Latest / The Financial Exchange Show / Tech Meltdown, AI Speculation Fallout & What This Volatility Means for Investors

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Tech Meltdown, AI Speculation Fallout & What This Volatility Means for Investors · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tuckle with you here on a Thursday
1:14
Speaker 2: busy one UH tech sector is in the process of
1:19
Speaker 2: melting down at the moment and dragging the rest of
1:24
Speaker 2: the market with it. We've got the S and P
1:26
Speaker 2: five hundred down about one point three percent, same with
1:28
Speaker 2: the Dow NASDAK composite down about one point seventy five percent.
1:33
Speaker 2: And by the way, the NASDAK composite, if we take
1:35
Speaker 2: a look at it now, actually I will get the
1:37
Speaker 2: Nasdaq one hundred just because it's more concentrated with like
1:40
Speaker 2: your your big tech names. NASDAKA one hundred is now
1:43
Speaker 2: at twenty four four forty nine UH and reached a
1:48
Speaker 2: peak previously of about twenty six two hundred. That means
1:54
Speaker 2: that the NASDAKA one hundred is now almost seven percent
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Speaker 2: off UH. It's it's high. So you're getting close to
2:01
Speaker 2: correction territory on the Nasdaq. Which if you're like a
2:04
Speaker 2: lot of you know, small investors who have gotten into
2:07
Speaker 2: the markets in the last couple of years, you might
2:09
Speaker 2: be particularly concentrated in some of these companies, and so
2:11
Speaker 2: you might be sitting there being like Chuck, it's way
2:14
Speaker 2: worse than that, And yes, I get it if you're
2:17
Speaker 2: you know, in a lot of these tech names that
2:18
Speaker 2: have been leading markets to the upside for the last
2:21
Speaker 2: couple of years, the last month or two, they've been
2:23
Speaker 2: kind of leading to the downside. And so it's it's tough.
2:26
Speaker 2: It's never fun going through these types of pullbacks here.
2:31
Speaker 2: And this is obviously, you know, a challenging situation to
2:36
Speaker 2: try to navigate the S and P as a whole,
2:38
Speaker 2: which is more broadly diversified a little bit more than
2:41
Speaker 2: three percent off. It's all time high, so not too
2:44
Speaker 2: much damage there yet, but tech is is in a
2:47
Speaker 2: pretty nasty spot. I mean, you look at some of
2:49
Speaker 2: these names, and you know, Microsoft is trading around four
2:52
Speaker 2: hundred bucks a share right now. It was at five
2:54
Speaker 2: point fifty two, so you're talking, you know, more than
2:56
Speaker 2: twenty five percent off. It's high. If you're an in
3:00
Speaker 2: vidio person in video goup to two twelve, it's at
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Speaker 2: one seventy two now it's almost you know, twenty percent off,
3:05
Speaker 2: it's high. Uh. If you're more of a metaperson, hey,
3:08
Speaker 2: I love the zuck you know, that's kind of your thing.
3:11
Speaker 2: It was at seven ninety five it's at six sixty
3:13
Speaker 2: six right now, almost twenty percent off. It's high. So
3:16
Speaker 2: there's a lot of pain out there in big names.
3:19
Speaker 2: And if you're looking at your portfolio that happens to
3:23
Speaker 2: be concentrated in these and you're not feeling too good
3:25
Speaker 2: about yourselves, just know that every investor in history, whether
3:28
Speaker 2: it is you, Warren Buffett and me, the person sitting
3:31
Speaker 2: next to you, whoever it might be, they've all gone
3:34
Speaker 2: through times when things didn't work. And it doesn't mean
3:37
Speaker 2: that they'll never work again, but it does mean if
3:39
Speaker 2: you're uncomfortable with the amount of draw down in your portfolio,
3:43
Speaker 2: think about how you might want to, you know, manage
3:45
Speaker 2: the level of risk in the future. You don't need
3:48
Speaker 2: to do anything drastic today, but you know, think about Hey,
3:51
Speaker 2: if you if you're if you're thinking about selling when
3:53
Speaker 2: everything's going down, it probably means that you shouldn't have
3:56
Speaker 2: been buying as much when everything was going up. Good take.
3:59
Speaker 2: That's it where I tend to land on that. Uh,
4:02
Speaker 2: talking about other things moving in markets, tenure, Treasury catching
4:06
Speaker 2: a bid on a little bit of weaker jobs data
4:09
Speaker 2: that I'm still not sure that I completely buy. The
4:12
Speaker 2: Joltz Report job openings report came out this morning with
4:15
Speaker 2: a big drop in the number of job openings. It
4:18
Speaker 2: doesn't mesh with what indeed is telling us as far
4:21
Speaker 2: as their job openings numbers, and normally there's pretty coose
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Speaker 2: alignment on those, so I'm taking it with a grain
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Speaker 2: of salt. But the tenure Treasury down six point eight
4:28
Speaker 2: basis points to four point two one percent, Dollar Index
4:32
Speaker 2: is up zero point two three percent to ninety seven
4:36
Speaker 2: seven one five, and we've got gold off about one
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Speaker 2: hundred and seventeen bucks ounce to forty eight thirty three.
4:43
Speaker 2: Crude oil down two fifteen barrel to sixty two ninety nine,
4:45
Speaker 2: triple a national average. For gas prices though up another
4:49
Speaker 2: four tenths per gallon to two eighty nine and one tenth.
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Speaker 3: I just want to point out, Jack, you quoted a
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Speaker 3: bunch of these numbers already, but there is no area
4:58
Speaker 3: of the market that is not pretty volatile right now.
