[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 Wednesday July 29th, 2026 edition, and it's FED Day, a very interesting FED Day, a lot to talk about, which I'll get into my market recap, because
[SPEAKER_03]: There was a lot of volatility and a lot to take away from that market reaction.
[SPEAKER_03]: Various types of wave, new freight, fed share, we had the, is the second meeting, the first one I think was more of a feeling out, and now it's like, okay, we, we know the drill, at least the market thought they did, and then he had an answer that was not
[SPEAKER_03]: In my mind, up to par for the market, and that's what you saw a major reaction.
[SPEAKER_03]: So we'll talk about that in a little bit, but we're gonna talk about a lot on today's show, mainly whatever's on your mind.
[SPEAKER_03]: I have topics to bring forth.
[SPEAKER_03]: I think are important, but ultimately, this show is not about me, this show is about you.
[SPEAKER_03]: I'm just here, the serve you, give you,
[SPEAKER_03]: My answer is my perspective based on 25 plus years in the investment experience.
[SPEAKER_03]: I have a ton of data sitting in front of me.
[SPEAKER_03]: I mean, it's, it's, it's, my whole, my goal for every show is for you to come out of it with just one tidbit, one little thing, that can help you come with better investor.
[SPEAKER_03]: And then tomorrow, hopefully you get more and more thing.
[SPEAKER_03]: And then another thing, and it stacks on each other.
[SPEAKER_03]: You know how to avoid the pitfalls and capitalize opportunities.
[SPEAKER_03]: So that's what this show is about.
[SPEAKER_03]: And in just a bit, we will talk about today's Mark performance and run down the show topics.
[SPEAKER_03]: But as usual, we'll tackle this first call a question now.
[SPEAKER_02]: Hello, this is David from San Jose, calling the Garden of Company Brookfield Corporation, symbol BN, looking for a good entry point to buy for a long-term investment.
[SPEAKER_02]: Thank you.
[SPEAKER_03]: A Brookfield Corp Management, a public and private investment products and services operates through a few business segments, asset management, well solution, real power, infrastructure, private equity, private real estate, etc.
[SPEAKER_03]: This is an interesting one because it's one of those names that has a lot of different exposures.
[SPEAKER_03]: Talking about private equity private credit, we know that area is struggling, but then when you're talking about infrastructure, that area is booming, renewable power and energy solutions, those are doing well and in high demand.
[SPEAKER_03]: So there's kind of this push and pull here.
[SPEAKER_03]: Now what I would say is, I would want something that is more targeted.
[SPEAKER_03]: And if I remember correctly, there is a Brookfields, there's BAM, and then there's BN, which is one's Brookfield asset management, that one I believe, I remember the difference here.
[SPEAKER_03]: be uncertainly stronger.
[SPEAKER_03]: I'll say that from a technical perspective.
[SPEAKER_03]: It's dividend yield is, where is that?
[SPEAKER_03]: 0.6% percent, it's not a big dividend yield.
[SPEAKER_03]: Orning so speed up, 22% this year, 24% next year.
[SPEAKER_03]: Once again, my issue is that private equity and private credit lens.
[SPEAKER_03]: Now I do like this better than Brookfield asset management, which has a bit of leverage, higher dividend, but just overall not as strong of a business as Brookfield.
[SPEAKER_03]: So similar companies, kind of sister companies, but if I'm gonna pick one or the other, I'm gonna go with Brooke Field.
[SPEAKER_03]: And I would probably be patient because it is starting to weaken a bit.
[SPEAKER_03]: And frankly, now that I look at it, it's just kind of a, just because they're just technicals.
[SPEAKER_03]: And I just don't want to have exposure to probably not clean, probably, credit.
[SPEAKER_03]: David, a great show yesterday, we're looking at the story.
[SPEAKER_03]: Have a bon market outlook for 2026.
[SPEAKER_03]: is evolving with treasure yields and you're multi your highs means for your portfolio and it's never more important than what happened in the market today.
[SPEAKER_03]: So Luke broke that down.
[SPEAKER_03]: He also answered questions about energy transfer.
[SPEAKER_03]: If you haven't missed a go check it out, that's what every show is to follow in best talk wherever you get your podcasts now.
[SPEAKER_03]: A lot of ground to cover over the next 45 minutes or so and here is what we have permitted time permitted.
[SPEAKER_03]: I made a focus about focus point is about the dollar, kind of a corollary to what's going on in the, an interesting market.
[SPEAKER_03]: The fed meeting today, it's a bit of a reversal, but overall the dollar has been strong.
