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Are ordinary investors souring on Big Tech? · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. It's Mike,
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Speaker 2: Paul and Tucker with you on a Monday. After the
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Speaker 2: weekends strikes in Iran have markets relatively calm. Quite honestly,
1:25
Speaker 2: at this moment, the price of oil is down by
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Speaker 2: one and a quarter percent here in the US, down
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Speaker 2: below seventy three dollars a barrel from Friday's prices. As
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Speaker 2: a reminder, prices have already rallied a good twenty plus
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Speaker 2: percent over the last several weeks in anticipation of escalations
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Speaker 2: in the Middle East. As of May fifth, we were
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Speaker 2: sitting under sixty dollars per barrel, and then we've been
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Speaker 2: making our way steadily up to these levels over the
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Speaker 2: course of the last few weeks.
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Speaker 3: US equities are positive for the day. You've got.
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Speaker 2: The Dow, SMP and Nasdaq all in positive territory between
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Speaker 2: a or and one half of one percent. And yeah,
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Speaker 2: some of the typical things that you would expect to
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Speaker 2: see on a hey, big geopolitical tension day, such as
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Speaker 2: stocked down, bonds up, are not playing out exactly that way.
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Speaker 2: In fact, the yield on the tenure treasury moving down
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Speaker 2: a little bit today four point three to two percent,
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Speaker 2: but no big moves really anywhere that we are seeing
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Speaker 2: inequities or oil markets at this point, and obviously more
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Speaker 2: to come based on how this all progresses. Right, do
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Speaker 2: we have some sort of negotiation happened? Tough to envision,
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Speaker 2: given Iran's previous comments about negotiating while being threatened, but
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Speaker 2: we shall see the obvious. The obvious piece that everybody's
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Speaker 2: talking about today would be the closure of the strait
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Speaker 2: of horror moves. Should that move forward, you could see
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Speaker 2: oil prices spike substantially higher, but a lot of downside
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Speaker 2: for Iran should they go that route, including probably their
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Speaker 2: I don't want to say their closest ally because that's
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Speaker 2: not an accurate show of it, but you know, the
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Speaker 2: biggest buyer of their oil being in China, and the
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Speaker 2: you know, relative support that China has provided to Iran,
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Speaker 2: you know, would pretty quickly dry up if that, if
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Speaker 2: that oil stopped.
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Speaker 3: Flowing, is most people's guess.
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Speaker 2: So we'll continue to keep folks updated all week this
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Speaker 2: week on this one subject because it probably matters and
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Speaker 2: dominates things a bit more than what's going on in markets.
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Speaker 2: But I think the the answer, you know, for people wondering, like,
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Speaker 2: what is going on, and you know, markets are moving
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Speaker 2: up in response to a big change on the geopolitical scene,
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Speaker 2: I think the answer is pretty simply, go look at
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Speaker 2: previous escalations like this. It's not terribly clear that it
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Speaker 2: means bad things for the US economy or stocks. And
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Speaker 2: in fact, if this ends up distracting from the subject
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Speaker 2: of trade wars or you know, brings allies closer together
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Speaker 2: as a result of all of this, then you know,
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Speaker 2: perhaps it could be good for the state of trade
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Speaker 2: in the US economy. So we will see where this
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Speaker 2: goes next. Wall Street Journal has a piece today that
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Speaker 2: I'm guessing is completely miscategorizing the subject. Investors are souring
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Speaker 2: on big tech and they talk about stretched valuations after
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Speaker 2: a very substantial run up. I would not debate the
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Speaker 2: substantial valuations. I would not debate the idea that some
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Speaker 2: people are taking a second glance at their tech exposure.
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Speaker 2: But I have to wonder how much of that is
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Speaker 2: purely because the Nasdaq's done like three percent this year
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Speaker 2: as opposed to its more recent twenty thirty percent up
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Speaker 2: years that we've been seeing.
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Speaker 3: Is it more what have you done for me lately?
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Speaker 3: Paul or do people have genuine concerns here?
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Speaker 4: No, I think it's more what have you done for
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Speaker 4: me lately? Ultimately, on the valuation front, no one's going
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Speaker 4: to argue with the sentiment that heading into the beginning
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Speaker 4: of this year, tech had performed extremely well and the
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Speaker 4: stocks were highly valued. Some of these shifts that are
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Speaker 4: discussed in this piece, which I do feel are real
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Speaker 4: and have been happening over the course first few months wishing,
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Speaker 4: include putting more in the way of utilities and consumer staples.
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Speaker 4: Those are sectors of the market that tend to have
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Speaker 4: less economic volatility in times of uncertainty and usual you
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Speaker 4: will sometimes see during times of market challenges that more
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Speaker 4: money is poured into the utility sector or consumer staples.
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Speaker 4: Think you know Colgate, Palmola or Procter Gamble on the
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Speaker 4: consumer staple side of things, next Era Energy on the utilities.
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Speaker 4: Those companies are going to have a much more predictable
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Speaker 4: revenue base than something like Tesla or others out there.
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Speaker 4: So I'm sure that shift has occurred to some extent.
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Speaker 4: And then the international one that's a big play too.
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Speaker 4: It seems like there's been a lot of pilion to
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Speaker 4: international equities when you have the policy uncertainty here.