5:01
Speaker 3: Oil price is down three percent today, silver price is
5:04
Speaker 3: down thirteen gold down two and a quarter percent. I
5:07
Speaker 3: know we've become used to those types of moves in
5:09
Speaker 3: those commodities, but they are abnormal. Crypto markets bitcoins down
5:13
Speaker 3: nine percent, crashing through the sixty seven thousand dollars per
5:16
Speaker 3: coin threshold. Remember it is where were we at the
5:19
Speaker 3: peak hundred and twenty twenty five. You've got obviously US
5:23
Speaker 3: stocks selling off even in the bond market, treasury market
5:26
Speaker 3: yield and tenure treasury moving down seven basis points. Those
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Speaker 3: are all fairly big, substantial swings in pretty much every
5:34
Speaker 3: area of the market that we are seeing right now.
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Speaker 4: So it feels volatile.
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Speaker 2: It should, and quite honestly, here's here's the problem in
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Speaker 2: markets that I think is going to take some time
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Speaker 2: to resolve. Like I'm not sure that Humpty Dumpty is
5:46
Speaker 2: just like put back together in the next week. I
5:49
Speaker 2: know that having said that, he will be. But here's
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Speaker 2: the issue is there was so much mania building in
5:58
Speaker 2: some of these areas of the market. You know, you
5:59
Speaker 2: take a look at you know, places like precious metals
6:03
Speaker 2: and what was going on there. You take a look
6:06
Speaker 2: at memory chip companies and what was going on there.
6:10
Speaker 2: There was a lot of nutty stuff. And when that
6:12
Speaker 2: started to unwind, if people were leveraged again you buy
6:15
Speaker 2: all this stuff in brokerage accounts, then you're forced to,
6:19
Speaker 2: you know, make margin calls. You start selling other stuff,
6:22
Speaker 2: and that triggers a whole other wave of selling from
6:24
Speaker 2: you know, institutional investors that might be you know, running
6:27
Speaker 2: quant strategies and things like that. There's some pretty nasty
6:31
Speaker 2: cross currents in this market, and it's gonna take a
6:34
Speaker 2: little time to sort out. So I know that, having
6:37
Speaker 2: said that, we'll be sitting here a week from now
6:39
Speaker 2: and it'll be like, oh, chuck, like, you know, look,
6:40
Speaker 2: everything's back like S Andp's back to seven thousand. Sure, maybe,
6:44
Speaker 2: but I'm just saying when things get so violent under
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Speaker 2: the surface, even though the indices as a whole have
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Speaker 2: looked calm, it tends to result in some nasty things.
6:55
Speaker 2: And by the way, again, we'll see where this goes
6:58
Speaker 2: over the next you know, read to six weeks. But
7:02
Speaker 2: I've been saying for the last you know, month or
7:05
Speaker 2: so hey, the last couple of times that anything but
7:07
Speaker 2: tech has tried to lead this market. We've gone splat,
7:12
Speaker 2: and we haven't splatted yet because again, three percent on
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Speaker 2: the S and P is a nothing burger. The dazdac's
7:17
Speaker 2: getting a little bit dodgy. But let's see how this develops,
7:21
Speaker 2: because I'm still not convinced see a market moving up
7:26
Speaker 2: consistently with Verizon, you know, leading with Johnson and Johnson leading.
7:32
Speaker 2: Those are big, boring companies that don't do anything that
7:35
Speaker 2: excites markets. And so when I see Verizon report earnings
7:40
Speaker 2: and now is up nineteen percent since them, I kind
7:42
Speaker 2: of look at it and I'm like, Okay, like the
7:45
Speaker 2: jig is up fair, you know, like that doesn't fill
7:49
Speaker 2: me with like future confidence for markets necessarily.
7:53
Speaker 3: Uh.
7:53
Speaker 2: Piece in the Financial Times, Kevin Warsh channels Alan Greenspan
7:57
Speaker 2: and AI productivity bets. So Worsh if you've been living
8:01
Speaker 2: under a rock is the new FED chair nominee. Uh?
8:06
Speaker 2: And he's basically talking about, Hey, I think that the
8:10
Speaker 2: US economy is going to be able to go through
8:13
Speaker 2: a productivity boom because of AI and other factors that
8:16
Speaker 2: will make all of the problems that we're seeing today
8:20
Speaker 2: not really a big deal.
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Speaker 3: Actually, does that seem consistent with his viewpoints that he
8:25
Speaker 3: has thrown out there since two thousand and nine, Chuck, No, okay,
8:30
Speaker 3: I'm not gonna stand here and say that you can't
8:32
Speaker 3: change your mind, right, right, we can all change our minds.
8:37
Speaker 3: But pretty consistently since two thousand and seven or eight,
8:44
Speaker 3: Kevin Worsh has been talking about how inflation is going
8:47
Speaker 3: to be a problem and a result of the Fed
8:50
Speaker 3: expansion that they have used and the bias towards lower
8:53
Speaker 3: interest rates. And he's been wrong pretty consistently since then,
8:57
Speaker 3: and never once had a Maya Kolpa like, hey, yeah,
9:00
Speaker 3: I missed this one, and my vision of this has
9:03
Speaker 3: all changed. And now all of the sudden, when he's
9:07
Speaker 3: you know, running for a chair person, he is looking
9:10
Speaker 3: for or fine, I shouldn't say he's looking for he
9:13
Speaker 3: has found a sound economic theory to justify lower interest rates.
9:19
Speaker 3: And I just I'm just suspicious. I'm just a little
9:23
Speaker 3: bit suspicious. I guess is where I live.
9:27
Speaker 5: A little watchistitious.