[SPEAKER_03]: So what does that mean for your what does that mean for your portfolio, your strategy, not just today, but going forward once again, bringing one of those tidbits back.
[SPEAKER_03]: So you can to fully understand how foreign equity or even foreign bond exposure, foreign currency exposure in general fits in your portfolio or maybe doesn't.
[SPEAKER_03]: So we'll look at that.
[SPEAKER_03]: Also, for years, there was a formula that pushed textdocs higher, and that was good businesses, great businesses.
[SPEAKER_03]: Solid earnings growth, great cash flow, they would pay their shareholders in both salary and especially stock.
[SPEAKER_03]: but they were buying back that stock and then some with all of that free cash flow.
[SPEAKER_03]: Now in the age of AI, that cash flow is going elsewhere and now the delusion of paying employees with stock options is starting to come to the forefront and how this is going to be a drag over time.
[SPEAKER_03]: It has been a drag.
[SPEAKER_03]: You just haven't seen it because it's been sterilized through buybacks and so we're gonna look at that topic
[SPEAKER_03]: If you're trying to understand whether the the market is pricing the your stock appropriately then hedge funds demand for collateral is increasing this is one of the reasons why you're seeing a strong sell off in the tech sector.
[SPEAKER_03]: These companies are these hedge funds are losing their support on Wall Street, they're asking for collateral.
[SPEAKER_03]: So, what does that mean for the near-term outlook for the market?
[SPEAKER_03]: And of course, we have voice bank questions, one is on trend following, is on Coca-Cola.
[SPEAKER_03]: We also have questions that came in via the comment section on the best talk YouTube channel, as well.
[SPEAKER_03]: But most importantly, we're going to have to break, and we want to hear from you.
[SPEAKER_03]: You can leave your question on the best talk voice bank, or if you're listening via our live stream, or possibly an aim to tell 20 in the Bay Area you can call right now, as always the number is 88899 chart that's 888992 4278.
[SPEAKER_03]: Up next, I will comment on today's market activity.
[SPEAKER_04]: It's a official.
[SPEAKER_04]: Total lifetime downloads for the Invest Talk podcast are now more than 63 million.
[SPEAKER_04]: Justin Klein is here now, taking your calls live.
[SPEAKER_04]: Invest Talk, 888-99 chart.
[SPEAKER_04]: What a fed day we just had.
[SPEAKER_03]: The market came into today.
[SPEAKER_03]: It's not really sure what was going to happen.
[SPEAKER_03]: The odds were about a 60, 40, 60% chance that they would not raise rates.
[SPEAKER_03]: And they didn't.
[SPEAKER_03]: So you'd think that was foolish.
[SPEAKER_03]: A more accommodative Fed lower interest rates, at least for now.
[SPEAKER_03]: And therefore, the market rallied, and it did rally in the short term.
[SPEAKER_03]: But we had a reversal late in the day.
[SPEAKER_03]: Why did it reverse?
[SPEAKER_03]: One of the big reasons for that is because there was a press conference.
[SPEAKER_03]: We have a new Fed chair, Kevin Worsh, came to the podium and said what's a quite bunch of questions, but the market really reacted when a reporter asked, what is your preferred Fed inflation target?
[SPEAKER_03]: You said that they're not changing the inflation target of 2%, but then again,
[SPEAKER_03]: What do you use to say is inflation at 2%, there's a lot of different inflation numbers, from CPI to PPI to CorePCE, et cetera.
[SPEAKER_03]: There's a million, and they're all kind of ranging from two and a half to four percent right now.
[SPEAKER_03]: Clearly all of them are above two.
[SPEAKER_03]: Then he also said he was strong on it.
[SPEAKER_03]: Well, if you're strong on it, it's not a weak target.
[SPEAKER_03]: Then you clearly should be raising rates, right?
[SPEAKER_03]: Because by any measure you want to pick, you're above it.
[SPEAKER_03]: Care too much about.
[SPEAKER_03]: It was more that he gave a very wishy-washy answer with no clear conclusion.
[SPEAKER_03]: There's no signal to the market now that the Fed is guided by this particular number.
[SPEAKER_03]: We always have the headline CPI, but the Fed really hasn't looked at that.
[SPEAKER_03]: They typically prefer the PCE indicator, remember correctly.
[SPEAKER_03]: But the new Fred chair says,
[SPEAKER_03]: And what was interesting is that the 10 year in the 30 year treasury rate turned right back around.
[SPEAKER_03]: They started to drop and then they started to rise very fast.
[SPEAKER_03]: And the 30 year has now closed at the highest rate since before the financial crisis.