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Speaker 2: But here's here's the reality. Investors, retail investors especially, but
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Speaker 2: investors across the board chase returns. Yes, and we're seeing
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Speaker 2: that plan. And that's seven point one billion dollars this
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Speaker 2: year has flowed into tech focused exchange traded funds, that's
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Speaker 2: morning Star Direct, while institutional flows into funds that try
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Speaker 2: to buy stocks at a discount, so value funds of
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Speaker 2: some for what of another? So on inflow of twenty
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Speaker 2: five billion, while international ETFs logged an inflow of nearly
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Speaker 2: seventy billion dollars. Go take a look at how that
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Speaker 2: performance is stacked up. Your international has done digit double digits,
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Speaker 2: your tech has done slow single digits, and your value
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Speaker 2: stocks somewhere in between. And so that's the only conclusion
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Speaker 2: I have our tech investors souring on tech names, or
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Speaker 2: investors in general souring on technology stocks.
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Speaker 3: No, it's just what have you done for MEU lately?
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Speaker 2: They're out there chasing returns, and the returns this year
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Speaker 2: have not come from the United States and certainly have
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Speaker 2: not come from most big tech companies. Might there be
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Speaker 2: a little bit of something here on, you know, some
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Speaker 2: investor souring on Tesla.
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Speaker 3: Yeah, I could see that. Yeah, that could be real.
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Speaker 2: Could you have some investors saying, you know, on both
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Speaker 2: sides of the political spectrum, by the way, souring on
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Speaker 2: that one company could be But quite honestly, that's not
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Speaker 2: how most people invest No.
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Speaker 4: Apple has had some pressure share pressure too, which is
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Speaker 4: sort of understandable just because of their reliance on China.
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Speaker 4: But ultimately that's not what investing is about.
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Speaker 2: For most YEA, you know again, I bring up the
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Speaker 2: Tesla thing because how many people that are frustrated with
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Speaker 2: Tesla owned Tesla shares in the first place, or own
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Speaker 2: individual stocks at all in the first place, right, vast
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Speaker 2: majority of people investor therefore, oh one k have no
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Speaker 2: option to even buy individual stocks and are probably not
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Speaker 2: shifting things much at all. The shifts that you are seeing,
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Speaker 2: I don't think are driven by fundamentals or people taking
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Speaker 2: a real hard look at their tech exposure and saying, whoa,
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Speaker 2: am I up over my skis? I think in most
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Speaker 2: cases it's people saying, huh, my tech's not doing as
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Speaker 2: well as it did for the last few years. What's
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Speaker 2: doing well this year? Oh, that foreign stock seems to
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Speaker 2: be going quite well. Why don't I try that out instead,
7:54
Speaker 2: Let's take a quick break. When we come back, I'm
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Speaker 2: gonna have a little bit of trivia for you next
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Speaker 5: Which President nominated Clarence Thomas to the Supreme Court? Be
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Speaker 5: Exchange Show dot com Paul.
9:39
Speaker 2: Leading up to the tech bubble in nineteen ninety eight,
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Speaker 2: the largest tech companies by market capitalization. I'm going to
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Speaker 2: go through this list here and try and find them.
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Speaker 3: This is uh.
9:50
Speaker 2: Microsoft is the biggest one by a lot, at the
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Speaker 2: three hundred and forty eight billion dollars in market cap
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Speaker 2: back in ninety eight. Intel is up thereb M is
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Speaker 2: up there, Cisco. So that's four companies, right, Microsoft, Intel, IBM, Cisco,
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Speaker 2: and then who else do we have here in the
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Speaker 2: tech space? Nobody actually in the top twenty companies. There
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Speaker 2: are no other big tech names out there today. Obviously,
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Speaker 2: Microsoft is the only one on that list that is
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Speaker 2: still even up there in terms of valuation and represents
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Speaker 2: one of the top five tech companies. And this question
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Speaker 2: has been risen raised several times by others, and so
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Speaker 2: it's not my own unique thought, but is the tech
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Speaker 2: universe in twenty twenty five fundamentally different than it was
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Speaker 2: any time in history because of its size, because of
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Speaker 2: its motes that they have, because of the lack of
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Speaker 2: breakups and lack of anti trust concern out there that
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Speaker 2: these same companies will continue to dominate, or are we
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Speaker 2: on the cusp of some revolutionary new shift in technology
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Speaker 2: with artificial intelligence that is going to cause new companies
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Speaker 2: to exist and dominate things going forward. Obviously, Mark Zuckerberg is,
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Speaker 2: you know, laying the groundwork to try and prevent that
11:11
Speaker 2: with the new recruitment blitz that he's been on. He's
11:14
Speaker 2: going after all sorts of different AI workers with one
11:17
Speaker 2: hundred million dollars worth of pay packages to try and
11:22
Speaker 2: I guess deepen that moat that Meta has successfully built
11:26
Speaker 2: over the course of the last two decades. But you
11:28
Speaker 2: think about, you know, these big companies that were talked
11:30
Speaker 2: about as the revolutionary makers of the dot com infrastructure
11:38
Speaker 2: an internet world, right. It was IBM, it was Intel,
11:41
Speaker 2: it was Cisco, it was these companies that were building
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Speaker 2: the infrastructure for AI. The companies that came to dominate
11:47
Speaker 2: or sorry, build the infrastructure for the Internet. The companies
11:50
Speaker 2: that came to dominate the Internet hadn't even really been
11:53
Speaker 2: thought up at that stage. Amazon existed, but it was
11:56
Speaker 2: selling books, It was in its infancy. It did not
11:58
Speaker 2: exist in the same way, certainly did not have cloud
12:01
Speaker 2: computing capability at that stage. Meta didn't exist, Uber didn't exist.
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Speaker 2: A bunch of companies that have driven a whole lot
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Speaker 2: of value. Google did exist. But again, the companies that
12:14
Speaker 2: came to dominate this were not the ones that were
12:16
Speaker 2: being spoken of when it came to the Internet. And
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Speaker 2: the question that I don't think anyone has the answer
12:20
Speaker 2: to is will that happen again this time? Will new
12:23
Speaker 2: entrants overturn the Microsoft's and the Metas and the apples?