9:29
Speaker 2: Yeah, I'm kind of. I'm more substitious than superstitious personally.
9:34
Speaker 2: You know, it's just how I roll. Just take a
9:36
Speaker 2: quick break here. When we return, we'll do a little
9:40
Speaker 2: bit of trivia and then we'll talk about This is
9:43
Speaker 2: actually a really good piece in the Wall Street Journal.
9:45
Speaker 2: It's titled how to Say How to Stay Sane in
9:49
Speaker 2: the AI Skills Race, and basically talking about, look, what
9:53
Speaker 2: can the average person do to figure out how to
9:56
Speaker 2: make AI work for them? I think that's a great question.
9:59
Speaker 2: And one we'll discuss after this.
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11:41
Speaker 2: Mike, there's a great piece in the Wall Street Journal today.
11:43
Speaker 2: It's titled how to Stay Sane in the AI Skills Race,
11:47
Speaker 2: and it's all about figuring out, Hey, if you are
11:50
Speaker 2: someone who works in a business that is likely to
11:53
Speaker 2: be impacted in the next couple of years by artificial intelligence,
11:57
Speaker 2: how do you make AI tools work for you instead
12:00
Speaker 2: of becoming a casualty of them. What kind of advice
12:05
Speaker 2: does it give here?
12:05
Speaker 3: Well, the author advises going directly to the tools themselves
12:09
Speaker 3: and saying, look, this is what I do for a living.
12:12
Speaker 4: Help me build a customized training.
12:15
Speaker 3: Course to this specific skill set that I'm trying to
12:18
Speaker 3: adapt to, and then you know, using the tools to
12:21
Speaker 3: customize it better. Hey, you know, limit it to this
12:23
Speaker 3: specific subset of type of career path, and you know,
12:28
Speaker 3: limit to this number of hours. I do have some
12:31
Speaker 3: questions about I think that's as good a plan as any,
12:36
Speaker 3: and he points out that, look, when recruiters are going
12:38
Speaker 3: out there and hiring managers are out there, they really
12:41
Speaker 3: don't know how much stock to put into an online
12:44
Speaker 3: certificate from some you know, online education school on AI
12:48
Speaker 3: tools that may or may not be specific to your
12:51
Speaker 3: job role. Personally, If I'm thinking about how I think
12:56
Speaker 3: this goes, I do think ultimately we're not We're probably
12:58
Speaker 3: not there yet, but I do think ultimately there are
13:01
Speaker 3: going to be some best in class training tools that
13:04
Speaker 3: are developed out there, and the course work is going
13:07
Speaker 3: to be recognized and respected by hiring managers. But we
13:11
Speaker 3: don't seem to be there right now, and so I
13:13
Speaker 3: don't have many other tips other than that. I guess
13:17
Speaker 3: the big one that's important here that he points out
13:20
Speaker 3: is don't just sit there panic and try and learn
13:23
Speaker 3: everything about every AI tool that's out there, because don't
13:25
Speaker 3: need to.
13:26
Speaker 2: You have no need to do that.
13:28
Speaker 3: You learning how to code using AI is going to
13:30
Speaker 3: be absolutely worthless if you work in corporate finance.
13:35
Speaker 2: I would agree it's something where and look, Mike, you
13:41
Speaker 2: and I we grew up with the internet, so like
13:45
Speaker 2: we were seeing it from its first days, and so
13:50
Speaker 2: our knowledge evolved as it did. This is my opinion,
13:54
Speaker 2: is the first time that I've seen a technology where
13:57
Speaker 2: I've looked at it and gone, gee, I don't really
13:59
Speaker 2: feel native to this. I'm not one hundred percent sure
14:02
Speaker 2: that I'm using it the best way. And the example
14:04
Speaker 2: that I'll give is Mike, when you go to search
14:07
Speaker 2: for something on Google, you don't type in where you know,
14:14
Speaker 2: show me where I can find this data about blah
14:17
Speaker 2: blah blah. Now you just say I Apple earnings Q one,
14:23
Speaker 2: and you know like what to look for there, because like,
14:25
Speaker 2: you built that skill over time and you kind of
14:28
Speaker 2: grew with it. Someone who's new to the Internet of
14:31
Speaker 2: any age doesn't have that, and they looked at it
14:33
Speaker 2: They're like, how do you know what to type in there?
14:35
Speaker 1: Right?
14:36
Speaker 2: I kind of feel that way sometimes when talking about
14:38
Speaker 2: how artificial intelligence programs work. It's like, am I asking
14:42
Speaker 2: it the right question in order to get the answer
14:45
Speaker 2: that I want? And so it's a fundamentally different proposition
14:49
Speaker 2: than search engines. Where search engines it's all keyword sensitive.
14:52
Speaker 2: Oh you're looking for pictures of chickens, great, here they are, Hey,
14:56
Speaker 2: you want you know, tips on skiing faster. Here here
15:00
Speaker 2: are the five websites you don't just type into, you know,
15:04
Speaker 2: chat GPT tips on skiing. You give it some context. Hey,
15:09
Speaker 2: I'm a skier that likes to ski on these types
15:12
Speaker 2: of runs. I like long, you know, cruising turns, and
15:18
Speaker 2: here's my height and my weight and I'd like to
15:20
Speaker 2: ski faster. What are some tips for me? And that
15:25
Speaker 2: you know, you provide it with the context and detail,
15:27
Speaker 2: and that's how it can be more helpful. But it
15:30
Speaker 2: takes time to understand, you know, for specific job purposes, Hey,
15:35
Speaker 2: how do I need to you know, prompt it in
15:37
Speaker 2: order to get the information that I want? And I
15:39
Speaker 2: think just spending a little time there can be a
15:42
Speaker 2: huge help in being able to make it more functional
15:46
Speaker 2: if you need it to be part of your workday
15:49
Speaker 2: and skill set.