[SPEAKER_03]: About 20 years, think about that.
[SPEAKER_03]: Two decades high in the 30 year treasury rate.
[SPEAKER_03]: This has nothing to do with the economy.
[SPEAKER_03]: This is the market, really not having a lot of faith, but this Fed is going to quote unquote reform itself, which Kevin Worst wants to do in a way that we'll make the market feel comfortable about inflation going forward.
[SPEAKER_03]: That's to me the clear signal.
[SPEAKER_03]: Now is one day, maybe they signal behind the scene, something different,
[SPEAKER_03]: They clarify their statement, whatever that might be, who knows.
[SPEAKER_03]: Usually these type of announcements, same with earnings announcements, big market moving events, tend to take a few days for the market to settle out as to what they really feel about this new bit of information.
[SPEAKER_03]: But on the last, the market sold off considerably.
[SPEAKER_03]: You had the S&P down one and a half percent.
[SPEAKER_03]: They dial down over to the NASDAQ on one
[SPEAKER_03]: Russell 2000 though, only down 1.6, so that actually did fairly well, especially compared to the tech.
[SPEAKER_03]: You could continue big sell-offs in the air hardware names, which makes a lot of sense, even if there's a re-adjustment of expectations around CapExpending from the Mac 7 or the Hyperscalers.
[SPEAKER_03]: It also means a higher cost of capital, so whether you're a Hyperscalor or you're a mid-tier guy or a smaller guy,
[SPEAKER_03]: The cost of financing these projects are going up, which means potentially less demand for chips and memory and everything within that tech stack.
[SPEAKER_03]: That's where my Chrome is down 10% of the day.
[SPEAKER_03]: Intel down five, envided on three and a half, Tesla down three.
[SPEAKER_03]: Even the name's a caterpillar down seven percent.
[SPEAKER_03]: Anything related to AI data infrastructure, sold off.
[SPEAKER_03]: We were talking about this internally,
[SPEAKER_03]: was we're not that far from the peak in these days.
[SPEAKER_03]: And if you look at various analogs through history, usually it's at least at six month, probably nine month to maybe even a year plus cell-off.
[SPEAKER_03]: Use 2022 as an analog, the peak was really right at the end of the 2021 and then it was sold off into the fall of 2022 with the Nathuk down being down 33% that year.
[SPEAKER_03]: So these things often take a month or so.
[SPEAKER_03]: Diamond, the year or so, to reverse completely.
[SPEAKER_03]: Dollar Knicks is down half a percent.
[SPEAKER_03]: Gold finished down point one percent.
[SPEAKER_03]: So definitely held up, even though the market reverse silver up one percent on the day.
[SPEAKER_03]: Bitcoin up point four percent, WTI up six point six percent as Middle East tensions continue to mount.
[SPEAKER_03]: So that was the market today.
[SPEAKER_03]: A lot of red, still some green, but a lot of red, as
[SPEAKER_03]: The new Fed Chair is not well-received by the market as a whole.
[SPEAKER_04]: Invest talk, 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 anytime on 888-99 chart.
[SPEAKER_03]: of the company, especially when it comes to equity delusion of new stock issued, if they're going to do it, it needs to be to create value for shareholders.
[SPEAKER_03]: Even though we're getting deluded, right?
[SPEAKER_03]: The return should be higher than the cost of that equity.
[SPEAKER_03]: And over the past couple decades, companies have gotten really too comfortable freely issuing stock base pay.
[SPEAKER_03]: But they didn't matter for a long period of time because, as they said at the top of the show, they were making a buttload of money and they were buying back that stock and then there's a counting adjustments that are made and that cost of equity isn't doesn't go to free cash flow, for example.
[SPEAKER_03]: It's not immediately obvious to shareholders that that wasn't expensive, especially when they're reporting was called adjusted profit margins.
[SPEAKER_03]: which is what they do with those shares, they advertise them over a period of many years.
[SPEAKER_03]: So as I said, firms are blunting the delusion by buying back shares consistently with a lot of cash flow.
[SPEAKER_03]: But investors rarely understand the costs.
[SPEAKER_03]: But the costs are now coming to bear because these companies are now spending so much on AI infrastructure that they are not buying back shares at the same rate.
[SPEAKER_03]: And the gap, the gap of the gap, and the gap that we were talking about is the difference between adjusted gap and unregular gap standards, the difference between the total profits.
[SPEAKER_03]: have moved from 14% in 2022, who's the 17 largest US listed software names.
[SPEAKER_03]: 17 largest US listed software names, went from 14% in 2020 to a 44% in 2025.