12:29
Speaker 2: Or are they so solidified that they will be able
12:31
Speaker 2: to successfully buy out anything upcoming to solidify their place
12:36
Speaker 2: in technology history.
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Speaker 4: It's a great question to pose. The piece that would
12:42
Speaker 4: have added to the argument of some of these bigger
12:44
Speaker 4: companies continuing to maintain that mote is the cost to
12:49
Speaker 4: scale up AI services is just something that was exorbit
12:53
Speaker 4: and expensive. Now, you had the deep Seek release back
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Speaker 4: in late twenty twenty four that perhaps brought up this
12:59
Speaker 4: idea that this notion that hyperscalers such as Microsoft and
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Speaker 4: Amazon and others that would just have to spend billions
13:06
Speaker 4: and billions of dollars developing large language models, they would
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Speaker 4: be the ones that would sort of dominate the space
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Speaker 4: that's been called into question.
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Speaker 2: A little bit, I think successfully quite honestly, Like you know,
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Speaker 2: I think you can take a look at that deep
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Speaker 2: Seek story and say, unless the end goal here is
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Speaker 2: for everyone to have a broad based model that anyone
13:26
Speaker 2: can use, like open AI's chat GPT, if that's what's
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Speaker 2: going to somehow drive all the value, then okay, yeah,
13:33
Speaker 2: the hyperscalers might end up dominating the space. But I
13:37
Speaker 2: think what Deepseeek told you is if you're trying to
13:39
Speaker 2: build specific objective AI models that can accomplish something for
13:45
Speaker 2: a specific organization, then no, you don't need the hyperscaling.
13:49
Speaker 2: You don't need all of this massive cost infrastructure in
13:51
Speaker 2: order to do so. You can go train it on
13:53
Speaker 2: a specific data set and get that up and running
13:55
Speaker 2: even without in video's best semiconductors at a pretty rapid pace,
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Speaker 2: So I think it kind of flips some of that.
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Speaker 3: Narrative on its head, and I don't know that's all
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Speaker 3: been realized.
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Speaker 4: Yeah, there there definitely seems to be an opening for
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Speaker 4: someone to come out with, whether it's sector specific software
14:11
Speaker 4: out there that or AI back software that would enhance productivity.
14:17
Speaker 4: And you know, there's been talks significantly about pairing robotics
14:22
Speaker 4: with the use of large linguis models and AI to
14:25
Speaker 4: complete jobs at manufacturing sites and others. There's certainly an
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Speaker 4: opportunity for a company to emerge to potentially dethrone some
14:34
Speaker 4: of these larger companies out there, but it's it's hard
14:37
Speaker 4: to say. I think it's good to bring up the
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Speaker 4: late nineties as a basis of comparison, where it's easy
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Speaker 4: to sit back and say that Microsoft and Meta and
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Speaker 4: Google will be the companies for the next twenty years
14:50
Speaker 4: to dominate this technology. But using history as a guy,
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Speaker 4: that's that's not always.
14:55
Speaker 2: The But I will also admit that these companies are
14:58
Speaker 2: far different than Intel was in nineteen ninety eight.
15:01
Speaker 3: The cash hoards.
15:02
Speaker 2: That they are sitting on and the expertise they've developed
15:05
Speaker 2: in acquisitions, and you know, go take a look at
15:07
Speaker 2: how Google has dominated their market for the last decade
15:12
Speaker 2: and a half. It's not been by innovating and you know,
15:15
Speaker 2: making the next big product. It's been by identifying what's
15:18
Speaker 2: a real threat to their business.
15:20
Speaker 3: Wait, he's really broken up about it.
15:24
Speaker 4: Identifying what is a threat to a business and like
15:27
Speaker 4: all the competition and purchasing them.
15:30
Speaker 3: And buying it out, you know, well before they could
15:32
Speaker 3: be come.
15:32
Speaker 4: I think think about Intel. The issue that it ran
15:34
Speaker 4: into there is they basically missed the whole mobile you know,
15:38
Speaker 4: massive iteration that we saw here where people shifted from
15:42
Speaker 4: desktop PCs to a lot of their computing being on mobile,
15:45
Speaker 4: and Intel just was caught flat footed for it. And
15:48
Speaker 4: to tie this back into the story that we're covering
15:50
Speaker 4: today with Meta, you have Marcus Zuckerberg realizing that this
15:54
Speaker 4: could be the next paradigm shift in technology, and if
15:57
Speaker 4: Meta fails to innovate in order to catch up to
16:01
Speaker 4: the change, then it too will fall by the wayside.
16:05
Speaker 4: I mean, I'm saying that very dramatically. They won't just
16:08
Speaker 4: fall off a cliff tomorrow because they have such a
16:11
Speaker 4: strong user base, but they will not be prepared to
16:15
Speaker 4: go through this this next decade. I mean talk about
16:18
Speaker 4: there's a This smells a lot of desperation if you
16:21
Speaker 4: read through this piece here the recruiting pact is that
16:23
Speaker 4: Mark Zuckerberg is throwing out here, Like you mentioned hundreds
16:25
Speaker 4: of millions of dollars, the acquisition of Scale, the company's
16:29
Speaker 4: Scale for fourteen billion dollars. It's uh, he's chasing it
16:33
Speaker 4: with that.
16:34
Speaker 2: He's not without risk, right, Like, there's no guarantee that
16:37
Speaker 2: with the best talent in there, you're going to develop.
16:42
Speaker 3: I don't even know what. I don't know how it fits.
16:44
Speaker 2: With your social media platform to develop an AI tool
16:47
Speaker 2: that people are going to use heavily.
