[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 Tuesday, July 14th, 2026, edition of Invest Talk and a lot to unpack on today's show.
[SPEAKER_03]: Quite the move in markets.
[SPEAKER_03]: We saw the NASDAQ, up nearly 1% of the day, and we kind of flip back to 14, what's leading, what's struggling.
[SPEAKER_03]: It's a very,
[SPEAKER_03]: It's a very interesting market.
[SPEAKER_03]: I'll tell you that much.
[SPEAKER_03]: We are an opx week.
[SPEAKER_03]: So there's a lot of kind of short-term funkyness going on in markets.
[SPEAKER_03]: We also had some, some inflation data come in.
[SPEAKER_03]: We're going to look at this and a lot more throughout the show and our job here each every week days, so we become a better investor by answering your finance and investment questions and bringing you data and perspective developed over 25 years of investment experience.
[SPEAKER_03]: So don't hesitate to reach out with your question
[SPEAKER_03]: Now, just a bit, we'll talk about today's Mark performance and run down the short topics that we'll get to throughout the hour, but first, let's tackle this call a question now.
[SPEAKER_05]: Hello and best talk calling class, question and regards to covered calls.
[SPEAKER_05]: I heard one of the podcasts and a caller asked about covered calls are just in reply with saying that sometimes it's better to sell closer to in the
[SPEAKER_05]: I was just wondering why that's the case if we could get a further explanation on that.
[SPEAKER_05]: Thank you.
[SPEAKER_03]: Well, just in general, if you're looking for more consistency, you're going to be selling closer to in the money or at the money or near the money options.
[SPEAKER_03]: doesn't have to be in the money.
[SPEAKER_03]: So let's say stocks say trading at $50 or say $40, $8 per share.
[SPEAKER_03]: You can sell $45 strike that'd be in the money at $35 call.
[SPEAKER_03]: You can sell a 50 strike call.
[SPEAKER_03]: That's be kind of near the money or at the money.
[SPEAKER_03]: Or you can sell like a 55 strike, which should be going further out of the money.
[SPEAKER_03]: You're not going to get nearly as much premium.
[SPEAKER_03]: So when you
[SPEAKER_03]: keep it relatively close to the current price you're getting decent premium and you're hedging on the downside.
[SPEAKER_03]: So, you know, if you have a 48, it's about 48, you sell a 50 strike, you make it three or four dollars putting off our out you go an premium.
[SPEAKER_03]: And that's going to hedge you considerably on the downside.
[SPEAKER_03]: And if things go right, you're still
[SPEAKER_03]: position, but it hedges you nicely on the downside.
[SPEAKER_03]: So here's the thing with cover calls.
[SPEAKER_03]: It's never a blanket statement.
[SPEAKER_03]: It's never, it's, I say that between sectors, you have to compare companies with inspectors.
[SPEAKER_03]: You have to understand the risk of their balance sheet in their business model and the security of the business model and all that.
[SPEAKER_03]: That goes down to stock selection.
[SPEAKER_03]: But then when you're layering on options trading, on top of that, there are so many other factors to consider, because you're going out in time, how much time should you give for that option to potentially expire if you're buying it, you want more time if you're selling it all less time.
[SPEAKER_03]: And then what's strike, you should get what's the current implied volatility, which means what's the premium that you're either paying if you're buying or getting if you're selling it option, if you're doing cover call, you're selling an option.
[SPEAKER_03]: And these become infinitely complex and any layer on the chart where support resistance and that is a big factor when it comes to selecting the strike in the near term.
[SPEAKER_03]: And I would argue that's probably the most important factor if you're selling a cover call.
[SPEAKER_03]: Where is that resistance level is it close to resistance or is it a bit of what weighs away to me.
[SPEAKER_03]: You want to sell it a little bit a strike a little bit below resistance.
[SPEAKER_03]: a little bit below resistance.
[SPEAKER_03]: So you're still getting decent premium, but you're not going to give up too much upside if it does start to test that resistance.
[SPEAKER_03]: That's the way we manage it.
[SPEAKER_03]: This is why we run our equity and complast strategy or cover call strategy.
[SPEAKER_03]: Not only can we pick the whole portfolio, what the portfolio looks like as opposed to just selling cover calls on an index, for example.
[SPEAKER_03]: But we can select different strikes, depending on where bullish on the market or a different name or where specific resistance is.
[SPEAKER_03]: All of these things matter when you're thinking about running a covered call strategy in general.
[SPEAKER_03]: So I hope that helped.
[SPEAKER_03]: But yes, the numbers show you wanna be trading closer.
[SPEAKER_03]: the current price, as well as not very far into the future talking 30 to 60 days up next.