[SPEAKER_03]: That's how big of a different stock-based compensation has been.
[SPEAKER_03]: And not only are companies not buying back those shares to sterilize that deletion, but many of them, especially in the software space in general, they're actually prices of their stock are down.
[SPEAKER_03]: And so they actually have to issue more shares or give more shares to employees to make up for the difference in compensation, right?
[SPEAKER_03]: If the stock gets cut in half,
[SPEAKER_03]: you're going to grant shares to these employees, you're now going to have to give them double the amount of shares in order to pay them the same amount.
[SPEAKER_03]: A bigger question too, we'll be, what happens if the companies have to start paying their employees in actual cash?
[SPEAKER_03]: That will directly, they'll go directly to earnings per share.
[SPEAKER_03]: So this is another reason why you're seeing issues with the bigger tech names, they've come in count.
[SPEAKER_03]: It also helped them acquire in the team a lot of great employees to make sure their business is strong.
[SPEAKER_03]: They have the best talent to create a good product, but now that's changing and the move is to AI.
[SPEAKER_03]: So I wanted to highlight that because it's a very important development.
[SPEAKER_03]: Let's talk about the same as go talk to Sammy and Sammy.
[SPEAKER_03]: So let's talk about Amazon.
[SPEAKER_00]: Hi, Justin.
[SPEAKER_00]: Thanks for taking my call.
[SPEAKER_00]: Yeah, I would like to get you a peanut on Amazon.
[SPEAKER_00]: Your things are good time to get in or related out a little bit.
[SPEAKER_03]: Well, the mag seven in general are struggling and Amazon is not immune to that.
[SPEAKER_03]: Today, what do you do today?
[SPEAKER_03]: That's down nearly 2% on the day.
[SPEAKER_03]: It's relative strength is 33.
[SPEAKER_03]: Okay, so it's in the bottom third of performance of stock to the past year, and I think they have a lot of the same issues that I just talked about.
[SPEAKER_03]: In addition,
[SPEAKER_03]: To me, one of their main, what they're known for, which is Amazon store, that's likely going to shift over the next five to ten years.
[SPEAKER_03]: When it comes to buying habits for the consumer, that's going to become far more agentic, far more line than AI.
[SPEAKER_03]: Now you can have AI go around the internet and find you the best price on a ticket with them, right?
[SPEAKER_03]: Especially when it's able to,
[SPEAKER_03]: Check out, quickly, right?
[SPEAKER_03]: You can tell I had to go search for this product, find me the best price that could get me, you know, if you don't need it in two days, for example, I'll take it in a week, just give me the best price and AI can go and find that and it's probably gonna be cheaper than Amazon.
[SPEAKER_03]: A lot of people think Amazon's the cheapest, but it was originally, that's where they were losing money earlier in their existence.
[SPEAKER_03]: Now they're no longer the cheapest, they make a lot of money on advertising.
[SPEAKER_03]: And so as,
[SPEAKER_03]: How we interface with the internet moves more and more towards AI chats and a Gentic AI, I think Amazon's going to be hurt over the long term.
[SPEAKER_03]: So I is not on my list of by I would not be buying it and the technicals are not looking great.
[SPEAKER_03]: So I'm passing on Amazon.
[SPEAKER_03]: I'm an excellent best talk.
[SPEAKER_03]: We're looking to this story.
[SPEAKER_03]: AI's spending problem when does the massive cash burn start paying off?
[SPEAKER_03]: That story is tomorrow, but for now I'm Justin Klein and ready to hear calls now at 80, 99 chart.
[SPEAKER_01]: You've got a question for Justin or Luke, you're the best person to ask is I wanted to pick your brain about Apple, what did you think about their earnings call, it's a good time to add to my position.
[SPEAKER_05]: Call in Vestock, 888-99 chart.
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[SPEAKER_04]: 888-99 chart.
[SPEAKER_03]: My focus point today concerns this question.
[SPEAKER_03]: Is the US dollar losing its edge?
[SPEAKER_03]: The dollar I look in age of oil shocks and geopolitical risk.
[SPEAKER_03]: Dollar's been up and down over the past few years.
[SPEAKER_03]: Recently, it's been up mainly against the Japanese yen.
[SPEAKER_03]: But then if you go look at it again, it's things like the Swiss Frank or the Euro.
[SPEAKER_03]: It's still basically at levels that we saw last fall.
[SPEAKER_03]: And in general, those other currencies are going up against the dollar.
[SPEAKER_03]: Look at the dollar index.