16:49
Speaker 3: Is it just you know, developing a better algorithm to
16:52
Speaker 3: keep eyes on the phones? Is it? You know what
16:54
Speaker 3: exactly is it?
16:55
Speaker 2: But you know, hypothetically, right, if AI is really successful,
16:59
Speaker 2: there is a bit big hole left in the interrnet's
17:02
Speaker 2: budgeting gap when it comes to marketing, because you don't
17:04
Speaker 2: need the Googles to direct that traffic.
17:06
Speaker 3: In the same way.
17:07
Speaker 2: And so you know, potentially there is a pickup here
17:10
Speaker 2: for Meta if they can find a way to capitalize
17:12
Speaker 2: that on that because already you are seeing major companies
17:17
Speaker 2: like the Wall Street Journal and other content producers throwing
17:22
Speaker 2: up their hands and saying, Hey, the traffic that was
17:25
Speaker 2: getting directed to our sites previously, it's no longer happening.
17:29
Speaker 2: We're no longer able to pay Google for it, we
17:31
Speaker 2: are no longer seeing that click through rate because of
17:34
Speaker 2: these AI summaries that are put out on you know,
17:37
Speaker 2: Google's AI system or chat GPT that allows people to
17:40
Speaker 2: quickly get at least usable answer, even if they're not
17:45
Speaker 2: really fact checking it. But you know what, people were
17:48
Speaker 2: getting all their information on Facebook previously, and so they
17:51
Speaker 2: weren't fact checking it to begin with. And so I
17:54
Speaker 2: think for most people most use cases, typing something into
17:58
Speaker 2: Google and getting a a I generated summary is nine
18:02
Speaker 2: times out of ten enough. Definitely definitely has its downside too.
18:06
Speaker 2: Either of you hitting the road on Friday of July fourth.
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Speaker 5: Nuh, probably gonna stay local, don't have to deal with
18:13
Speaker 5: all that traffic.
18:14
Speaker 2: Sixty two million Americans hitting the road on July fourth,
18:17
Speaker 2: I will be one of them.
18:19
Speaker 3: The Friday is actually the fourth, right.
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Speaker 2: Yes, yeah, yeah, so triple A predicting some sixty two
18:25
Speaker 2: million Americans hitting the road in some way, shape or form.
18:29
Speaker 2: I will be heading south down to the Connecticut area.
18:33
Speaker 2: About sixty one point six million people travel by car.
18:35
Speaker 2: It's not just on the fourth, it's between the twenty
18:38
Speaker 2: eighth and the sixth. That's a two point two percent
18:41
Speaker 2: increase from last year, according to the American Automotive I
18:45
Speaker 2: didn't know what that. I did not even know that.
18:47
Speaker 2: That's what Triple A did for.
18:48
Speaker 3: What does it stand for, the American Automobile Association.
18:51
Speaker 5: I never thought of it.
18:52
Speaker 3: Yeah, I had not considered that. Paul. You you hitting
18:54
Speaker 3: the road.
18:55
Speaker 4: Yes, I'll be on the roads as well, headed down
18:58
Speaker 4: the Cape. It seems like the road trips are the
19:02
Speaker 4: most popular sort of form of Fourth of July travel,
19:05
Speaker 4: But it does seem like more people are gonna fly
19:08
Speaker 4: to up one and a half percent from from last
19:11
Speaker 4: year the travel here, so it'll be interesting to see.
19:14
Speaker 4: Supposedly some of the summer travel numbers were a little
19:16
Speaker 4: weaker on the flying side of.
19:18
Speaker 2: Things as we head in to that holiday. Gas price
19:21
Speaker 2: is sitting right now at three dollars twenty two cents
19:24
Speaker 2: per gallon. Obviously, that has the possibility to swing upwards
19:27
Speaker 2: substantially depending on what happens next in the Middle East.
19:29
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Speaker 1: Radio Network.
19:51
Speaker 3: Time now for.
19:52
Speaker 1: Wall Street Watch a complete look at what's moving market
19:55
Speaker 1: so far today right here on the Financial Exchange Radio Network.
20:00
Speaker 5: It's in positive territories so far today despite the attacks
20:03
Speaker 5: on Iran's three nuclear sights on Saturday evening, where traders
20:07
Speaker 5: are keeping a close.
20:08
Speaker 3: Eye on oil.
20:10
Speaker 5: Right now, the Dow is up by only sixty points now,
20:14
Speaker 5: SMP five hundred is up a third of a percent,
20:16
Speaker 5: and the Nasdaq is up by four tenths of one
20:19
Speaker 5: percent or eighty three points. Russell two thousand is up
20:22
Speaker 5: about a third of a percent as well. Ten year
20:24
Speaker 5: treasurreel down by six basis points now at four point
20:28
Speaker 5: three one percent, and crude oil off above one percent,
20:32
Speaker 5: trading just above seventy three dollars a barrel. Defense stocks
20:36
Speaker 5: are also garnering attention as well. RTX, Northrop Grumming, and
20:41
Speaker 5: Kratos Defense and Security are all seing gains on the day.