[SPEAKER_03]: Now, with a wonderful show yesterday, we looked into the story behind this headline, simple portfolio checks could save you from costly mistakes.
[SPEAKER_03]: We looked at all the things that you should be doing now that we hit the halfway mark in the year, a little past that to rebalance your portfolio, check it on your ear plan, all those things to make sure you're hitting your particular goals.
[SPEAKER_03]: We also added a listener question on the micro on the technology and you, and if you happen to miss it, go check it out.
[SPEAKER_03]: The best way to get every show is to follow and best talk wherever you get your podcast.
[SPEAKER_03]: Now we have a lot of ground to cover over the next 45 minutes.
[SPEAKER_03]: Here's what I have planned.
[SPEAKER_03]: Our main focus point concerns the story.
[SPEAKER_03]: How to protect your portfolio from inflation's second wave oil prices are resurging.
[SPEAKER_03]: Fed is flagging award-driven inflation risks and consumers are already feeling pain at the pump.
[SPEAKER_03]: So this is raising fears that a second inflation wave could undo the progress made over the past few years.
[SPEAKER_03]: So as a current macro setup, truly comparable to 2022, how is it the same
[SPEAKER_03]: So make changes to the German auto industry because of Chinese automakers.
[SPEAKER_03]: Is this a Harbinger of things to come for maybe domestic automakers?
[SPEAKER_03]: Look at that.
[SPEAKER_03]: Also, rare earths, they see that rare earths are not so rare, they're just challenging
[SPEAKER_03]: Get out.
[SPEAKER_03]: We know they are.
[SPEAKER_03]: It's just expensive to extract.
[SPEAKER_03]: But end of man is going to be very reliant, at least domestically, on industrial execution.
[SPEAKER_03]: Can we rebuild our industrial base if we can't, then there are a small matter near this much.
[SPEAKER_03]: So we'll dig into what that I mean.
[SPEAKER_03]: And then lastly, if we had time, we'll talk about America's first stock bubble.
[SPEAKER_03]: We also have questions in regards to Costco and Arista Networks, and of course questions that came in via the comment section on the investor's YouTube channels.
[SPEAKER_03]: Well, we're going to head into a break.
[SPEAKER_03]: Please never be in calling any time.
[SPEAKER_03]: Leave your question on the investor's voice bank, and if you're listening via our live stream or possibly an aim to help 20 in the Bay Area, you can call right now at 888 at your chart.
[SPEAKER_03]: Hang on, because I'll talk about today's market activity in the next segment.
[SPEAKER_04]: The numbers are in.
[SPEAKER_04]: Total lifetime downloads for the Invest Talk podcast have now surpassed 63 million.
[SPEAKER_04]: So tell your friends when they've got finance and investment questions don't forget to call Invest Talk 888-99 chart.
[SPEAKER_03]: 8999 chart, 89224278.
[SPEAKER_03]: So I 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 overall.
[SPEAKER_03]: It was decidedly positive.
[SPEAKER_03]: You had the NASDAQ nearly 1% S&P up about 38-based disappoints.
[SPEAKER_03]: That was flat though.
[SPEAKER_03]: The main weakness was out of
[SPEAKER_03]: As of late, the big news though was IBM, IBM was down about 25% I've been fairly bearish on IBM for a while, so not shocking here on earnings, poor earnings going forward.
[SPEAKER_03]: really there's just a lagger in so many areas that the technology is is going towards so not shocking on that front you did a bit of a sell off in some of the software names you can get this ping pong back and forth with a hardware name sell off due to
[SPEAKER_03]: Maybe a little bit more pessimism around AI data to center build out, at least the growth of it.
[SPEAKER_03]: Remember, there's a lot of growth now built in.
[SPEAKER_03]: It needs to be sustained.
[SPEAKER_03]: If it's not sustained, you're something to see a retrenchment in a lot of these names.
[SPEAKER_03]: And I think that's the market's trying to figure out.
[SPEAKER_03]: Now, is this consolidation period?
[SPEAKER_03]: Will this be sustained at these levels?
[SPEAKER_03]: Or will it be a considerable pullback?
[SPEAKER_03]: Maybe a minor pullback would probably be OK. And an AI data center can't be expanding,
[SPEAKER_03]: It's still the wild west.
[SPEAKER_03]: It's hard to really gauge where that is headed at the moment, and that's why you're seeing this major volatility.
[SPEAKER_03]: You can super staples also a bit weaker surprisingly because you did have bonds rallying on the fact that CPI came in a bit better than expected.
[SPEAKER_03]: Came in just two basis points.
[SPEAKER_03]: month over month, core CPI, that was, sorry, that 0.02%, consensus was 0.2%.
