it just kind of done on me that I'm wondering if this creates an issue when you go to sell those shares a stock because your dollar owning partial shares.
[SPEAKER_08]: I'd appreciate any comment you can be going to.
[SPEAKER_08]: Thanks have a good day.
[SPEAKER_03]: No, there should be no reason why that would create an issue.
[SPEAKER_03]: most brokerage firms now allow partial share ownership.
[SPEAKER_03]: Another question would be, wherever it's held, are you making sure that that broker is tracking the lots for tax purposes?
[SPEAKER_03]: That's what I would be worried about.
[SPEAKER_03]: But that's partial share ownership has no bearing on whether it's a smart thing to do.
[SPEAKER_03]: What I'm saying that is automatic,
[SPEAKER_03]: To me, the bigger question you have to ask yourself is, in a world that's rapidly shifting, rapidly changing, especially with AI, how many companies can you confidently say that you want to buy shares in, and all the dividends to simply accrue as more shares in your account?
[SPEAKER_03]: where those businesses are safe from competition by just spending a bunch on ads, for example.
[SPEAKER_03]: And continue to print money and cash flow that supports that dividend and earnings growth over time.
[SPEAKER_03]: I think it's a much more difficult environment to operate in.
[SPEAKER_03]: Even names like Coke and Pepsi.
[SPEAKER_03]: They're still, you know, they're still, they'll say they're bad investments.
[SPEAKER_03]: Their businesses are more at risk today than they were 20 or 30 years ago.
[SPEAKER_03]: So you have to be very careful in what type of companies you are running a dividend reinvestment plan with.
[SPEAKER_03]: A lot of the big names from general mills, for example, to a craft hines.
[SPEAKER_03]: There's a lot of those names that are just not doing very well.
[SPEAKER_03]: because they've changed in taste or, you know, they acquire other businesses and lay around too much dead and the debt becomes an issue.
[SPEAKER_03]: There's just a lot of ways that large businesses can, that might seem bulletproof today, can stumble, Nike and other example.
[SPEAKER_03]: They've been around for a long time, was always the leader in sports apparel.
[SPEAKER_03]: Not very bright things by leading foot locker and pivoting online and not in reinvesting and marketing.
[SPEAKER_03]: And suddenly they lose market share and their stock goes from 175 to 41 today.
[SPEAKER_03]: So that is my bigger issue.
[SPEAKER_03]: There's nothing to do with the fractional shares or anything like that.
[SPEAKER_03]: Let's go take another voicemail question now.
[SPEAKER_02]: Hey, I'm trying to reach out just in a little loop.
[SPEAKER_02]: I have a question for the show.
[SPEAKER_02]: I'm trying to decipher two stocks here.
[SPEAKER_02]: We got CEG constellation energy, and then we have Southern Company SO.
[SPEAKER_02]: I'm just thinking about all the energy that's gonna be needed for the data centers.
[SPEAKER_02]: I know that in Georgia these data centers that are getting constructed, they're filling up real quick.
[SPEAKER_02]: And so there seems to the demand is definitely there.
[SPEAKER_02]: I'm trying to see is there a way that I could try to invest.
[SPEAKER_02]: I don't know, I'm looking at a Southern company or C.E.G.
[SPEAKER_02]: or if you have maybe another suggestion for me, listen to the podcast, we're big fans of the show.
[SPEAKER_02]: Thanks guys.
[SPEAKER_03]: Well, I can't give you a suggestion of a different name, but I can address the two names that you asked about, which is a constellation energy and Southern company.
[SPEAKER_03]: The constellation energy, this is $94 billion market cap.
[SPEAKER_03]: but it's different as yield is only two thirds of one percent.
[SPEAKER_03]: It's a very low, especially for utility name.
[SPEAKER_03]: earnings growth is going up to 25% this year and then 15% next year.
[SPEAKER_03]: So it's growth is good.
[SPEAKER_03]: But the stock price is not reflecting that.
[SPEAKER_03]: In fact, it's off 37% from it's 52 week high.
[SPEAKER_03]: It's relative strength is 14, very low.
[SPEAKER_03]: So it's not doing very well.
[SPEAKER_03]: Then you look at Southern Company.
[SPEAKER_03]: a utility company, but it has some natural gas business as well.
[SPEAKER_03]: Well, the Versified has a nuclear.