[SPEAKER_03]: It looks fairly strong, but so much the dollar index is the yen that it's not really a great proxy for how good how well the dollar is doing.
[SPEAKER_03]: It's really about how bad Japan is doing when it comes to its currency.
[SPEAKER_03]: The dollar is at a 40-year high against the yen and a big reason for this is that you have higher oil prices, not just oil, but natural gas, distillates, refined products, etc.
[SPEAKER_03]: Japan's heavily reliant on importing energy through higher energy prices lower yen.
[SPEAKER_03]: And the big Japan, their interest rates remain very much below where we are with Fed and Fed has been talking about hiking rates and has become more hawkish throughout the
[SPEAKER_03]: even though they haven't actually raised rates.
[SPEAKER_03]: But we all know about the end-carry trade, what was that blow up two summers ago?
[SPEAKER_03]: They're really pushed the market down, quickly, a 10% from remember correctly.
[SPEAKER_03]: And there's certainly always a risk for that because there's a lot of people that are short-yen in long-dollar assets, and if they get rallies, you have a short-covering rally, dollar sells off, et cetera, that certainly is in the cards at some point.
[SPEAKER_03]: But that's kind of its own thing.
[SPEAKER_03]: Japan is a small country, big economy, a lot of assets, big debt problem, but that's one country.
[SPEAKER_03]: What about the rest of the world?
[SPEAKER_03]: Well, one of the reasons why foreign equity markets have been doing fairly well is that their currencies are starting starting to really perform.
[SPEAKER_03]: For example, the euro is up about 10% since the beginning of last year against the dollar.
[SPEAKER_03]: better in their revenue and their earnings.
[SPEAKER_03]: In euros, you're getting a tail in the 10% by investing in European stocks.
[SPEAKER_03]: Not to mention any outperformance, any fun flows that are going in that direction, and you've seen foreign stocks start to outperform it in a considerable way.
[SPEAKER_03]: And that's with once again, the dollar, broad dollar index, still advancing over the past.
[SPEAKER_03]: Call it four, five months.
[SPEAKER_03]: So what happens on a day like today where the dollar turned around at US equity markets were down as well?
[SPEAKER_03]: Well, foreign equities outperform US equities by about 1% on the day.
[SPEAKER_03]: So to me, there's very strong relative strength out of those other non-yet incurancies.
[SPEAKER_03]: So that's how it impacts your portfolio and why I say it should overweight foreign equities.
[SPEAKER_03]: Now when it comes to the broader economy, a strong dollar relatively can be good in bad.
[SPEAKER_03]: A strong dollar tends to make imports imported goods cheaper, which dampens inflation.
[SPEAKER_03]: But you have the issue right now with tariffs, supply chain issues that's really not the strong dollar's not really doing a whole lot.
[SPEAKER_03]: And like I said, it's relative strength is still not that great over the last year and half.
[SPEAKER_03]: And one of the reasons I think the President Trump wants the Fed to look at rates is he actually wants a weaker dollar.
[SPEAKER_03]: There's people that argue that all this geopolitical instability that, you know, he's certainly in the mix on is on purpose to actually weaken the dollar that will improve our competitiveness of our, our industry.
[SPEAKER_03]: And I think that's a bit far fetch, but there's a lot of people to believe that.
[SPEAKER_03]: But either way, if you're going to bring manufacturing back to the United States, you actually need a weaker dollar.
[SPEAKER_03]: There are a lot of people in Washington that truly understand this.
[SPEAKER_03]: So once again, it's a double-edged sword on that side.
[SPEAKER_03]: Now, if the dollar does continue on this longer, you know, medium to long-term path of trending lower, does that mean you should...
[SPEAKER_03]: own assets in foreign currencies, simple answers.
[SPEAKER_03]: Yes, but also depends on your timers.
[SPEAKER_03]: I think it was a long term.
[SPEAKER_03]: Yeah, you want to own unhege international equity and foreign bond market exposure.
[SPEAKER_03]: But if you're, if your time horizon is very short term, and you want to invest in, say, foreign, we love people chase foreign emerging market bond funds because they have high yields.
[SPEAKER_03]: They don't understand the currency risk.
[SPEAKER_03]: Those
[SPEAKER_03]: short term investing even if they pay a big deal.
[SPEAKER_03]: So understand when you're making any investment, what type of exposure you might have to the dollar?
[SPEAKER_03]: Let's go with a YouTube comment question.
[SPEAKER_03]: Selena Marie says, are you familiar with CPM group?
[SPEAKER_03]: Their research seems reliable, would you agree?