[SPEAKER_03]: So overall is the first monthly, actually, yes, sorry, it fell 0.02%.
[SPEAKER_03]: month through the client, barely a decline since 2017, but obviously that was after many months of accelerating inflation and really it was on the back of oil prices pulling back considerably, but we've seen so far in July, you're seeing the oil prices bounce back.
[SPEAKER_03]: So to me, this is kind of a one-off, but cooler inflation did help Fed expectations for rate hikes.
[SPEAKER_03]: Now,
[SPEAKER_03]: The expectation is about 30 basis points of hikes.
[SPEAKER_03]: So maybe one, maybe two hikes between now and your end versus before.
[SPEAKER_03]: It was about 40 basis points.
[SPEAKER_03]: You're talking about probably two rate hikes between now and your end.
[SPEAKER_03]: So not shocking.
[SPEAKER_03]: On that front, that's why you saw rates fall treasures rally.
[SPEAKER_03]: It fell more though on the front end of the curve, which is up note.
[SPEAKER_03]: So you got a steepening of yield curve.
[SPEAKER_03]: Dullion X is down 0.2%, gold finished up 1.6 silver up 2% Bitcoin up 3.9%, WTI up 1.5% on the day though off its earlier highs.
[SPEAKER_03]: And it really is around with going the Middle East.
[SPEAKER_03]: The kinetic warfare looks to be muted for now, but we've seen this kind of tale before of the past three or four months.
[SPEAKER_03]: you get some escalation over the weekend, and then it comes down by the weekend.
[SPEAKER_03]: You know, it's pretty clear that the White House wants to avoid major market disruptions around what's going on in the Middle East.
[SPEAKER_03]: Deutsche Bank says that they don't see really a sustained market reaction unless oil gets back above one and a barrel, which frankly makes sense.
[SPEAKER_03]: What else?
[SPEAKER_03]: I think that was about it for the day.
[SPEAKER_03]: Remember, we are in the midst of opx week, which there's a lot of volatility around that week.
[SPEAKER_03]: And I think you'll get a little bit more clarity around trends in the market once we get through this week and into next week.
[SPEAKER_03]: So, that's what I'm expecting.
[SPEAKER_03]: Specta lot of choppiness throughout the week.
[SPEAKER_03]: Let's go answer.
[SPEAKER_03]: A YouTube question, Iraq don says SPGI seems to be an elite stock, but it's down from 500 partially.
[SPEAKER_03]: I driven what are your thoughts?
[SPEAKER_03]: Yeah, we actually own S&P global.
[SPEAKER_03]: We had been buying it back above when it was down, kind of chopping in the high 300s.
[SPEAKER_03]: And now it's at about three, a 438.
[SPEAKER_03]: What's interesting is, even though software and it is, it has sold off because of part of their business is a software, I think it was Mark, I've tried to remember the markets, one of the names of the software and the software name that they bought, I can't remember if I top my head, but they, I think it's just called market.
[SPEAKER_03]: Now they think about it.
[SPEAKER_03]: Uh, that was a worry that their bad business would be disrupted because of AI research, but clearly that hasn't happened so far, earnings are expected to still be up 10% this year, 12% next year to an all-time high up $20.81, they also rate bonds and so many of them
[SPEAKER_03]: They just spun off a piece around the auto industry.
[SPEAKER_03]: So kind of a non-core business.
[SPEAKER_03]: So I think that will focus down a little bit better.
[SPEAKER_03]: But overall, I do think this is a good stocked own and a good buying opportunity after the pullback over the past year or so.
[SPEAKER_03]: In our 24-7 Air Vestock, 24-7 Invest Talk Voice Bank never closes, so you can leave your finance and invest in questions anytime on 80 day and any chart, and I work continues after this break.
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[SPEAKER_03]: Let's talk a little bit about the auto industry.
[SPEAKER_03]: Not just here in the US because it hasn't really impacted us too much.
[SPEAKER_03]: But what's going on in China, or at least the Chinese automakers, is starting to have a large impact across the world.
[SPEAKER_03]: They're pumping out very high quality, very low cost EVs.
[SPEAKER_03]: Talking about companies like BYD, Sherry, and other automakers, they toped the European market share at 10% for the first time.
[SPEAKER_03]: So they're encroaching on European other sales.
[SPEAKER_03]: And that is being felt by all the major European brands, which is going to have a large
[SPEAKER_03]: Volkswagen is set to cut about 100,000 jobs over the coming years and end production at four different plants in Germany.
[SPEAKER_03]: The MW recently said they're going to spend about a billion euros in restructuring costs that could lead to about 10,000 jobs or 15% of those job losses and a 15% reduction in European car production overall, think about that.