15:50
Speaker 3: Here's what doesn't exist for AI, which again I would
15:53
Speaker 3: think we eventually get to. But when I was applying
15:56
Speaker 3: to my first jobs out there and I had my resume.
15:58
Speaker 3: On that resume, I had under the skill set a
16:01
Speaker 3: Microsoft Excel certification course that I took sure, meaning I
16:06
Speaker 3: had to pass an actual course where they teach you
16:08
Speaker 3: how to write formulas and do all these things, and
16:10
Speaker 3: I did it in college and it was voluntary, and
16:12
Speaker 3: I put it on my resume and it applying to
16:14
Speaker 3: jobs in corporate finance. People asked about it, they said,
16:17
Speaker 3: what went into the course? I didn't even know they
16:19
Speaker 3: offered that, And it was an immediate Now, were my
16:23
Speaker 3: excel skills as good as the people that had been
16:26
Speaker 3: working at my first job for ten years now laughably behind?
16:30
Speaker 3: But the mere fact that they were there was an
16:32
Speaker 3: independent authority that was certifying my skill set went a
16:36
Speaker 3: long way. And that does not from what I can tell,
16:40
Speaker 3: There's plenty of places that will offer that certification, but
16:42
Speaker 3: there isn't one that I think hiring managers can identify
16:45
Speaker 3: right now and say, oh, that means something. Yeah, And
16:48
Speaker 3: I would imagine that there's a business model there, and
16:50
Speaker 3: I would imagine, but right now it doesn't exist, And
16:53
Speaker 3: so I would be very hesitant. I see advertised all
16:56
Speaker 3: the time, you know, pay one hundred and fifty dollars
16:59
Speaker 3: for this online course, you know, this masterclass, and I
17:02
Speaker 3: would personally be very very skeptical about spending and or
17:07
Speaker 3: wasting my money on a course that nobody is going
17:10
Speaker 3: to be able to identify as useful.
17:12
Speaker 2: And part of it is just because the technology is
17:14
Speaker 2: evolving so quickly. When you took that Excel course, you
17:17
Speaker 2: walked into any white collar job in America and they'd say, great,
17:22
Speaker 2: I know what Microsoft Excel is. Yeah, but if you
17:25
Speaker 2: take a course today on you know, prompting, you know
17:29
Speaker 2: caud code, Well, what if calud code doesn't exist two
17:32
Speaker 2: years from now, right like or what if it's completely different?
17:36
Speaker 2: Like how do you know you don't even know what
17:38
Speaker 2: it's gonna look like by the time you're ready to
17:40
Speaker 2: use it. Uh So, I thought that was again just
17:43
Speaker 2: a good piece just to talk about these things. Piece
17:46
Speaker 2: of the Financial times. The treasury market is trading treading
17:49
Speaker 2: in dangerous waters, which which waters Michael.
17:53
Speaker 3: That we if Kevin wortsh is going to kind of
17:58
Speaker 3: change up some of the things in the Fed specifically
18:00
Speaker 3: he's talked in the past about the size of the
18:03
Speaker 3: Treasury balance sheet at the Federal Reserve and all of
18:08
Speaker 3: those pieces that it might cause some alarm bells, but
18:12
Speaker 3: not alarm bells that we haven't dealt with in the like.
18:14
Speaker 3: These wouldn't be things that we haven't had to deal
18:16
Speaker 3: with in the past. When was the kind of mini
18:18
Speaker 3: blow up that the Treasury that the FED had to
18:22
Speaker 3: deal with it. I want to say it was was
18:24
Speaker 3: that pre COVID when they had to backstop some of
18:27
Speaker 3: the very short term lending markets.
18:31
Speaker 2: Which one are we talking like what I mean? There's
18:33
Speaker 2: been a few of these times. I mean remember QI
18:35
Speaker 2: was like that for a decade.
18:37
Speaker 3: Yeah, So I guess the point is, Hey, they're trying
18:41
Speaker 3: to make a point that if things slow down and
18:45
Speaker 3: they try to run off a balance sheet, you could
18:46
Speaker 3: create a bunch of problems, which is always the case,
18:49
Speaker 3: and we know the solution to that, which is why
18:50
Speaker 3: I don't think there's going to be a massive reduction
18:52
Speaker 3: of what the FED does.
18:54
Speaker 2: Yeah, I think that's fair. Uh. Taking a look at
18:57
Speaker 2: markets as we head towards the bottom of the hour,
19:01
Speaker 2: trying to stage a bit of a rally here, the
19:05
Speaker 2: down S and p A is still down one percent, respectively,
19:08
Speaker 2: but not down one and a half percent anymore. The
19:10
Speaker 2: Nasdaq also now down about one percent instead of one
19:13
Speaker 2: and three quarters percent, So you've had a little bit
19:15
Speaker 2: of a bounce in the last half hour. Don't know
19:18
Speaker 2: if it has legs or if it doesn't, but you
19:21
Speaker 2: do have a little bit of a bounce that is
19:23
Speaker 2: happening here, and we'll see if it turns into a
19:26
Speaker 2: bigger bounce. First, we're going to take a quick break.
19:29
Speaker 2: When we come back, we've got the trivia answer, We've
19:31
Speaker 2: got Wall Street Watch, and then we're talking about retirement
19:35
Speaker 2: portfolios in this market.