[SPEAKER_03]: It's actually an end of we own for clients, giving us 3.14% relative strength is 46.
[SPEAKER_03]: So, these are price perspective.
[SPEAKER_03]: It's kind of an then about average over the last year, which actually is pretty good for utility name, to do kind of average for the broader market in a bull market.
[SPEAKER_03]: And then you have the dividend, some fairly well for us.
[SPEAKER_03]: So, we're much bigger fans of something company than constellation energy.
[SPEAKER_03]: The next of us talk, we'll look into the story.
[SPEAKER_03]: J.P. Morgan says 7000.
[SPEAKER_03]: Should you believe, price targets, a major shop just lifted the S&B target to 7000 on the blue A-blue sky scenario?
[SPEAKER_03]: We'll talk about that story tomorrow, but for now I'm Justin Klein, ready to take your calls any time, and eight, eight, 99 chart.
[SPEAKER_03]: At KPP Financial, Accountability means more than advice.
[SPEAKER_03]: It means we invest alongside you through our parallel investing approach.
[SPEAKER_03]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.
[SPEAKER_03]: Same day, same price, same percentage.
[SPEAKER_03]: If your portfolio moves, ours does too.
[SPEAKER_03]: That is alignment, that is transparency.
[SPEAKER_03]: That is the KPP difference.
[SPEAKER_03]: Visit investtalk.com to get your free portfolio review.
[SPEAKER_04]: 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, Justin Klein 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]: Our main focus point today is about the SpaceX IPO.
[SPEAKER_03]: What are the biggest risks?
[SPEAKER_03]: Not just for the name itself, but for the broader market.
[SPEAKER_03]: Then we talked about nowsing with the past couple of weeks about how these mega
[SPEAKER_03]: and you suddenly see them sink and they go lower before they finally find some sort of equilibrium and then there were more reasonable investment.
[SPEAKER_03]: And SpaceX is not the only one likely coming to market this year.
[SPEAKER_03]: We know there's open AI and Thropic and many others.
[SPEAKER_03]: But the script is always the
[SPEAKER_03]: many times unprofitable, and the public investors are exit liquidity for the billionaires like an Elon Musk or a Sam Alman.
[SPEAKER_03]: But what it signals for the broader market is euphoria, that can be seen at the end of bull runs.
[SPEAKER_03]: But what you have to understand is that it's not guaranteed.
[SPEAKER_03]: There are other factors that have to be in play as well.
[SPEAKER_03]: The reason data come out by truest showed that the average one year drawdown for large IPA was 55% the average, think about that, and then recently, what it SpaceX get up to.
[SPEAKER_03]: The tie was up 225 dollars per share, so that puts the drawdown, probably somewhere close to $100 per share, it would not shock me at all, make me beat the trough.
[SPEAKER_03]: But once again, that's not the only story here.
[SPEAKER_03]: Because if you look back in history, there were some high profile IPOs in the dot com bubble, like net, net escape, Amazon, eBay, a lot of them went public in more like 97.98, then you had the bull run up until 2000, and then the bubble popped.
[SPEAKER_03]: And why did it pop?
[SPEAKER_03]: Remember the Y2K scare?
[SPEAKER_03]: So one of the reasons why the mark was up so much in 99
[SPEAKER_03]: The Fed wanted to make sure there was plenty of liquidity in case there was some sort of Y2K issue, where computer systems were down and it created an economic shock in some way, shape, reform, and then when the new era came and went, the new millennium came and
[SPEAKER_03]: And that's why by March, you had the bubble pop.
[SPEAKER_03]: And it's why the NASDAQ was up over 100% then you end.
[SPEAKER_03]: So once again, it's not just about those excessive valuations, but it's about liquidity reversing.
[SPEAKER_03]: What this does, it signals that we are set up for a potential major reversal if liquidity titans materially.
[SPEAKER_03]: So a few flashy IPOs on their face will break the market.
[SPEAKER_03]: but you add on top of that, a tightening that'll reserve, that's where issues may arise.
[SPEAKER_03]: And it can, sometimes it's not just the federal reserve, it could be bank stopping, lending for whatever reason, maybe the AI investment theme starts to reverse in a major way and then banks pull back their lending and that reduces overall liquidity in the system, that could be a catalyst as well.
[SPEAKER_03]: So expensive markets can stay expensive for a long time, especially if earnings keep growing, which they have been.