[SPEAKER_03]: And this is after a lot of these automakers have already streamed line their production.
[SPEAKER_03]: So this is forcing German automakers to re-trench even more, even with the union pressures.
[SPEAKER_03]: In May Volkswagen Mercedes-Benz Stellantis and Renault, all lost market share of new cars in Europe.
[SPEAKER_03]: despite the entire new car marketing Europe uh, being up 4% year of year because all of that and then some went to those Chinese automakers.
[SPEAKER_03]: And this is not just something that is going to be confined to Germany.
[SPEAKER_03]: This is likely to spread around the world.
[SPEAKER_03]: You know what's insulating us is that we, we aren't allowing the Chinese automakers here in the U.S.
[SPEAKER_03]: And even the companies that are doing well like BMW, being the sole European automaker that increase sales in Europe in May.
[SPEAKER_03]: But they even flagged profit profits, saying that higher costs are cutting into overall profits, mainly due to downturn in their sales in China because they're being obviously
[SPEAKER_03]: And of course, the impact of the Iran war, right, making impact, input cost, go up.
[SPEAKER_03]: So when you're thinking about investing in the out industry, understand that these dynamics are at play, and it very well could start spreading through other industries as well, but at least in the auto industry, very competitive space and likely this won't impact their domestic
[SPEAKER_03]: Let's keep things moving and pivot to the best black voice bank.
[SPEAKER_03]: You know, the number it's 80, 90, nine chart.
[SPEAKER_08]: Hi, this call is for Justin or Luke.
[SPEAKER_08]: I had a question regarding that company, a Rista, ticker symbol A and E T. I've held the stock since March of 2024.
[SPEAKER_08]: And I'm up about 40% on the company was just curious your take on the company and if you think I should continue to hold or if I should start taking some of my my gains and start to look to reinvest those gains elsewhere.
[SPEAKER_08]: Love what you guys do on the show and I'll be looking forward to hearing your answer on the podcast.
[SPEAKER_08]: Thanks.
[SPEAKER_03]: Yeah, Rista networks.
[SPEAKER_03]: What they do is they develop market and sell cloud networking solutions.
[SPEAKER_03]: Network applications, gigabit, Ethernet switches, routing platforms.
[SPEAKER_03]: So a lot of what they make goes into these AI data centers.
[SPEAKER_03]: Profitability was turned out to be on 31% very, very solid.
[SPEAKER_03]: Now it is $182 stocks, so you're talking about a mid 40s multiple, not cheap, but it's great business.
[SPEAKER_03]: It's also a business that has net cash in its balance sheet, so you can discount that P ratio a little bit, but still it's on the expensive side.
[SPEAKER_03]: which is on the high end of a range.
[SPEAKER_03]: So this is an area honestly, I would probably trim it, but I wouldn't be outright selling it.
[SPEAKER_03]: Because the technicals are fine, the relative strength is good, around 86.
[SPEAKER_03]: It's business is solid.
[SPEAKER_03]: Analysts are upgrading earnings for this year and next year, which is always a good sign.
[SPEAKER_03]: Well, it's again, you're set a high multiple.
[SPEAKER_03]: which means a lot of this positivity is already priced in.
[SPEAKER_03]: Now that could be sustained, it could be increased, et cetera, and the stock could go higher, that's certainly true.
[SPEAKER_03]: But to me, this is an area you would probably want to rebalance and just reduce your position, don't sell it.
[SPEAKER_03]: Next in Best Talk, we'll look into this story.
[SPEAKER_03]: Retail Investors Chase Shiny Objects while ignoring the S&P.
[SPEAKER_03]: These shows retail investors are piling into speculative assets and individual momentum plays while largely ignoring the broad index exposure.
[SPEAKER_03]: In the S&P, this is a behavioral pattern.
[SPEAKER_03]: This directly signals late, cycle, risk taking.
[SPEAKER_03]: So we'll explore this psychological.
[SPEAKER_03]: Psychology behind this trend and why, chasing Shiny Objects almost always ends badly for individual investors.
[SPEAKER_03]: We'll talk about that tomorrow, but give me a call now at 8.909.
[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]: 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, 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-Chark.
[SPEAKER_03]: We're going to go talk to John in St. Louis, Missouri.
[SPEAKER_03]: It wants to talk about relics, RLX, correct?
[SPEAKER_01]: Yes.
[SPEAKER_03]: OK. What do you mean?
[SPEAKER_01]: I mean, I mean, I mean, it was kind of peak my interest.
[SPEAKER_01]: I understand it kind of got beaten down with the software, crash, and some AI fears.