19:40
Speaker 6: Bringing the latest financial news straight to your radio. Every day,
19:45
Speaker 6: it's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Speaker 6: Time now for Wall Street Watch.
19:53
Speaker 1: A complete look at what's moving market so far today
19:56
Speaker 1: right here on the Financial Exchange Radio Network.
20:00
Speaker 5: Continuing for third straight session as investors continue to show
20:04
Speaker 5: concern around tech stocks. Wall Street's also reacting to slightly
20:09
Speaker 5: higher than expected jobless claims data and software than expected
20:12
Speaker 5: job openings data for the month of December. Right now,
20:16
Speaker 5: the Dow is down exactly one percent, or four hundred
20:19
Speaker 5: and ninety four points, SMP five hundred down eight tenths
20:22
Speaker 5: of a percent of fifty six points, Nasdaq down eight
20:26
Speaker 5: tenths of a percent or one hundred and eighty five
20:28
Speaker 5: points lower, so some dip buying out there was worse
20:31
Speaker 5: about an hour ago. Russell two thousand is down just
20:34
Speaker 5: over one percent. Tenure Treasure reeled is down six basis
20:38
Speaker 5: points at four point two one eight percent, and crude
20:42
Speaker 5: oil down three percent today trading just above sixty three
20:45
Speaker 5: dollars at barrel. Google Paya company Alphabet reported a jump
20:49
Speaker 5: in quarterly profit where sales rose eighteen percent in the
20:53
Speaker 5: fourth quarter of The tech giant also set it plans
20:55
Speaker 5: to roughly double capital spending this year to develop AI
20:59
Speaker 5: models and bill data centers. Alphabet stock is down by
21:02
Speaker 5: three percent. Meanwhile, Qualcom shares are down by seven percent
21:07
Speaker 5: after the semiconductor company posted disappointing earnings guidance, where blamed
21:11
Speaker 5: an industry wide shortage of memory supply and price increases Elsewhere,
21:16
Speaker 5: s day Lauder lifted its adjusted earnings outlook for the year. However,
21:21
Speaker 5: the beauty company said it still expects a roughly one
21:23
Speaker 5: hundred billion dollar hit from tariffs as day Laughter shares
21:27
Speaker 5: are tanking twenty two percent. Rio Tinto said it is
21:31
Speaker 5: no longer considering a potential merger with glen Core that
21:34
Speaker 5: would have created the world's largest mining company with a
21:37
Speaker 5: market value of more than two hundred billion dollars. Rio
21:40
Speaker 5: shares are flat, while glen Core stock is down by
21:43
Speaker 5: six percent, and after today's close, all eyes will turn
21:46
Speaker 5: too Amazon for more big tech earnings. I'm Tucker Silva
21:51
Speaker 5: and that is Wall Street Watch. On the previous segment,
21:53
Speaker 5: we asked you the trivia question which country hosted the
21:56
Speaker 5: first Winter Olympics. Well, that would be France. Norman from Portland,
22:02
Speaker 5: Maine is our winner today taking on the Financial Exchange
22:04
Speaker 5: Show t shirt. Congrats to Norman, and we play trivia
22:07
Speaker 5: every day here in the Financial Exchange See complete contest
22:11
Speaker 5: rules at Financial Exchange Show dot com.
22:14
Speaker 2: I think I would have guessed France. Actually I probably
22:17
Speaker 2: would have guessed Switzerland. But then again, the guest that
22:22
Speaker 2: you should make is France because I believe the official
22:26
Speaker 2: language of the Olympics is French. Like they at least
22:31
Speaker 2: like give like a lot of the A lot of
22:33
Speaker 2: the speeches are in French as well, even when the
22:35
Speaker 2: games aren't there. So I don't know. Isn't it wild
22:39
Speaker 2: that Lake Pass has hosted them twice?
22:42
Speaker 3: It is a pretty uh right, small place, look like
22:46
Speaker 3: lake plast like it's crete and everything.
22:47
Speaker 2: The population is two thousand people.
22:50
Speaker 3: Yes, true, but like how many locations across the globe
22:53
Speaker 3: actually can handle the Winter Olympics reliably? Like I guess
22:58
Speaker 3: everything over that parallel, I think'd.
23:00
Speaker 5: Be great in Boston the Winter Olympics. You know that's awesome. No, everywhere,
23:05
Speaker 5: no one can drive at all.
23:06
Speaker 2: I mean, look if if they held the Winter Olympics
23:09
Speaker 2: in Beijing, they can hold them anywhere. Yeah, that's fair,
23:12
Speaker 2: that's true. You know, not no, not here, No, sorry,
23:16
Speaker 2: I do actually enjoy the twenty thirty ones. There's no
23:19
Speaker 2: specific location. It's just French Alps. Yeah, so they go,
23:23
Speaker 2: sir like, yeah, you'll say it, why not? But uh
23:27
Speaker 2: in any case? Uh, piece in Barns it's a time
23:30
Speaker 2: of rapid change? How to protect your retirement portfolio. So
23:34
Speaker 2: let's let's talk about this, Michael, because there's two pieces here. First,
23:39
Speaker 2: is it a time of rapid change?
23:43
Speaker 3: I guess it depends like society. Technologically, I think it
23:46
Speaker 3: is a time of rapid change, whether or not is
23:48
Speaker 3: a time of rapid change in the stock market. I
23:50
Speaker 3: mean it's been a week of rapid change. I'm not
23:52
Speaker 3: sure that that indicates anything.
23:54
Speaker 2: No.
23:55
Speaker 4: Technologically, yes, I think it's a time of rapid change.