[SPEAKER_03]: And liquidity doesn't tighten it.
[SPEAKER_03]: That's why I would say valuation is a horrible timing mechanism.
[SPEAKER_03]: One of the worst.
[SPEAKER_03]: So the more of the story here is, don't confuse
[SPEAKER_03]: Overpriced IPOs, which SpaceX is definitely one, and there's probably more to come for this year, don't confuse those with an automatic sign of a market on the verge of collapse.
[SPEAKER_03]: But use it as a signal that says, hey, if you get a Fed that pivots aggressively, I don't like they did in 2022, so we talked about recently before, is that that's what could be setting up.
[SPEAKER_03]: not a recessionary bear market, but a bear market that kind of brings valuations back in, but you have to see that shift in the Quote de Dynamics, which we have not quite seen yet.
[SPEAKER_03]: Let's go talk to Dave, located up in the Fresno area here in California, looking at Conico Phillips.
[SPEAKER_10]: Correct, and I want to thank you for all you do.
[SPEAKER_10]: I've been listening since the money radio days.
[SPEAKER_03]: A lot of people don't know that, a lot of people don't know that, that the best talk was on on the radio in the 1990s, like grandfather, on the money radio here in Southern California.
[SPEAKER_10]: Correct, I listen to it every day.
[SPEAKER_10]: So anyway, yeah, I have a small position in
[SPEAKER_03]: So this is a name that we actually don't for clients who don't have for some time.
[SPEAKER_03]: So we still done well, yes, it's pulled back from 135 to about 105 today, but it's still well above kind of where it was most of last year when it's hanging around in the 80s and 90s.
[SPEAKER_03]: So I think it's still in broader options, so that's a good thing.
[SPEAKER_03]: But we've actually started to think about shifting our allocation from Conoco Phillips into other names within the space that are more in the midstream business, meaning moving the end product from the well to where it's being consumed.
[SPEAKER_03]: So type line companies.
[SPEAKER_03]: Also thinking about the refining business, which also is more consistent.
[SPEAKER_03]: Whereas these MP companies, they're very tied to the EBS inflows of the supply demand dynamics within the oil industry.
[SPEAKER_03]: And this is a lesson.
[SPEAKER_03]: This is a lesson that you have to listen to the market, listen pay attention to the headlines and realize what didn't happen.
[SPEAKER_03]: It's not often times in markets the best lessons are what you think should have happened
[SPEAKER_03]: and how do you adjust your views accordingly?
[SPEAKER_03]: And that's what I'm thinking, or we're thinking with what's happened with the warranty run, and the closing of the straight-to-ormance.
[SPEAKER_03]: This was always pledged as a major reason for potential major oil spike.
[SPEAKER_03]: And I think that's certainly still possible, but clearly not to 150, $200, maybe $150, if you get into a real crisis in the next two years.
[SPEAKER_03]: You know, months and this work keeps dragging on, but it's telling us that, you know, there's new supply out there, there's supply that can be turned on at the rate price and lot lower prices then people realize and and that countries are able to pivot their their energy use when prices do go up.
[SPEAKER_03]: And so maybe the price and elasticity of demand has reduced over time, as there's alternative energy sources, like solar, like wind, like nuclear, etc.
[SPEAKER_03]: And so we're less bullish on a lot of these EMP names and focusing more on, like I said, the pipeline companies, the refining businesses, etc.
[SPEAKER_03]: That's where I would rather if I'm going to
[SPEAKER_03]: commit more money, that's where we rather go.
[SPEAKER_03]: Now, I do think that a lot of what's happening in Italy is going to probably, I think, blow up in the current administration's face, at some point where you do get another oil spike to the upside, but honestly, we're selling into that spike as opposed to buying it.
[SPEAKER_03]: So, not an area that I would continue to allocate a ton of more capital to.
[SPEAKER_06]: Thank you.
[SPEAKER_03]: No problem.
[SPEAKER_03]: Thanks for the call.
[SPEAKER_03]: Let's do another voicemail question now.
[SPEAKER_06]: Hey, Justin, I look this is Joe from the mid last great show.
[SPEAKER_06]: Thanks for all you do.
[SPEAKER_06]: I've got a question about a fun, puttin' them large cap value trust, ticker, PE, Y, A, X.
[SPEAKER_06]: It's available to me in my 401K listed as class IA shares with an expense ratio of 33 basis points.