[SPEAKER_01]: They have a lot of data sets for a long period of time, and it kind of gives them a wide note with the amount of data they have for various reasons, but insurance underwriting, law firms using their data for this and that.
[SPEAKER_01]: And it just seemed like it was at a decent price right now from the valuations I was,
[SPEAKER_01]: researching.
[SPEAKER_01]: So I'll just call on to get your opinion of it.
[SPEAKER_03]: Yeah, I mean, this software enables professional researchers, legal teams, and businesses to make informed decisions, and improve operational efficiency.
[SPEAKER_03]: And I think, oh, you kind of hit on the head there where they have a lot of data.
[SPEAKER_03]: And I think more and more AI is going to be very reliant on datasets that can't just be mine from the internet.
[SPEAKER_03]: So if they have that, and to me, that is a competitive advantage, I do generally like the software space right now, especially those that can bring unique data sets to their end user, where they can't, like you said, just go and subscribe to chatGPT or cloud or whatever, and they'll be able to go find that data.
[SPEAKER_03]: So I like what you're looking at,
[SPEAKER_03]: look at the technicals.
[SPEAKER_03]: The weekly is still certainly in a downtrend.
[SPEAKER_03]: It hasn't made a new low since February.
[SPEAKER_03]: That's a good thing.
[SPEAKER_03]: So it's trying to gain a bit of momentum.
[SPEAKER_03]: Mark have to still about 60 billion.
[SPEAKER_03]: You look here.
[SPEAKER_03]: Yeah, I mean earnings next year is supposed to be two dollars and nine cents that the earnings for this year and next year are coming down.
[SPEAKER_03]: That's a bit of a worry.
[SPEAKER_03]: But about a midteam's multiple.
[SPEAKER_03]: I think I'm okay paying that.
[SPEAKER_03]: I like also
[SPEAKER_03]: some foreign exposures, this is at the UK.
[SPEAKER_03]: So I'm actually going to give this one a thumbs up from a risk-reward standpoint.
[SPEAKER_03]: Understand that it is pretty high risk because there's still a lot of market positioning around whether or not these type of businesses are going to be disrupted.
[SPEAKER_03]: So if you feel confident that it won't, then I do think this is a good risk-reverse reward at these levels.
[SPEAKER_01]: Awesome, thanks, Justin.
[SPEAKER_03]: Nevermind, thanks for the call.
[SPEAKER_03]: Now I focus point concerns how to protect your portfolio from inflation's second wave.
[SPEAKER_03]: This is something that happened in the 70s.
[SPEAKER_03]: You had the initial inflation wave of the early 70s and then accelerated into the late 70s and
[SPEAKER_03]: Booker raised rates dramatically, and that pushed inflation down, and then we went through a long period of kind of disinflation really driven by industrialization of Japan, and then China, and all of that.
[SPEAKER_03]: But then the less we are in is very similar area, era, and there are some similarities and differences to what we saw in 2022 versus today.
[SPEAKER_03]: and obviously the post-pandemic supply chain disruptions that kind of persisted for a number of, for a couple of years.
[SPEAKER_03]: Today, it's Middle East tension, Middle East War.
[SPEAKER_03]: Still the Russia Ukraine war, it's not quite as, say, intense as it was, or at least it isn't headlines.
[SPEAKER_03]: But the supply chains are largely moving.
[SPEAKER_03]: It's more energy-specific commodity and chemical specific type of bottlenecks versus broad supply chain disruptions.
[SPEAKER_03]: So that makes this surge resurgence in inflation a bit more muted because it isn't as broad-based.
[SPEAKER_03]: Rates in it were near zero, so gave the fat a lot of leeway to raise rates to bring inflation down the drain liquidity.
[SPEAKER_03]: Right now, you already have relatively elevated interest rates, even though they cut rates last year, probably a mistake.
[SPEAKER_03]: But that means there's less room for them to raise rates than you had on top of that.
[SPEAKER_03]: The deficit that remains very large and our debt, we know remains very large.
[SPEAKER_03]: So it's going to be very difficult for, I think, the Fed to really combat this inflation surge.
[SPEAKER_03]: So in my mind, actually, this is likely to be a more a lower level of inflation than we saw at peak in 2022 when it was, you know, eight, nine percent depending on what.
[SPEAKER_03]: What a measure you're looking at, but to me, it's probably going to be more persistent, meaning three, four, five, maybe even six percent for a longer period of time because especially with Kevin Worsh, somebody who is pointed by President Trump that, you know, President Trump wants lower rates, he's going to be more hesitant to raise rates.
[SPEAKER_03]: And if he does, it'll probably won't be at the pace that we saw in 2022.