23:58
Speaker 2: How to protect your portfolio? What there's this piece talk
24:01
Speaker 2: about when it comes to portfolio protection.
24:05
Speaker 3: For ties extremely specific and nuanced things that I don't
24:11
Speaker 3: personally find very useful. I mean one just general thing
24:15
Speaker 3: she does. The author does address that, Yeah, diversification across
24:20
Speaker 3: asset classes and global assets can help you avoid specific
24:27
Speaker 3: market downturns related to specific countries or industries. If you
24:31
Speaker 3: didn't if you didn't know that in your investing for
24:34
Speaker 3: retirement in the first place, then you've got a bigger
24:37
Speaker 3: problem here, and I'm not sure you're going to gain
24:40
Speaker 3: anything from that. Then she she goes on to speak
24:42
Speaker 3: about how you know specific dividend ETFs that she has selected,
24:47
Speaker 3: or international focus funds or different individual companies can really
24:53
Speaker 3: protect in a downturn. And that's where I get a
24:56
Speaker 3: little bit lost and hesitant, because I think if the
25:00
Speaker 3: author had a real track record of picking these things
25:02
Speaker 3: during downturns, then she wouldn't be writing no offense. I
25:06
Speaker 3: don't know if you were that good at that, I'm
25:08
Speaker 3: not sure you would be writing it as an author
25:10
Speaker 3: for barons. I'm not good enough to do it, and
25:14
Speaker 3: so I'm not sure that that is going to really
25:16
Speaker 3: dramatically be a useful thing. What I would say instead,
25:21
Speaker 3: if you're attempting to protect your retirement portfolio, and that
25:26
Speaker 3: type of advice overwhelms you like it? Did me start
25:29
Speaker 3: with something more basic, right, Like, if I'm trying to
25:33
Speaker 3: think about how it is my retirement portfolio in a
25:37
Speaker 3: good state of quote protection, I would look at it
25:41
Speaker 3: personally to me and I would say, okay, here's where
25:43
Speaker 3: I am today, and let me map out the next
25:46
Speaker 3: decade if all goes according to plan, how much money
25:49
Speaker 3: might I need to take out of my retirement portfolio? Sure,
25:53
Speaker 3: there's my starting point. How much money might need to
25:55
Speaker 3: come out of the next decade. Obviously, if you're fifty
25:58
Speaker 3: two versus seventy, those are very different figures. But map
26:02
Speaker 3: it out and say, okay, this is the number. Okay,
26:05
Speaker 3: how many Like how much of that ten year expected
26:10
Speaker 3: withdrawal is invested in something that you consider to be
26:16
Speaker 3: reliably predictable? And again this is everybody's personal opinion, but
26:21
Speaker 3: you know, cash CDs loans to the United States government?
26:25
Speaker 2: How much of that.
26:26
Speaker 3: Ten years that I'm going to need is invested in
26:28
Speaker 3: something that doesn't deal with the types of swings that
26:31
Speaker 3: we're dealing with right now, And that to me is
26:35
Speaker 3: a kind of good starting point. If it's very little
26:38
Speaker 3: of it, then okay, that might indicate something to you.
26:41
Speaker 3: If it's that time, you know, it's forty years of
26:45
Speaker 3: all that stuff is in something that you deem to
26:47
Speaker 3: be really conservative, then maybe you're going too far in
26:49
Speaker 3: the other direction. But I think rather than trying to
26:53
Speaker 3: figure out which author of a news publication is going
26:56
Speaker 3: to be best at recommending securities to you, which is
26:59
Speaker 3: not what they do because they can't, then I think
27:04
Speaker 3: that's a better starting point if I'm trying to assess
27:06
Speaker 3: just hey, is my portfolio prepared for whatever it.
27:10
Speaker 4: Could come next? Is there anything else that you would
27:12
Speaker 4: look at there?
27:13
Speaker 3: Because I found this to not be very helpful for
27:16
Speaker 3: the average person. In fact, the average person I don't
27:18
Speaker 3: think would have any idea what to do with this
27:20
Speaker 3: or how to implement it.
27:21
Speaker 2: No, I think kind of looking at it in that
27:23
Speaker 2: that broader categorization of look financial planning at its core
27:28
Speaker 2: is about one thing, matching the assets that you have
27:32
Speaker 2: with the liabilities and when they're due. And so that's
27:35
Speaker 2: what this looks at is how much money do you
27:38
Speaker 2: need at specific intervals and do you have a plan
27:41
Speaker 2: such that the assets that you need sooner aren't exposed
27:44
Speaker 2: to you know, a five percent draw down in markets
27:47
Speaker 2: that you know the assets that you need later can
27:50
Speaker 2: stomach that because you're not touching them until later. So
27:52
Speaker 2: that's that's what it's all about, is do you have
27:55
Speaker 2: a plan for I need money X at time y,
27:59
Speaker 2: and I've put it in Z to accomplish that.
28:01
Speaker 3: My worry is that it sure has been tempting to
28:05
Speaker 3: take that money that we just described, that money that
28:08
Speaker 3: needs to be allocated towards cash flow in year one
28:13
Speaker 3: or two, and it's sure been easy and tempting to
28:16
Speaker 3: grow that a lot faster than what you can get
28:19
Speaker 3: from a CD.
28:20
Speaker 2: It just has.
28:21
Speaker 3: Right, it's been a tremendous three years for stock market growth.