[SPEAKER_06]: diversification in my large cap U.S. equities, and this is really my only other option, but I kind of like it.
[SPEAKER_06]: Let me know what you think before the answer on the podcast.
[SPEAKER_06]: Thank you.
[SPEAKER_03]: I'm looking at the Putnam Large Cap Value Fund, PEIYX.
[SPEAKER_03]: I'm sorry, PE.
[SPEAKER_03]: That's another
[SPEAKER_03]: Offered as 401k so this says there's a front and load ideally that front and load is waived usually they are for 401k's so if make sure that's the case make sure you're not paying some sort of load up front.
[SPEAKER_03]: Management fees about looks like 45 basis points or so.
[SPEAKER_03]: Performance is pretty good.
[SPEAKER_03]: 10 year performance in the 6th percentile same with the 15 year performance also in the 6th percentile which means that only 6 percent of funds within this category which would be large cap domestic value.
[SPEAKER_03]: Only 6 percent of funds have done better over the past 10 15 years.
[SPEAKER_03]: That's pretty good.
[SPEAKER_03]: That's very good actually.
[SPEAKER_03]: So,
[SPEAKER_03]: I actually like this one.
[SPEAKER_03]: If this is available in your 401k, this is one of those the type of funds that you want to have a hefty allocation to if you do want exposure to the domestic large cap stock.
[SPEAKER_03]: So I'm going to give this one a thumbs.
[SPEAKER_03]: Let's go answer a YouTube question.
[SPEAKER_03]: SSJ says, what are your, what, thanks for the video and influence silver.
[SPEAKER_03]: Thoughts on AG is a silver play and waiting on the next rally or is WPM a better investment.
[SPEAKER_03]: This is a good question.
[SPEAKER_03]: These are the type of decisions you have to make when you're investing in silver and gold miners.
[SPEAKER_03]: There's your traditional miners, which would be like a first majestic AG symbol.
[SPEAKER_03]: very heavily tied to silver.
[SPEAKER_03]: Let me see, make sure that a lot of times, you'll get names that the title, the name of the company is silver, right?
[SPEAKER_03]: But it has a lot of other exposures, and it may be not a pure play silver name.
[SPEAKER_03]: So for this, McSville Canada, you'll do have some gold exposure, but it is mainly silver.
[SPEAKER_03]: It's pull back considerably, earnings though this year, so it's supposed to be a $89 and $99 next year and a $16,000,000, if you wouldn't sense stock.
[SPEAKER_03]: $8 billion market cap.
[SPEAKER_03]: But with gold miners or silver miners, they have different mines.
[SPEAKER_03]: Looks like they've three main mines in Mexico and then United States, but mainly Mexico.
[SPEAKER_03]: And things are gonna happen with those mines.
[SPEAKER_03]: can happen good, where they pull more out of the mines than they expected?
[SPEAKER_03]: Or bad, where there's a mine collapsed or some deaths or whatever, and it gets shut down, maybe their permits get pulled or whatever.
[SPEAKER_03]: So there's risks there, especially when, once again, they're concentrating those few mines.
[SPEAKER_03]: But with those risks, gives you substantial upside, because if this returns back to 52 week high, you're talking about going from $16 today to, well, over 30, which is doubling
[SPEAKER_03]: So this is the high-risk play, whereas we in precious metals historically was more of a silver streamer, different type of business.
[SPEAKER_03]: Still tied to golden silver, but they invest in a lot of different minds around the world.
[SPEAKER_03]: 45% of the revenue comes from Brazil, 19% Peru, 7% Canada, 28% though, everywhere else.
[SPEAKER_03]: So you can see very well diversified, 45% of the revenue comes from gold miners, 13% from silver, a silver mine, another 10% from another silver mine, and then 32% mines all over.
[SPEAKER_03]: So they have stakes in mines around the world.
[SPEAKER_03]: And so they're very well diversified.
[SPEAKER_03]: So that's what makes it a lower risk play, even though it is trading at a more expensive valuation buff.
[SPEAKER_03]: Roughly 25 times forward looking earnings versus AG, it's said about 16 times forward looking earnings.
[SPEAKER_03]: So it really just depends on your, the risk you want to take.
[SPEAKER_03]: You want to be aggressive, it's AG.
[SPEAKER_03]: You want to be more conservative, kind of that consistency, get a bit of a dividend of wheat and is about double, what is on AG?