20:45
Speaker 5: Outside of the Middle East. Some big news in the
20:47
Speaker 5: financial sector this morning after The Wall Street Journal reported
20:50
Speaker 5: that Bank of New York Mellon approached Northern Trust about
20:53
Speaker 5: a possible merger. Northern Trust shares are jumping by eight percent,
20:57
Speaker 5: while Bank of New York Mellon stock is down over
21:00
Speaker 5: two percent. Meanwhile, Tesla shares are rallying over ten percent
21:04
Speaker 5: now after the ev maker launched its long awaited robo
21:08
Speaker 5: taxi service in Austin, Texas over the weekend. Elsewhere, Novo
21:13
Speaker 5: Nordis shares down by over five percent after its latest
21:16
Speaker 5: results for its next gen obesity drug were disappointing and
21:20
Speaker 5: suggested no clear advantage over its rival Eli Lilly's zep bound. Furthermore,
21:26
Speaker 5: the pharmaceutical company announced it has ended its collaboration with
21:29
Speaker 5: Hymns and Hers Health, citing compounding and marketing concerns. Hims
21:34
Speaker 5: and Hers is tanking by twenty eight percent, and shares
21:37
Speaker 5: and Trump Media and Technology are up over two percent
21:42
Speaker 5: after the parent company of Truth Social set its board
21:45
Speaker 5: has approved a stock buyback of up to four hundred
21:49
Speaker 5: million dollars. I'm Tucker Silva and that is Wall Street
21:53
Speaker 5: Watch trivia question. We asked in the previous question which
21:56
Speaker 5: president nominated Clarence Thomas to the Supreme Court. That would
21:59
Speaker 5: be George H. W. Bush, now ran from Weymouth, Mass
22:03
Speaker 5: is our winner. Today taking on a Financial Exchange Show
22:06
Speaker 5: t shirt and we play trivia every day here on
22:09
Speaker 5: the Financial Exchange See complete contest rules at Financial Exchange
22:12
Speaker 5: Show dot com.
22:13
Speaker 2: The CEO of Russell Investments has a piece out in
22:16
Speaker 2: Barns today about four one k's not being built for
22:20
Speaker 2: the gen Z economy. Paul, what is Zach referring to
22:26
Speaker 2: here when he talks about the downsides of four to
22:28
Speaker 2: one k's for this demographic group.
22:30
Speaker 4: Especially what he's mentioning, which I'm not so sure that
22:34
Speaker 4: I agree with, Mike, but we'll get into that in
22:35
Speaker 4: just a second, is that the four on K system
22:38
Speaker 4: was designed in nineteen seventy eight, where this was much
22:41
Speaker 4: more a heavier focus on pensions for retirement security, and
22:45
Speaker 4: there was a lot less job mobility or movement within
22:50
Speaker 4: the system. Typically during that period of time, people were
22:53
Speaker 4: more likely to stay with their employer for a longer
22:56
Speaker 4: period of time. Now, it's estimated that on average a
23:00
Speaker 4: gen Z employee will change jobs twelve times over the
23:04
Speaker 4: course of their career. And what Zach is alluding to
23:07
Speaker 4: you here in this piece is that that will cause
23:10
Speaker 4: for many four on k's to be left out there
23:14
Speaker 4: by the wayside. If people are to move from job
23:17
Speaker 4: to jobs so frequently, and that this could cause an
23:21
Speaker 4: interruption in retirement savings. And I just I'm not so
23:25
Speaker 4: sure that this is such a significant problem because auto
23:31
Speaker 4: enrollment is one of the things that is mentioned this
23:32
Speaker 4: piece that is featured that if you do join your
23:34
Speaker 4: new company, that's becoming a more prevalent feature, meaning that
23:38
Speaker 4: you don't have to take the effort to establish retirement
23:42
Speaker 4: contributions at your new employer. It's just done for you.
23:45
Speaker 4: That's a step I think that's tremendous in the right direction.
23:49
Speaker 4: And then secondly, to me, it's the fault of the
23:53
Speaker 4: participant if you're not going to take the effort in
23:55
Speaker 4: time to roll your old four one k minimally out
23:59
Speaker 4: to an i R that you manage yourself or roll
24:02
Speaker 4: it into your new employee four one K. I just
24:07
Speaker 4: find it a little hard not to sympathize that the
24:09
Speaker 4: efforts and I know this process intimately because you and
24:12
Speaker 4: I we deal with this all day. It is not
24:14
Speaker 4: so difficult to roll your old four one k out
24:17
Speaker 4: from a lot of these providers out there. It's just
24:20
Speaker 4: a phone call. So I just have trouble finding a
24:23
Speaker 4: lot of sympathy for that.
24:24
Speaker 2: Yeah, and I think we sometimes kind of get the
24:28
Speaker 2: order of operations incorrect.
24:30
Speaker 3: Here.
24:31
Speaker 2: The reason or a big reason that gen zers are
24:34
Speaker 2: going to hop their jobs some fifteen times is at
24:37
Speaker 2: least in part because companies don't offer pensions. So let's
24:41
Speaker 2: not confuse these two, right, Like, yeah, the companies don't
24:44
Speaker 2: offer pensions anymore. That's probably why I'm not incentivized to
24:47
Speaker 2: stay with my employer long term and go seek out
24:50
Speaker 2: the highest possible compensation. And so it kind of comes
24:53
Speaker 2: with the territory here. Look, I agree the four oh
24:56
Speaker 2: one K is not perfectly designed. There are a lot
24:58
Speaker 2: of flaws to it. And yeah, that process of changing
25:01
Speaker 2: employers is a burdensome one. Like, for example, let's say
25:07
Speaker 2: you work with one employer and then you know, switch
25:10
Speaker 2: jobs to another, and they both have their four oh
25:13
Speaker 2: one k's sponsored by Fidelity, biggest four to one K
25:17
Speaker 2: retirement specialist out there. Hypothetically, you would think it'd be
25:22
Speaker 2: pretty easy to tell Fidelity, like, hey, just combine those
25:24
Speaker 2: two for me so I don't have to deal with
25:26
Speaker 2: all these different accounts and different fund lineups.
25:28
Speaker 3: It's not it requires a call out to them.