28:24
Speaker 3: It's been a tremendous fifteen years, but in particular the
28:27
Speaker 3: last three. If you are trying to assess this yourself
28:31
Speaker 3: and nervous about this market downturn that we've seen, which
28:34
Speaker 3: again just been the last week or so. I don't
28:36
Speaker 3: want to overstate what we are seeing right now, but
28:39
Speaker 3: if you're uncertain about where your portfolio lies and whether
28:42
Speaker 3: or not it is achieving what you think is your
28:45
Speaker 3: real objective, please call us an armstrong advisory group. We
28:48
Speaker 3: have a well thought out set of theories as to
28:50
Speaker 3: how to apply this to each individual's situation, and it's
28:54
Speaker 3: not just cookie cutter advice that gets thrown out there.
28:57
Speaker 3: Give us a ring eight hundred three nine three four
28:59
Speaker 3: Z zero zero one. You can check us out or
29:02
Speaker 3: book a time for us to call you back at
29:03
Speaker 3: Armstrong Advisory dot com. But that phone number once again,
29:06
Speaker 3: eight hundred three nine three for zero zero one.
29:10
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
29:13
Speaker 1: registered investment advisor. Nothing in the ad or in any
29:15
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
29:19
Speaker 1: your own financial tax into state planning advisors before making
29:21
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
29:24
Speaker 1: advisory services.
29:26
Speaker 2: Mike, do we want to talk about executives buying their
29:31
Speaker 2: stock and whether it's a signal for how the company
29:33
Speaker 2: will do? Do we want to talk about how hard
29:36
Speaker 2: it is to retire early when you have kids? Or
29:40
Speaker 2: do we want to talk about Peloton sales?
29:43
Speaker 4: Isn't Peloton the most fun one there?
29:45
Speaker 2: It is? Yeah, So here's the deal. Peloton stock has
29:50
Speaker 2: not been doing very well for sometime now, several years.
29:56
Speaker 2: It's doing worse today. It's down another twenty five percent,
30:00
Speaker 2: and this puts it ninety eight percent off its all
30:05
Speaker 2: time high from early January of twenty one. I see
30:09
Speaker 2: the way a stock loses ninety nine percent is it
30:12
Speaker 2: loses ninety eight and then another fifty. So just remember
30:15
Speaker 2: it can always get worse. And Sam, kids, I'm not
30:23
Speaker 2: saying it will. I'm just saying that can.
30:25
Speaker 3: That's the message that Chuck delivers every Christmas to his family.
30:29
Speaker 2: Not happy with this? It could be worse next year.
30:33
Speaker 2: Here's the deal. Revenue for their Q one they're estimating
30:37
Speaker 2: to be at six hundred to six hundred and twenty
30:39
Speaker 2: five million dollars. That's a one percent decline and about
30:42
Speaker 2: a two percent miss on consensus estimates. The rains for
30:47
Speaker 2: the fiscal year that ends in June is about a
30:49
Speaker 2: three percent drop in revenue. And the reason why this
30:53
Speaker 2: is an issue is they've spent a bunch of money
30:55
Speaker 2: trying to roll out new like AI powered products and
30:58
Speaker 2: new devices and this and that, and it clearly isn't
31:03
Speaker 2: working yet. And the problem that Peloton has is that
31:08
Speaker 2: it's a business that is, you know, struggling to be
31:12
Speaker 2: consistently cash flow positive. And if this turnaround doesn't work,
31:18
Speaker 2: they only have about a billion dollars in cash on hand,
31:21
Speaker 2: and so it puts them in a dodgy position going forward.
31:25
Speaker 2: Then so I think, again, this is one that, in
31:29
Speaker 2: my opinion, someone maybe Apple would be a great fit
31:36
Speaker 2: to buy them when they get cheap enough. Because if
31:38
Speaker 2: you're Tim cooksont there, you're like, Okay, the market cap
31:41
Speaker 2: on Peloton's a couple billion dollars now five years ago
31:44
Speaker 2: was forty five billion. We're glad we didn't spend that.
31:47
Speaker 2: But hey, we've got this fitness program that we're trying
31:50
Speaker 2: to roll out with the Apple Watch and all that.
31:52
Speaker 2: Wouldn't it be great to take a a premium product,
31:56
Speaker 2: or at least a premiumly priced product, put it into
31:59
Speaker 2: that sweet and have it integrate with all that stuff.
32:02
Speaker 2: Of course it would. But if it's a billion dollars,
32:05
Speaker 2: if it's two billion dollars today, we'd have to pay
32:07
Speaker 2: you know, three billion to take it out. Yeah, let's
32:09
Speaker 2: just wait another year and see if it gets cheaper.
32:12
Speaker 3: In the meantime, I'm really hoping that I didn't buy
32:15
Speaker 3: my wife a really expensive clothes hangar instead of a treadmill,
32:20
Speaker 3: because I'm starting to get that feeling.
32:22
Speaker 2: You never know. I mean, look, here's the thing, It's
32:25
Speaker 2: not like these devices won't work if the company does
32:28
Speaker 2: end up going out of business, they just won't have
32:30
Speaker 2: the programming.
32:31
Speaker 4: Right, That's that's my point.
32:32
Speaker 3: Yeah, you know, still have a treadmill, but you won't
32:35
Speaker 3: have any of the other features that you are paying for,
32:39
Speaker 3: which is the whole reason. But you wouldn't be paying
32:41
Speaker 3: for them anymore. True, but you paid a pretty big
32:43
Speaker 3: upfront price.
32:44
Speaker 2: That is true. Let's take a quick break here. When
32:47
Speaker 2: we come back, we'll do a little bit of stack roulette.
32:49
Speaker 1: Find daily interviews and full shows of the Financial Exchange
32:52
Speaker 1: on our YouTube page. Like us on YouTube and get
32:55
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34:01
Speaker 2: Mike, what do you got for stack roulette?