[SPEAKER_03]: So how much risk do you want to take?
[SPEAKER_03]: If you're a high risk player, you want the most upside you're going to go with AG, that would be majestic versus majestic silver.
[SPEAKER_03]: Thanks for the call.
[SPEAKER_03]: This is Investock.
[SPEAKER_03]: I'm Justin Klein.
[SPEAKER_03]: We have one goal here.
[SPEAKER_03]: Each and every week day.
[SPEAKER_03]: It's helped you achieve your own version of Phantom Freedom.
[SPEAKER_03]: And I work continues after this final break.
[SPEAKER_03]: So it's questions it right now at 8.99 chart.
[SPEAKER_03]: John from St. Louis, hang on, you will be next.
[SPEAKER_07]: Got a question for Justin or Luke?
[SPEAKER_07]: You're the best person to ask it.
[SPEAKER_05]: Quick question, what are some signs of a that a recession is coming?
[SPEAKER_09]: Is there any lesson for people who own stocks, even if they don't short a stock that the stock they own, they should know whether it's been heavily shorted?
[SPEAKER_03]: Invest talk is ready 24-7.
[SPEAKER_03]: If it gets to 170-175 in that range, that's where I pick it up.
[SPEAKER_03]: Often, they could just appreciate it.
[SPEAKER_00]: I'm hoping you'll give me your cake on or matte technology, ORA.
[SPEAKER_00]: Curious if you think it'd be better for me to let it go and spend money elsewhere.
[SPEAKER_06]: I'm a new investor in your podcast to help me out a lot.
[SPEAKER_07]: Call in Vestock, 888-99 chart, or post your questions on the Invest Talk YouTube channel.
[SPEAKER_04]: Weight is almost over beyond the yield how to invest for your income needs.
[SPEAKER_04]: And all new in Vestock, wealth webinar, tomorrow, noon to one Pacific time.
[SPEAKER_04]: I'm line in free of charge, pre-register at investtalk.com.
[SPEAKER_04]: And now the in Vestock phone lines are open, 888-99 chart.
[SPEAKER_03]: We're going to head out to St. Louis, Missouri and talk to the John.
[SPEAKER_03]: You must talk about the S&P 500.
[SPEAKER_09]: Hi, Justin.
[SPEAKER_09]: Hey.
[SPEAKER_09]: I was just calling to us to what year opinion of the S&P 500 is right now.
[SPEAKER_09]: I'm calling for, like, with my broth.
[SPEAKER_09]: I'm, I mean, my, TSP account in mind.
[SPEAKER_09]: I've, I've been putting more money into the, uh, the, uh, S fund, which is small and make gaps and the international fund.
[SPEAKER_09]: with a little bit to the S&P, however, ideally or I just keep in mind how warm off it's said to just put your money to S&P and just leave it alone at one point in time.
[SPEAKER_09]: I'm trying to get back to that at some point, but I'm just wondering what you think it's going to take for the S&P to look attractive again.
[SPEAKER_09]: Would it be like the big names moving down to less than 30% of the
[SPEAKER_09]: the index or a crash or what would what would make the S&P attractive again?
[SPEAKER_09]: I guess it's my question.
[SPEAKER_03]: I think it would be that the major hyperscalers start to readjust their cafe expense that allows them to have a good sense of whether this spend makes sense from an ROI perspective,
[SPEAKER_03]: You know, that yes, they are spending a lot of money, but they're getting the requisite revenue back for that spend.
[SPEAKER_03]: I think right now, there's still a lot up in the air.
[SPEAKER_03]: And then on top of that, you have a cash flow situation where a lot of them are going negative and a negative territory.
[SPEAKER_03]: And even others are just,
[SPEAKER_03]: dropping considerably from a cash flow perspective, and that leaves very little, and sometimes none, left for stock buybacks, which really supported the shares for a long period of time, and thus the S&P 500, and a lot of those, a lot of what that was doing was,
[SPEAKER_03]: It was sterilizing the stock issuance that was going to a lot of employees.
[SPEAKER_03]: Now they're no longer doing that, so a lot of them were there, their number shares outstanding or a rising once again as opposed to falling it could have been for years.
[SPEAKER_03]: So it's just a fundamental shift in a lot of those names that would need to reverse an major way.
[SPEAKER_03]: I'm not seeing that at least in the shorter term.