25:31
Speaker 2: They have to sometimes cut a check to you personally,
25:34
Speaker 2: and then you have to turn around and give it
25:36
Speaker 2: back to Fidelity. Even though they're both plans at the
25:39
Speaker 2: same place. They can't just simplify that and make it
25:43
Speaker 2: easy for you. In some cases, your old employer actually
25:46
Speaker 2: has to sign off on it. You have to send
25:48
Speaker 2: paperwork back to your old employer, and like, those are
25:51
Speaker 2: unnecessary problems in the way. The other downside to all
25:56
Speaker 2: this job hopping, right, those matching contributions that go into
25:59
Speaker 2: your four to one K, they oftentimes vest over several years,
26:02
Speaker 2: right up to five years from what I've seen, and
26:04
Speaker 2: so you know, you job hop three times in five years,
26:07
Speaker 2: your matches are probably out the window. The other big
26:10
Speaker 2: complaint I have about the retirement system generally, it has
26:13
Speaker 2: never made any sense to me why I can contribute,
26:18
Speaker 2: what is it this year, twenty two hundred dollars into
26:22
Speaker 2: a four oh one K, But I'm capped at like
26:25
Speaker 2: you know, single thousands of dollars when it comes to
26:28
Speaker 2: an IRA. And so if I happen to work for
26:30
Speaker 2: an employer that doesn't offer a four oh one K,
26:32
Speaker 2: then too bad, You're out of luck. This is how
26:34
Speaker 2: much you can do. And if you earn too much,
26:35
Speaker 2: you can't do anything into the IRA, so good luck.
26:39
Speaker 2: So look, there are several downsides to the four oh
26:42
Speaker 2: one K, but it comes back to me, this is
26:45
Speaker 2: the system we have. And so if you are just
26:49
Speaker 2: going to protest the system and not contribute because you
26:52
Speaker 2: don't trust your employer, or don't think you'll be there
26:55
Speaker 2: for a long time, or don't like the way the
26:56
Speaker 2: system's set up, the only person you're screwing is yourself. Yes,
27:01
Speaker 2: I think that's the main message I would have here
27:02
Speaker 2: is you know, if you're frustrated because they don't allow
27:05
Speaker 2: you to invest in what you want, or if you're
27:08
Speaker 2: frustrated because it's too annoying to roll over, Ultimately, you're
27:12
Speaker 2: losing yourself money when it comes to all of this.
27:15
Speaker 2: And so if you're new to the workforce, if you've
27:17
Speaker 2: been there for decades, if you're trying to sort out, Hey,
27:20
Speaker 2: you know, I've got these ten plans from old jobs,
27:23
Speaker 2: what do I do with them? That's where the danger
27:26
Speaker 2: comes in of losing one of these things. And you know,
27:30
Speaker 2: and by losing I mean literally like, hey, I move
27:32
Speaker 2: three times and that four oh one K is now gone.
27:34
Speaker 2: I don't know how to find it anymore, and I
27:36
Speaker 2: can't log in. This happens frequently to folks and is
27:41
Speaker 2: just your own money disappearing. If you have questions about
27:44
Speaker 2: how the four oh one K or four h three
27:46
Speaker 2: B four fifty seven, you know, whatever the employer sponsor
27:50
Speaker 2: plan is that you have can fit into your overall
27:53
Speaker 2: retirement strategy, and how best to take advantage of it
27:56
Speaker 2: because they are confusing with a bunch of complex tax laws.
28:00
Speaker 2: All the folks at Armstrong Advisory Group the numbers eight
28:02
Speaker 2: hundred three nine three for zero zero one. We work
28:05
Speaker 2: with our clients every day to maximize these benefits that
28:09
Speaker 2: again are annoying. They are complicated, but if you're not
28:12
Speaker 2: taking advantage of them, then you're missing out. And that
28:15
Speaker 2: number again for the Armstrong Advisory Group, eight hundred three
28:18
Speaker 2: nine three four zero zero one.
28:21
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
28:23
Speaker 1: registered investment advisor. Nothing in the ad or in any
28:26
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
28:29
Speaker 1: your own financial tax into state planning advisors before making
28:32
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
28:35
Speaker 1: advisory services.
28:36
Speaker 3: Mark your name's not Mark is it not less time, No, Paul,
28:41
Speaker 3: Paul's your name. Sorry.
28:43
Speaker 2: Wall Street Journal has a piece out today, high cost
28:45
Speaker 2: of ended America's love affair with cars.
28:48
Speaker 3: I like this piece because I always just.
28:51
Speaker 2: Kind of drove the crappiest car I could find at
28:53
Speaker 2: the most reasonable price and drove it forever. But I
28:56
Speaker 2: would admit that I think America does have a love
28:58
Speaker 2: affair with cars, and because of.
29:01
Speaker 3: Costs, that's kind of changing.
29:04
Speaker 2: A little bit that that love affair. Two pieces that
29:07
Speaker 2: I found fascinating in this article. One, average insurance costs
29:11
Speaker 2: in twenty twenty four rose ten percent. That's after rising
29:14
Speaker 2: fifteen percent in twenty twenty three. Insurance costs in this
29:18
Speaker 2: country are.
29:19
Speaker 3: Going through the roof.
29:20
Speaker 2: And while it's not all our fault, right, like, some
29:25
Speaker 2: of this is natural disaster and increasing frequency of them.
29:28
Speaker 2: Some of it is, like, you know, our choice to
29:30
Speaker 2: consistently buy sixty thousand trucks instead of thirty thousand dollars
29:35
Speaker 2: sedans means that it's more expensive to ensure them, and
29:38
Speaker 2: those things are going to keep creeping up because of
29:40
Speaker 2: the choices that we make as consumers.