[SPEAKER_03]: So overall, supply chains are broadly functioning, but there are targeted choke points versus 222s, broadly broken, supply chain.
[SPEAKER_03]: It has this manifest in portfolios or how it should you think about your portfolio in context.
[SPEAKER_03]: Because the end results, very well could be similar, but probably not to the same magnitude.
[SPEAKER_03]: Number one is longer duration bonds remain a big risk.
[SPEAKER_03]: We saw the 30 year treasury drop considerably from early, called late 2021 into late 2022.
[SPEAKER_03]: So for about a year, there was a really, really intense broad-based sell-up.
[SPEAKER_03]: And that could certainly happen again.
[SPEAKER_03]: So when you're thinking about bond exposure, you want to make sure that you have low duration risk, but you probably want to take some credit risk.
[SPEAKER_03]: Maybe not extreme credit risk, but some credit risk, especially in the public credit markets.
[SPEAKER_03]: Remember TLT went from a very high of $179 TLT for having out there, that's the 30 year treasury on DTF.
[SPEAKER_03]: So this is low yielding, very long duration that the, probably one of the riskiest duration trades you can make by owning TLT.
[SPEAKER_03]: And it peaked in actually March of 2020.
[SPEAKER_03]: It had a lower high in December of 2021.
[SPEAKER_03]: So that's really when things started to change in earnest to be honest.
[SPEAKER_03]: That's when you had the waterfall through Q1 and Q2 where TLT went from about 155 in December and by the fall of 2022, it was all way down to a low 91.
[SPEAKER_03]: Which, it didn't say, I guess.
[SPEAKER_03]: Yeah, that's over 30% drop.
[SPEAKER_03]: For something that's supposed to be safe, these are treasuries.
[SPEAKER_03]: And really ever since TLT has been just grinding a bit lower now or 84.
[SPEAKER_03]: But it shows you you do not want to be owning longer duration assets.
[SPEAKER_03]: Speaking of long-duration assets, usually high-growth loss-making companies, they tend to suffer.
[SPEAKER_03]: That's why you saw all of the arc funds do terribly in 2022.
[SPEAKER_03]: And as that goes down 33 percent in that time, what's saving the market right now is or at least that area of the market.
[SPEAKER_03]: is really AI data structure.
[SPEAKER_03]: Build out that's pushing earnings higher in the short term, but draining the balance sheets in the cash flows of the major Mac 7 names.
[SPEAKER_03]: Without that, if you seem to see rates rise, you're likely to see higher quality names with better balance sheets consist of earnings and cash flows that are being recycled as thought by the acts and dividends,
[SPEAKER_03]: and comes with competitive durable advantages, those are the ones that are gonna weather higher rate environments and higher inflationary environments.
[SPEAKER_03]: And then keep your cash rates elevated.
[SPEAKER_03]: In high yield savings count, short-term treasuries, that offer attractive yields, especially if rates are gonna probably stay higher.
[SPEAKER_03]: But you wanna view, ready when there is a significant sell-off?
[SPEAKER_03]: Maybe due to,
[SPEAKER_03]: The draining of liquidity from a Kevin Worsh, for example, where you can pick up assets.
[SPEAKER_03]: Before the market or the government comes in and tries to estimate which they will, we know they will.
[SPEAKER_03]: Then we talk to the top of the show, how CPI will fail a little bit.
[SPEAKER_03]: We know it's likely to be short-lived because now we're seeing as the war kind of reignited over the past week, freight costs shipping costs are going up.
[SPEAKER_03]: So future inflation readings are likely to surprise the upside because these higher shipping costs, these higher energy costs are now starting to feed into core goods that are on the shelf.
[SPEAKER_03]: And then what are the best type of inflation hedges we know from a sector perspective?
[SPEAKER_03]: There are about three or four sectors on the equity side that tend to do well in inflation environment.
[SPEAKER_03]: You're talking REITs, you're talking materials, energy, and actually financials.
[SPEAKER_03]: Why?
[SPEAKER_03]: Because rates go up.
[SPEAKER_03]: They can lend at higher rates, they're managed with smarts and send it go up.
[SPEAKER_03]: Those are the four sectors that tend to do well in inflationary environment.
[SPEAKER_03]: The ones that don't do well, typically, technology, because they're growth yearn-eems.
[SPEAKER_03]: Consumer staples?
[SPEAKER_03]: Utilities, because they tend to need bond proxies, same with consumer staples.
[SPEAKER_03]: They also have input costs that go up from workers to shipping costs, et cetera.
[SPEAKER_03]: But then healthcare, also kind of bond proxies.