[SPEAKER_03]: So CPM group, I did look this up the other day.
[SPEAKER_03]: I don't know
[SPEAKER_03]: much about them.
[SPEAKER_03]: It looks like they are a research firm around commodities.
[SPEAKER_03]: Generally, I like exposure to commodities.
[SPEAKER_03]: I have never read a CPM group report.
[SPEAKER_03]: I briefly browse their website, but that's it.
[SPEAKER_03]: So I can't really give you much beyond, hey, can you like exposure to commodities?
[SPEAKER_03]: That's probably what they're gonna say.
[SPEAKER_03]: They're a commodity research firm.
[SPEAKER_03]: I have to understand that.
[SPEAKER_03]: I don't really love research firms that lean on one particular sector of the market because they're gonna be biased.
[SPEAKER_03]: But they want investors to have more interest in that particular space.
[SPEAKER_03]: So that they buy more research reports, their reports become more valuable, the work they're doing becomes more valuable.
[SPEAKER_03]: Simple as that.
[SPEAKER_03]: For us, the KPP, we don't focus on what?
[SPEAKER_03]: We had broad, broad-based research capabilities and we want exposure where it makes sense based on the broader economic backdrop.
[SPEAKER_03]: So make sure you take their research kind of with the green salt.
[SPEAKER_03]: Let's keep things going to play another question from A to 899 chart.
[SPEAKER_06]: Good day, Luke and Justin.
[SPEAKER_06]: Long, long time listener here from the Midwest.
[SPEAKER_06]: Love your show.
[SPEAKER_06]: You're the best podcast out there.
[SPEAKER_06]: Hey, quick question.
[SPEAKER_06]: Suffering losses from a lot of the volatility that's going on in the fiber stocks, I guess.
[SPEAKER_06]: You're in tell and might grind in so forth.
[SPEAKER_06]: I've lost a lot of my earnings and not sure if this would be a good time just to get out of them or what to do.
[SPEAKER_06]: Anyhow, I'm looking at a stock and I want to know what you think of this one, K.O.
[SPEAKER_06]: Coca-Cola.
[SPEAKER_06]: I've seen it've been going up good this year and the future oil look looks really good from what I can tell for the year.
[SPEAKER_06]: It has good upgrades and stuff.
[SPEAKER_06]: I'm wondering what you think about getting into Coca-Cola and just letting it go for a while.
[SPEAKER_06]: It seems like a pretty safe stock.
[SPEAKER_06]: I know Buffett had it for years.
[SPEAKER_06]: Thank you,
[SPEAKER_03]: Well, thank you for the kind words, and you're consistent calling.
[SPEAKER_03]: I've been listening for the last couple of months.
[SPEAKER_03]: I've been saying, yeah, the microns of the world, you want to be at minimum trimming and probably exiting a lot of these names because their valuations go way too stretched.
[SPEAKER_03]: And while I'm bullish on AI in the long term, these technological revolutions don't move in a straight line.
[SPEAKER_03]: But should you reallocate some of that money to a Coke?
[SPEAKER_03]: Well, Coke's technical is a very strong.
[SPEAKER_03]: Now it's a bit of a bot right now.
[SPEAKER_03]: Ertings I believe was on was yesterday or maybe I would come out after market day before, but the market move was yesterday.
[SPEAKER_03]: And it kind of consolidated those gains today.
[SPEAKER_03]: And overall was up by 1%.
[SPEAKER_03]: It's one of those few consumer staple stocks that
[SPEAKER_03]: are not being drastically impacted by inflation.
[SPEAKER_03]: Usually, it's consumer staple stocks.
[SPEAKER_03]: We've higher input costs workers to transportation to inputs on the product, et cetera, and that squeeze is margins.
[SPEAKER_03]: Well, that's not really happening with code.
[SPEAKER_03]: In fact, they're in $3 last year.
[SPEAKER_03]: Those are in $3.30 this year, then $353 next year.
[SPEAKER_03]: Enterprise value, the EBITDA going forward is at about 25 times.
[SPEAKER_03]: That's in the midpoint of the 10-year range.
[SPEAKER_03]: That's fine.
[SPEAKER_03]: no real issue on that front from the valuation perspective.
[SPEAKER_03]: $3.90, so $3.53 next year, you're still on a high 20s multiple, which is expensive.
[SPEAKER_03]: So I wouldn't say it's cheap, but it's margins are still very good.
[SPEAKER_03]: And what I like about it is, Vanneccoholic, everyone who's Coke knows Coke, their broad distribution, consistent cash flows.
[SPEAKER_03]: And ultimately, they just grind value for shareholders.