29:42
Speaker 4: The other part of it is the amount of technology,
29:44
Speaker 4: though that are in vehicles today, Like I just think about.
29:47
Speaker 2: As again, that's a choice, right, Like if Americans for
29:51
Speaker 2: the last few decades had been choosing manual transitions with
29:55
Speaker 2: hand crank windows, then car producers would be making them instead,
30:00
Speaker 2: we want fifteen different cameras in our cars.
30:03
Speaker 4: They have to innovate, you know, in order to keep
30:06
Speaker 4: up with the overall marketplace, you know, to make driving better,
30:11
Speaker 4: Like you can't just have the old system in. I
30:14
Speaker 4: don't know.
30:15
Speaker 2: I mean, there is a car company that's again it's
30:17
Speaker 2: just an idea right now, but they're tossing around making
30:21
Speaker 2: I think it's like a fifteen thousand dollars EV truck
30:24
Speaker 2: with nothing. It doesn't have a radio, it doesn't have
30:27
Speaker 2: power windows, and like, I don't know, I kind of
30:31
Speaker 2: find that idea appealing.
30:33
Speaker 3: I think you're a.
30:34
Speaker 4: Prisoner of this this crappy car movement too much in
30:36
Speaker 4: yourself because I have just a newer car that we
30:39
Speaker 4: bought recently, and then one that's probably a twenty seventeen
30:42
Speaker 4: twenty eighteen. Even I noticed that I get spoiled by
30:45
Speaker 4: the newer features on the new car, where the cameras
30:48
Speaker 4: that initially when you get in, like this is such
30:50
Speaker 4: overkill that I have an overhead camera. I have a
30:52
Speaker 4: front camera and a back camera, but when I'm in
30:54
Speaker 4: my older version, I just have the rear facing camera.
30:57
Speaker 4: I sort of find myself missing the feature that I have.
31:01
Speaker 4: And the sensors on the lane change too. It's just
31:04
Speaker 4: gotten better and better, so I agree to me. The
31:07
Speaker 4: other piece that stood out is the amount of age
31:11
Speaker 4: of passionate cars on the road. Fourteen and a half
31:13
Speaker 4: years is the average age of passionate cars on the
31:16
Speaker 4: road according to S and P globals data.
31:19
Speaker 3: That's the average.
31:20
Speaker 2: That's a big number, that's incredible, incredibly high. The last
31:24
Speaker 2: piece here that again is just crazy and explains all
31:27
Speaker 2: of this. The Bureau of Labor Statistics estimates that the
31:30
Speaker 2: total cost to own and operate at a car averaged
31:34
Speaker 2: twelve and ninety six dollars in twenty twenty four. So
31:38
Speaker 2: you know, repair costs, insurance costs, gasoline, all all this
31:41
Speaker 2: stuff that goes into owning a car. That's up thirty
31:44
Speaker 2: percent from a decade ago. That's I don't know what
31:48
Speaker 2: that is. I mean, that's got to be double the rate.
31:51
Speaker 3: Of overall inflation.
31:52
Speaker 2: I would think, let's take a quick break when we
31:54
Speaker 2: come back here on the Financial Exchange stack Roulette.
31:58
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32:34
Speaker 5: Now's a great time to register for the DAV five k,
32:38
Speaker 5: taking place on Saturday, November eighth at Fort Independence on
32:42
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32:45
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32:56
Speaker 5: Financial Exchange by registering under team that Saturday, November eighth
33:02
Speaker 5: For this year's DAV five k, sign up now at
33:06
Speaker 5: DAV fivek dot Boston.
33:08
Speaker 2: So, by the way, Paul I was talking about that
33:09
Speaker 2: stripped down EV company is a company called Slate, which
33:13
Speaker 2: has apparently been backed by Jeff Bezos. The company's first
33:18
Speaker 2: vehicle is a modular customizable electric pickup truck called the
33:21
Speaker 2: Slate Truck that starts at around twenty thousand dollars.
33:24
Speaker 3: And the whole idea is.
33:25
Speaker 2: You know where the name comes from is blank slate.
33:27
Speaker 2: So you start off with this truck that has one
33:30
Speaker 2: hundred forty miles range, I think, and then can completely
33:34
Speaker 2: customize it in a number of different ways, including basically
33:37
Speaker 2: using the frame and turning it into an suv. You can,
33:41
Speaker 2: you know, put a rap on it. You can have
33:43
Speaker 2: all sorts of different things, but starts at twenty thousand dollars.
33:46
Speaker 2: I don't know, bab. Maybe I'm just nostalgic for the
33:50
Speaker 2: first car I ever drove, which was the cheapest Mazda
33:53
Speaker 2: three we could find, with no power windows, no cruise control,
33:58
Speaker 2: and a manual transmission. And that's how I learned how
34:00
Speaker 2: to drive stick And so maybe I'm just nostalgic for it.
34:03
Speaker 2: But maybe, you know, I don't know, maybe there's a
34:05
Speaker 2: buyer for this type of thing out there.
34:07
Speaker 4: It is just one more thing on the car front.
34:09
Speaker 4: We were talking about the average life of vehicles on
34:11
Speaker 4: the road at fourteen and a half years. So ironically,
34:14
Speaker 4: I've been getting a couple of emails. I bought a
34:16
Speaker 4: big suburban back in the fall with the arrival of
34:20
Speaker 4: my third child here, and I've been getting emails saying
34:23
Speaker 4: that the dealership will give one hundred and twenty percent
34:25
Speaker 4: of Kelly Blue Book value to that vehicle that I purchased.