[SPEAKER_03]: So you want to own commodities in general or be overweight them as well as potentially tips if you're investing in bonds.
[SPEAKER_03]: That's where you want to be at least safe bonds.
[SPEAKER_03]: You want to be in tips versus just straight up treasuries.
[SPEAKER_03]: Now the investment lock voice bank never closes so your finance and investment questions keep coming.
[SPEAKER_03]: This next one came in earlier from listener in New York.
[SPEAKER_07]: Hi there, Duncan Ford's from New York.
[SPEAKER_07]: Thank you for all that you do.
[SPEAKER_07]: I'm calling about stock ticker, COS, T, Costco.
[SPEAKER_07]: I'm looking into getting entry point for this for a couple of reasons one, and you can just give me feedback if that's methodology makes sense.
[SPEAKER_07]: But without getting changing with the cycle of AI chips, I'm looking to get into consumer.
[SPEAKER_07]: Stables to looking at the technicals.
[SPEAKER_07]: It is dropping like a falling knife at past by its 50, 100 and 200-day moving average.
[SPEAKER_07]: So I know that it was priced for a perfection.
[SPEAKER_07]: From my reading of technical analysis, I was thinking between 840, 877 to enter this stock, but I would like your technical analysis so I'm going to get in.
[SPEAKER_07]: Even if that method allows you to make sense.
[SPEAKER_07]: Thank you very much.
[SPEAKER_07]: Bye.
[SPEAKER_03]: All right, looking at Costco, I don't think I need to tell you a bit of a Costco does.
[SPEAKER_03]: It's a name that we sell in for clients, but we sold it somewhere on the $1,000 for shared.
[SPEAKER_03]: Now we're at 921.
[SPEAKER_03]: It's certainly been struggling kind of over the past year, not because the business struggle is a good example of what I say with rising a trade environment, higher inflation, these type of businesses tend to be reevalued lower.
[SPEAKER_03]: Multiple contract.
[SPEAKER_03]: Like I said, it's not the business.
[SPEAKER_03]: Cause this year's the earnings since we have 13% than another 10% next year to an all-time I have $22.60.
[SPEAKER_03]: It's cents, however, still trade it today, and $921.
[SPEAKER_03]: So even based on four looking earnings, you're talking a mid-40s multiple for a retailer, doesn't make sense.
[SPEAKER_03]: And once again, we like the business.
[SPEAKER_03]: We like the company.
[SPEAKER_03]: We bought it a long time ago.
[SPEAKER_03]: We did very well, but the valuation just got
[SPEAKER_03]: at a hand.
[SPEAKER_03]: Enterprise value E-B is 28, which is on the high size, especially for a name that doesn't have a lot of growth.
[SPEAKER_03]: Last quarter, revenue growth and earnings growth were 9%, I'm sorry, earnings growth was 12, revenue growth was 7, that was last quarter.
[SPEAKER_03]: Yeah, this upcoming quarter, this will be 10 in 12.
[SPEAKER_03]: Okay, so it's decent.
[SPEAKER_03]: Now, it does have good cash flow, and it's a great balance sheet.
[SPEAKER_03]: It's buying back shares, but once again, it's just too expensive.
[SPEAKER_03]: So, where's that?
[SPEAKER_03]: By point, six hundred and seventy one dollars.
[SPEAKER_03]: Now, I do think that 750 is a good support level, but I think the screening bias, 671 dollars.
[SPEAKER_03]: That would bring it back into a reasonable multiple.
[SPEAKER_03]: I'll pay the mid to high 20s from an earnings perspective, but not 45.
[SPEAKER_03]: I'm sorry, not for Costco.
[SPEAKER_03]: Thank you for the question, Nicole.
[SPEAKER_03]: The list of S. Docum, Justin Klein, we have one goal.
[SPEAKER_03]: Each and every week, they help you achieve your own version of French Afrique.
[SPEAKER_03]: I'm going to work with you after this final break.
[SPEAKER_03]: Let's get to questions in now at 8-8-9-9-Charge.
[SPEAKER_02]: Invest talk is ready 24-7 for your finance and investment questions.
[SPEAKER_06]: I'm hoping you'll give me your cake on Oremat Technologies, ORA.
[SPEAKER_09]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?
[SPEAKER_02]: Don't forget to call.
[SPEAKER_02]: Invest talk, 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 Investalk.com.
[SPEAKER_00]: Hi, Investalk.
[SPEAKER_00]: I was calling to get your opinion on a stock.
[SPEAKER_00]: I'm looking at it's the Altera group.
[SPEAKER_00]: The symbol is M-O.
[SPEAKER_00]: And I wanted to see what would be a good entry point on this.