[SPEAKER_03]: Simple as that.
[SPEAKER_03]: So it's a good name.
[SPEAKER_03]: I'm much rather be in this than a micron, for example, in the short-term medium term.
[SPEAKER_03]: The long term, then I'd be in other story.
[SPEAKER_03]: But for right now, Coke is clearly a winner.
[SPEAKER_03]: Let's go pivot to another voicemail question now.
[SPEAKER_07]: This is Glenn and San Francisco.
[SPEAKER_07]: I'm relatively new listener, but learning a lot.
[SPEAKER_07]: So thanks for what you're doing.
[SPEAKER_07]: My question is about trend following.
[SPEAKER_07]: If I'm following a stock,
[SPEAKER_07]: and it starts to move up above.
[SPEAKER_07]: It's 200 day moving average.
[SPEAKER_07]: What strategy do you recommend?
[SPEAKER_07]: Yeah, if I'm looking to buy that stock or ETF, do I jump on it right away?
[SPEAKER_07]: Do I wait a few days make sure it maintains that level?
[SPEAKER_07]: Do I look at other indicators?
[SPEAKER_07]: What's your recommendation there?
[SPEAKER_07]: Look forward to hearing the answer.
[SPEAKER_07]: Thank you.
[SPEAKER_03]: Well, the 200 day is a good moving average.
[SPEAKER_03]: It's a good barometer of whether it's in a long-term uptrend or not.
[SPEAKER_03]: And what I focus on, this is something that most people don't even talk about, which is the direction of the moving average.
[SPEAKER_03]: Is that moving average moving up, or is it moving down?
[SPEAKER_03]: Love you will wait until the price moves above that moving average or below it, or one moving average is crosses another moving average.
[SPEAKER_03]: But that time, the move often is done.
[SPEAKER_03]: But as for example, I'm just going to use my cronics as an example.
[SPEAKER_03]: So this is obviously in an uptrend.
[SPEAKER_03]: All the moving averages were moving strongly higher, pointed higher, until mid June.
[SPEAKER_03]: But starting in, let's see, about two weeks ago,
[SPEAKER_03]: When Micron was kind of around 1980 through $1,000 somewhere in that range, and then it moved negative.
[SPEAKER_03]: It started pointing down when it was in the low 900s.
[SPEAKER_03]: And so whether you wanna call it flattening out or moving down, those indicators that momentum had stalled.
[SPEAKER_03]: Where's Micron now?
[SPEAKER_03]: Let's add about seven to 40 at the close today.
[SPEAKER_03]: So to me, I feel because a lot on are the moving average is point higher or not.
[SPEAKER_03]: Then, you want to look at the space between the moving averages.
[SPEAKER_03]: Are they close together?
[SPEAKER_03]: Or are they spread apart?
[SPEAKER_03]: Those are the trends that you want to follow.
[SPEAKER_03]: If you're like my trend following, if you're just talking about moving above and moving average, it's more of a swing trade.
[SPEAKER_03]: It's trading.
[SPEAKER_03]: But once again, that's just one moving average.
[SPEAKER_03]: And frankly, from a trading perspective,
[SPEAKER_03]: Let's go with another YouTube comment question.
[SPEAKER_03]: SS Baller says, thank you for the info and watch out on oil and gas.
[SPEAKER_03]: Thoughts on TR, GP.
[SPEAKER_03]: Target resources provides mainstream natural gas and logistics services, okay?
[SPEAKER_03]: So I said before, I kind of like these type of businesses.
[SPEAKER_03]: The gather, compress, treat, process, transport and purchase and sell natural gas.
[SPEAKER_03]: One thing I love about this is that natural gas is
[SPEAKER_03]: relatively clean energy source is now the swing molecule and the energy space around the world for the most part.
[SPEAKER_03]: It's profitability is very high 73%.
[SPEAKER_03]: So I'm going to go, yeah, I'm going to give Targa thumbs up, return equity.
[SPEAKER_03]: It's at 73%.
[SPEAKER_03]: But a bit of debt, but it's a highly capital intensive business, which is understandable.
[SPEAKER_03]: Well, if you might look at the space and say, he feels 1.9%.
[SPEAKER_03]: You can get others within the space that are yielding three, four, five percent.
[SPEAKER_03]: Both are not paying attention to is that Target has increased its dividend from 10 cents in 2021 to $1.25 all-time high.
[SPEAKER_03]: So it has growth in that payout, very good business, good cash flow, I'm going to give
[SPEAKER_03]: Those some best thought, I'm Justin Klein, we have one goal here each and every week.