34:29
Speaker 4: And it speaks to the idea of the demand for
34:32
Speaker 4: used cars, which we've covered a little bit on the show,
34:34
Speaker 4: where concerns about some of the tariffs in place, there's
34:36
Speaker 4: a tremendous amount of demand for.
34:38
Speaker 2: By the way, I say all this, and then you
34:40
Speaker 2: know I'm being a total hypocrite because a prerequisite for
34:44
Speaker 2: my next minivan was that it had to have a
34:46
Speaker 2: television in it or.
34:47
Speaker 3: May be able to put into it. No power windows.
34:50
Speaker 2: Again, that's not technology for me. By this is a
34:53
Speaker 2: technology to keep my kids quiet. So you know, six
34:55
Speaker 2: one half dozen the other I guess what do you
34:57
Speaker 2: have for us, Paul? I want to talk a little
34:58
Speaker 2: bit about stable coins.
34:59
Speaker 4: I don't if you guys have covered it on the
35:01
Speaker 4: show over the last week or so, Sure, where basically
35:05
Speaker 4: I just find it interesting in the sense that it
35:06
Speaker 4: could be a huge disruptor to the ecosystem of in
35:10
Speaker 4: particular Visa and MasterCard.
35:12
Speaker 3: So if you or I are go going.
35:14
Speaker 4: Out there to pay for a purchase today, I may
35:16
Speaker 4: use my chase, you know, Visa credit card where I'll
35:20
Speaker 4: buy a laptop, for example, and there will be a
35:23
Speaker 4: fee associated assess to the vendor. Let's say I'm buying
35:26
Speaker 4: the laptop from Best Buy, where they have to cover
35:30
Speaker 4: the three or four percent charge that Visa assesses, and
35:34
Speaker 4: a lot of that goes back to me as a
35:37
Speaker 4: rewards benefit. But the interchange, the small percentage differential between
35:42
Speaker 4: that fee and what I get in form of rewards,
35:46
Speaker 4: is how Visa and MasterCard make money through their network.
35:48
Speaker 3: Now stay they pretty much have a monopoly on.
35:50
Speaker 4: The exactly I mean. It's Visa, MasterCard, Discover, and American
35:53
Speaker 4: Express that are basically the big four that control a
35:56
Speaker 4: lot of the majority of any sort of consumer transactions
36:01
Speaker 4: out there. The stable coins have been mentioned with this
36:04
Speaker 4: idea of in this same hypothetical of me purchasing the laptop,
36:08
Speaker 4: I have a thousand dollars in my wallet crypto wallet
36:13
Speaker 4: out there that pegs the currency or the stable coin
36:18
Speaker 4: to the US dollars, so that I basically know my
36:20
Speaker 4: one thousand dollars are equipment to one thousand US dollars
36:23
Speaker 4: to make that same purchase, and the transaction is executed
36:26
Speaker 4: through blockchain, basically cutting out Visa and MasterCard from that
36:31
Speaker 4: transaction by using other financial technology out there. And the
36:35
Speaker 4: reason I just find interest in it is what does
36:38
Speaker 4: this How would this reshape things? Certainly Walmart and Amazon,
36:42
Speaker 4: a lot of these big retailers out there, This would
36:44
Speaker 4: be a huge coup for them to be able to
36:46
Speaker 4: cut out that three or four percent transaction fee. But
36:49
Speaker 4: on my end, I still like the rewards that I'm getting,
36:52
Speaker 4: So what's the incentive to me now? Obviously the easy
36:55
Speaker 4: strategic pivot is for Amazon and Walmart to say, hey, Paul,
36:58
Speaker 4: we'll give you three percent off on the purchase or
37:00
Speaker 4: something like that. But I just find an interesting development
37:04
Speaker 4: in financial technology.
37:05
Speaker 2: So Visa stopped, by the way down about eight and
37:08
Speaker 2: a half percent sincetead of June eleventh high So you know,
37:11
Speaker 2: I think some of that might be in reaction to this.
37:13
Speaker 2: I'm right there with you, Paulack. Yeah, I could disrupt
37:16
Speaker 2: a bunch of banks. I don't know how it changes
37:18
Speaker 2: my life, right, you know, like one, if I'm going
37:21
Speaker 2: to move a bunch of money onto a stable coin,
37:23
Speaker 2: I have a ton of questions.
37:24
Speaker 3: Is it fdic ensured?
37:25
Speaker 2: What sort of assurances do I have from some brand
37:27
Speaker 2: new company that's going to actually be able to peg
37:29
Speaker 2: this similar to like a money market or you know,
37:33
Speaker 2: a mutual funder these sorts of things. And then yeah,
37:36
Speaker 2: I mean, give me an incentive to stop running this
37:39
Speaker 2: on my credit card, and I'll consider doing so. But
37:42
Speaker 2: it's going to have to be more than two percent,
37:44
Speaker 2: which is what I get on my credit card.
37:46
Speaker 4: I would think that Amazon Walmart would give more away
37:48
Speaker 4: just to get the adoption, you know, you'd think that
37:51
Speaker 4: they'd lose almost lose money on the transactions just to
37:54
Speaker 4: embed it.
37:55
Speaker 2: But I'm just interested in from basically a crypto gift card, right,
38:02
Speaker 2: I don't know.
38:03
Speaker 3: It doesn't seem all that innovative to me.
38:05
Speaker 2: Yeah, let's take a quick break for the rest of
38:07
Speaker 2: the day, but we will be right back at it tomorrow.
38:09
Speaker 3: Folks, markets remain in positive territory.
38:12
Speaker 2: We'll have a recap for you tomorrow, and a whole
38:15
Speaker 2: lot more have a great risk of your day.
38:17
Speaker 3: Stay cool,