[SPEAKER_00]: I've interested in the dividend.
[SPEAKER_00]: Should I wait for a pullback or just you think it'd be good to get in now?
[SPEAKER_00]: I'm also comparing the stop to Philip Morris, the symbol there is PM, what would you think with the better income for dividend?
[SPEAKER_00]: I will be listening to the answer on your podcast.
[SPEAKER_00]: Thanks again for your program.
[SPEAKER_03]: Thank you for the call.
[SPEAKER_03]: This is a great question.
[SPEAKER_03]: I love this question because it's the perfect example.
[SPEAKER_03]: of when investors make a mistake that when they only focus on the yield, the dividend yield.
[SPEAKER_03]: We own Philip Morris for clients.
[SPEAKER_03]: We've, and that's PM, okay.
[SPEAKER_03]: That's Philip Morris International, they think of the Philip Morris brand outside of the
[SPEAKER_03]: Philip Morris International, though, they are the leader kind of globally in smokeless tobacco alternatives.
[SPEAKER_03]: Now, their yield is, living yield on Philip Morris, sorry, I'll show you a group is, where is that?
[SPEAKER_03]: 6%.
[SPEAKER_03]: For Philip Morris, it is 3.3.
[SPEAKER_03]: So the average person is going to say, well, I just, I want the yield, I want, I want, I want all
[SPEAKER_03]: But then you go and look at the returns.
[SPEAKER_03]: Trailing total returns.
[SPEAKER_03]: It's includes dividends, includes dividends, okay?
[SPEAKER_03]: Over the last three years, fill a Mars total return is 25% annually.
[SPEAKER_03]: Altria is 21.9, despite the better,
[SPEAKER_03]: Over less five years, Altia, 13.5% Philip Morris International, 16.17%.
[SPEAKER_03]: Over two and a half percent, annualized better returns per year of last five years.
[SPEAKER_03]: Go back 10 years, Philip Morris International, 8.3 versus 4.3 for Altia Group.
[SPEAKER_03]: Nearly doubled the return over the last 10 years.
[SPEAKER_03]: The juxtloser goes to show you.
[SPEAKER_03]: It's not just about the dividend, it's about the quality of the business and the earnings growth.
[SPEAKER_03]: All trades earnings will be up 5% this year and 3% next year.
[SPEAKER_03]: Fill it Morris, 11% this year, 9% next year.
[SPEAKER_03]: you're getting a better business with Philip Morris.
[SPEAKER_03]: That's why we own it.
[SPEAKER_03]: We own it over, I'll show you a group.
[SPEAKER_03]: So if you want the dividend share, go for it.
[SPEAKER_03]: If you want better returns, Philip Morris.
[SPEAKER_03]: Lastly, let's talk about rare earths and domestic industrial supply chains.
[SPEAKER_03]: This is a big factor in whether or not
[SPEAKER_03]: Investing in Rare Earth is going to be a good investment of the long term.
[SPEAKER_03]: And it's about developing the industrial supply chain here in the United States.
[SPEAKER_03]: It's not about one-off projects.
[SPEAKER_03]: It's about an industrial ecosystem that needs to be built up, but it's not just about mining of both rare earths and traditional materials, but it's not processing those materials.
[SPEAKER_03]: Creating metals and alloys,
[SPEAKER_03]: getting financing and permits and logistics, workforce development.
[SPEAKER_03]: All of this is what is needed to really reshore manufacturing in a sustainable way, as well as get the contract that will create the contracts for more development on the mining side from rare earths, like I said, to traditional industrial materials, like copper, like zinc, like nickel, et cetera.
[SPEAKER_03]: This is what China's done.
[SPEAKER_03]: This is how you can be with China.
[SPEAKER_03]: They have an integrated industrial model, and if that's what we are, if you want to see manufacturing research in the United States, that's what you're going to need to see.
[SPEAKER_03]: So when you're thinking about investing in any stocks relating to on-choring manufacturing, this is how you need to think about the long-term growth of the industry.
[SPEAKER_03]: I'm Justin Klein, reminding you of KPP Financial's parallel investing will make a trade for our clients, make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatments.
[SPEAKER_03]: We invest right alongside our clients, we show the same risk and potential for success and you can learn more.
[SPEAKER_03]: Over at investtalk.com, please tell your friends and family about a free podcast downloads, which you find any time that iTunes or Spotify and be sure to rate their review on iTunes as well.
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[SPEAKER_02]: It's important for the listener to understand that not all comments made will apply to them.
[SPEAKER_02]: Specifically, nothing sets shall be taken to be investment advice.
[SPEAKER_02]: or shell statements on this program be considered and offered to buy or sell security.
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