[SPEAKER_03]: Okay, so I hope you achieve your own version of Financial Freedom.
[SPEAKER_03]: Now, we're continues after this final break.
[SPEAKER_03]: Let's get your questions in right now and eight and eight ninety nine chart.
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[SPEAKER_03]: It's going to be another YouTube comment question section, section question.
[SPEAKER_03]: Yeah, that's what I meant.
[SPEAKER_03]: Iraq don says EMEM core down the day around 700 seems to be a great company, your opinion, and what is a good entry point.
[SPEAKER_03]: Well, it's now even lower, it's a $672 done with another 5% ish today.
[SPEAKER_03]: Erring's supposed to be $29 and change this year, nearly $33 and share next year, it's a $672 stock.
[SPEAKER_03]: Now, so based on four legurings, you're talking about 22 times, which is,
[SPEAKER_03]: not unreasonable, but growth has certainly slowed.
[SPEAKER_03]: Orings are growing 65% in 2021, and 20% in 2024, 20% last year, the net of 13% this year in 12% next year.
[SPEAKER_03]: The question is, is it cheap enough and where is major support?
[SPEAKER_03]: Now, what I will say is major support doesn't come in until about 635 or so.
[SPEAKER_03]: And big, big support comes down around 562,
[SPEAKER_03]: Q4 of last year, it would as M. Core do, engaged in provision of electrical and mechanical construction and facility services.
[SPEAKER_03]: A.I.
[SPEAKER_03]: anyone?
[SPEAKER_03]: That's whether businesses have been booming.
[SPEAKER_03]: They install systems for heating, ventilation, air conditioning, refrigeration, clean room processing, ventilation that's chip processing as well, manufacturing excuse me.
[SPEAKER_03]: So it's a 30 billion dollar market cap.
[SPEAKER_03]: Fee cash flows around a billion,
[SPEAKER_03]: Enterprise value to EBITDA going forward down about 16, which historically this isn't cheap till it gets closer to 10.
[SPEAKER_03]: So I think this gets down to 560-ish in that range.
[SPEAKER_03]: That's where I would think about picking it up and it could be a decent value.
[SPEAKER_03]: Decent risk versus reward there.
[SPEAKER_03]: I think there's more downside to come because of what I want to talk about next.
[SPEAKER_03]: And that is,
[SPEAKER_03]: While she banks are telling hedge funds, they need to post more collateral because of the route in AI stocks.
[SPEAKER_03]: And this is something that most people do not understand, especially when it comes to these hot sectors, is that there is a lot of leverage, not just on the retail investor borrowing money, or now, maybe they're buying triple leveraged ETFs on micron, for example, or single stocks,
[SPEAKER_03]: They're employing a lot of leverage, and that leverage is coming from Wall Street banks, and they have algorithms.
[SPEAKER_03]: And when the NASDAQ goes into correction territory, which we are now in, down 10% from a size, NASDAQ 100.
[SPEAKER_03]: When that happens, there are actually guardrails, the automatic trigger, some mark of volatility, better in these agreements between the hedge funds and the banks.
[SPEAKER_03]: And what happens?
[SPEAKER_03]: Forced, selling.
[SPEAKER_03]: So that's why you're getting right now on an unordily market.
[SPEAKER_03]: For the first month or so of them drop in the NASDAQ, the sell-offs in the space were orderly.
[SPEAKER_03]: Now it gets for selling.
[SPEAKER_03]: Now the good news is that's the start of a true reset in sentiment and positioning.
[SPEAKER_03]: And as long as the growth in demand for services, a hardware continues to be relatively strong, this will be a buying opportunity.
[SPEAKER_03]: But as Goldman said in a recent note, it said that the build up in gross levers in the first five months the year was the largest cumulative increase that recorded since it began tracking data in 2016.
[SPEAKER_03]: which shows that there is a lot of leverage to be wrong out of this market.
[SPEAKER_03]: So I think it's more downside of the market to come.
[SPEAKER_03]: Just me, I think it's going to hell in a hand basket.
[SPEAKER_03]: It's going to be probably very concentrated in this tech space.
[SPEAKER_03]: A lot of this market rotation into, and two, industrial into, staples into, reats, and to foreign stocks.
[SPEAKER_03]: That's where the market, so the money is moving.
[SPEAKER_03]: And they sell it, these AI names, that's really redeploying the capital.
[SPEAKER_03]: Well, that about doesn't, I'm just inclined to remind you.
[SPEAKER_03]: about K could be financials parallel investing, would make trade for our clients, make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatments.
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