34:03
Speaker 3: You know. Our conversation about housing, as it usually does,
34:05
Speaker 3: sparked some interest from listeners. We received three texts, two
34:09
Speaker 3: of which agreed with us, in one of which disagreed
34:12
Speaker 3: with us, which honestly, sixty six percent, not about per
34:15
Speaker 3: perf of the course. I'm pretty happy with that ratio,
34:17
Speaker 3: But I wanted to talk about one of them that
34:22
Speaker 3: brought up the idea of corporate ownership of homes. So
34:26
Speaker 3: the first texture let us know, everything you guys are
34:29
Speaker 3: saying is obviously incorrect. The only thing that's changed lately
34:32
Speaker 3: is that corporations are buying private homes at a phenomenal
34:35
Speaker 3: rate that must come to a grinding halt to fix
34:37
Speaker 3: this problem. So first things first, corporate ownerships of single
34:41
Speaker 3: family homes has always been a presence in the market,
34:44
Speaker 3: and I will acknowledge that, you know, it has grown
34:47
Speaker 3: as a percentage in the most recent data that we have.
34:50
Speaker 3: There's some data from Batch Data indicating that the third
34:54
Speaker 3: quarter of twenty twenty five, investors purchased thirty four percent
34:59
Speaker 3: of homes. So in that quarter of twenty twenty five. Now,
35:04
Speaker 3: one piece that I want to draw attention to though
35:06
Speaker 3: and debate is that these are by and large not
35:09
Speaker 3: the giant investors out there. The same data broke out
35:13
Speaker 3: the percentage of ownership in the corporate space by how
35:17
Speaker 3: many owned homes they own. Ninety two percent of corporate
35:21
Speaker 3: ownership of single family residences came from those who own
35:24
Speaker 3: between one and five homes.
35:26
Speaker 2: Which also then matches up with the data that's out there.
35:30
Speaker 2: And this is data that I've seen from a bunch
35:33
Speaker 2: of different sources. Real Estate News has this. John Byrn's
35:37
Speaker 2: Research and Consulting has this that generally gets to around
35:41
Speaker 2: three percent of all homes in the United States are
35:45
Speaker 2: owned by large corporate landlords basically that then end up
35:48
Speaker 2: renting those homes out.
35:49
Speaker 3: So if you want to ban mom and pop investors
35:52
Speaker 3: from buying homes, I agree, it may impact prices to
35:55
Speaker 3: the downside. You may be able to make homes more
35:57
Speaker 3: afforded by by doing that, But you cannot just go
36:00
Speaker 3: after the thousand plus homeowner one thousand plus ownership bucket
36:04
Speaker 3: because it's it's just not big enough. Furthermore, I just
36:10
Speaker 3: don't know that this is actually today's problem because while
36:13
Speaker 3: the percentage grew in twenty twenty five, the actual number
36:16
Speaker 3: of homes purchased by corporate owners was down year over year,
36:20
Speaker 3: and so the big corporate investors were net sellers of
36:24
Speaker 3: homes in the most recent quarter.
36:26
Speaker 2: Yes, so yeah, I don't think corporate ownership is the
36:30
Speaker 2: biggest issue here.
36:32
Speaker 3: It's it's supply not demand. Let me put it that way.
36:36
Speaker 3: It's supply not demand.
36:37
Speaker 2: Yes, let's see what do I want to talk about here.
36:41
Speaker 2: I want to talk about this piece from the Wall
36:42
Speaker 2: Street Journal. It's the Wall Street Journal exclusive SpaceX seeks
36:46
Speaker 2: early index entry as it prepares massive IPO. I'll quote here,
36:52
Speaker 2: companies must typically wait several months or a year after
36:54
Speaker 2: their public debut before gaining inclusion in a major index,
36:57
Speaker 2: such as the S and P five hundred and Nasdaq
36:59
Speaker 2: one hundred. Inclusion unlocks access to retail and institutional capital
37:03
Speaker 2: from funds, particularly those mimicking the performance of indexes, that
37:07
Speaker 2: have to hold the companies in the index. SpaceX hopes
37:10
Speaker 2: to skirt traditional rules in an effort to bring liquidity
37:13
Speaker 2: to which shareholders sooner is part of its planned IPO.
37:17
Speaker 2: And I gotta tell you, like, that's what it feels like.
37:20
Speaker 2: It feels like they're trying to get this thing out
37:22
Speaker 2: the door and move on from it. Yeah.
37:24
Speaker 3: And also, there's nothing about SpaceX or Elon Musk's companies
37:29
Speaker 3: generally that would indicate to me that they don't need
37:32
Speaker 3: to demonstrate that they are stable and liquid enough.
37:35
Speaker 2: No, Like, I'm not saying that like SpaceX is a
37:37
Speaker 2: bad company or anything, but yeah, why would you waive
37:41
Speaker 2: your normal rules in order to include this in the index?
37:47
Speaker 4: I would not.
37:48
Speaker 2: There's no reason to. You see how it performs. You see,
37:50
Speaker 2: it's you know, fully audited, you know, full year financials
37:54
Speaker 2: as a publicly traded company. And then you say yep,
37:56
Speaker 2: this can get in and we're gonna boot out XYZ. This.
38:00
Speaker 2: This really makes it feel like and again, I hate
38:03
Speaker 2: to go back to the AI thing. I think all
38:05
Speaker 2: these AI model companies are just in a race to
38:08
Speaker 2: unload their bags right now. It's what it feels like.
38:12
Speaker 2: Let's take a quick break. When we return tomorrow, we'll
38:16
Speaker 2: finish up the week on the Financial Exchange