[SPEAKER_03]: And I would continue to watch what's happening with those small cap names, what's happening with foreign names,
[SPEAKER_03]: They are outperforming especially small in midcap.
[SPEAKER_03]: So I would continue to overweight those small midcaps until I see a major shift in what those hyperscalers are doing in the strategy to make it so that their actions are more shareholder friendly like they had been in the past.
[SPEAKER_09]: All right.
[SPEAKER_09]: Sounds good.
[SPEAKER_09]: Thanks, Justin.
[SPEAKER_09]: I appreciate you.
[SPEAKER_03]: from.
[SPEAKER_03]: Thanks for the call.
[SPEAKER_03]: Now lastly, let's talk about earnings growth over the past year, 12-month forward looking earnings forecast with MSCI all world indexes up 30%.
[SPEAKER_03]: And as not just about tech companies, it's about oil names, but also non-financial stocks as well.
[SPEAKER_03]: So the profit share of GDP of the financial sector over the past years has been about state or since the pandemic, excuse me.
[SPEAKER_03]: It's been about stable with the domestic non-financial industries surge from 8.1% of national income to 11.2% today.
[SPEAKER_03]: Now, what is this saying?
[SPEAKER_03]: Now, what is this saying about the structure overall overall economy?
[SPEAKER_03]: What it's saying is that this profit surge
[SPEAKER_03]: is from two factors.
[SPEAKER_03]: Number one is government deficits.
[SPEAKER_03]: Government deficits rose dramatically during the pandemic 2020 and they never really drop.
[SPEAKER_03]: They stayed high since and currently the congressional budget office estimates it'll be about 5.8% this year, 5% 8%, 5.8% of GDP that is very high.
[SPEAKER_03]: And what does that typically go to?
[SPEAKER_03]: It goes into corporate profits,
[SPEAKER_03]: money is flowing into these corporate coffers so that's a big reason why earnings growth this year is so high.
[SPEAKER_03]: Unfortunately, we'll be repeated next year, but it should stay elevated as long as these tough cuts and the deficit stays in place.
[SPEAKER_03]: Then the other side is personal spending.
[SPEAKER_03]: So the savings rate has now dropped to levels not seen since the financial crisis.
[SPEAKER_03]: And what that tells you is that workers are struggling.
[SPEAKER_03]: Fed's analysis shows that worker wages, the portion of GDP, is slightly lower than it was the end of 2024, so all that growth during the pandemic has now started to reverse.
[SPEAKER_03]: And companies are gaining ground against workers when it comes to wages.
[SPEAKER_03]: So these are factors that are driving profit growth, but you can't have that for long because you either have the bond market.
[SPEAKER_03]: throwing a fit around government deficits or you have political issues and that's what you see that with the approval rating of the current administration being very very low it's because both inflation and a broader economy that is not keeping up with that inflation especially when it comes to wages.
[SPEAKER_03]: So I wanted to give you some insights on what's happening with the current earnings growth and whether it is sustainable.
[SPEAKER_03]: I'm Justin Clyden, reminding you of KP Financial's Parallel Investing, we 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_03]: Please tell your friends and family about a free podcast downloads you can find anytime.
[SPEAKER_03]: at iTunes or Spotify, or head over to our YouTube channel check out our content there.
[SPEAKER_03]: The next World Webinar coming up tomorrow beyond the yield how to invest for your income needs.
[SPEAKER_03]: So pre-register now at investtalk.com.
[SPEAKER_03]: Independent thinking should success.
[SPEAKER_03]: This invests talk, good night.
[SPEAKER_07]: Invest talk is a trademark of KPP financial because of the nature of the interactive dialogue inherent in the format of this program.
[SPEAKER_07]: It's important for the listener to understand that not all comments made will apply to them.
[SPEAKER_07]: Specifically, nothing sets shall be taken to be investment advice or shell statements on this program be considered and offered to buy or sell security.
[SPEAKER_07]: Because such advice is rendered solely on an individual basis and at times will require
[SPEAKER_07]: Invest talk is a copyrighted program of Plyne, Pavles, and Peasley Financial, a registered investment advisor firm, which retains all rights.
[SPEAKER_07]: For more information regarding KPP's investment advisors, call 1-800-557-5461.
[SPEAKER_07]: Thank you for listening, and your comments and questions are welcome on our 24-hour listener line.
[SPEAKER_07]: At 888-99 chart,