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Why the AI boom is not like the dot com boom · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada
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Speaker 1: and Paul.
1:07
Speaker 2: Lane, Chuck, Paul Tucker with you kicking things off and
1:13
Speaker 2: market it's not really doing a ton Prior to the
1:18
Speaker 2: FED meeting. The S and P is down ten points,
1:22
Speaker 2: about a tenth of a percent, A little bit less
1:24
Speaker 2: than that, I'm sorry, a little more than that. Dal
1:27
Speaker 2: Jones is up one hundred and three points, a little
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Speaker 2: less than a quarter percent. The Nasdaq is down about
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Speaker 2: half a percent, so you do have a little bit
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Speaker 2: of movement on that front, the vast majority of it. Again,
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Speaker 2: if you look kind of where it's coming from, Microsoft
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Speaker 2: off about three percent today, and video off about one
1:48
Speaker 2: and a half and Broadcom off about one in a quarter.
1:51
Speaker 2: So tech kind of dragging a little bit today. And
1:56
Speaker 2: we're gonna be talking quite a bit about artificial intelligence
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Speaker 2: as uh. It'll actually be the first day that we've
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Speaker 2: ever talked about artificial intelligence on the Financial Exchange, so
2:08
Speaker 2: that's kind of exciting for us. Tucker. We still do
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Speaker 2: not have any AI hosts for the show.
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Speaker 1: We're working on it. Holidays are coming up, so.
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Speaker 2: What do we do. We have names. I know Mark
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Speaker 2: Fandettai is one of the I.
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Speaker 3: Don't know if you could do better than that. That's
2:28
Speaker 3: that's a really good name, Chuck GPT. Yeahzi uh.
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Speaker 2: Let's see what are the other major ones. We've got
2:37
Speaker 2: perplexity out there? What about poulplexity? Yeah, I like poulplexity.
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Speaker 1: Yep.
2:42
Speaker 2: Quote me on that, Mike Armstrong could be No, Mike
2:49
Speaker 2: A I am Strong. No, that one sucks anyways, I
2:54
Speaker 2: don't know. Yes, thank you, Mike, I Armstrong idiots. That's
3:00
Speaker 2: that's about right. No, No, yeah, that's that's right, Mike.
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Speaker 2: I know. US tenure Treasury is down one point eight
3:08
Speaker 2: basis points to four point one six eight percent. The
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Speaker 2: Dollar Index is down point one three percent to ninety
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Speaker 2: nine oh seven. Gold is off fourteen eighty announced to
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Speaker 2: forty two to twenty one and forty cents, and crude
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Speaker 2: oil West Text Intermediate down another forty eight cents a
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Speaker 2: barrel to fifty seven seventy seven, and the triple A
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Speaker 2: national average for gas prices continuing its little slide of
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Speaker 2: runey as well, that is off another half a cent
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Speaker 2: to two ninety four even, and so continuing to see
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Speaker 2: gas prices coming down, which is always fun, but in
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Speaker 2: particular heading into a busy period of driving that kicks
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Speaker 2: off in about you know, eight to ten days. So
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Speaker 2: it's nice let's talk a little bit about China. And
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Speaker 2: in video, we've got a couple different stories here. Yesterday
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Speaker 2: we cover the story that the Trump administration is authorizing
4:03
Speaker 2: the export of in Vidia's H two hundred chip to China.
4:07
Speaker 2: This had previously been not allowed. Still is not the
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Speaker 2: newest chips that they have, the Blackwell chips, but this
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Speaker 2: is the previous version the hoppers as they're referred to
4:17
Speaker 2: in the biz. And so you got you know, full
4:21
Speaker 2: powered hoppers that China can buy now. China basically came
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Speaker 2: out yesterday as again we're not really sure that we
4:26
Speaker 2: want these anyways, which is why you get this news
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Speaker 2: failure where in videos down despite the announcements. But a
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Speaker 2: couple different stories that are out today, one from the
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Speaker 2: New York Times China's access to powerful in vidio chips
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Speaker 2: comes at a quote critical moment, and the other one
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Speaker 2: is China's deepseek uses banned in video chips for AI model,
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Speaker 2: according to a report from the Information So a couple
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Speaker 2: of things to talk about on this. The first is
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Speaker 2: that when we look at semiconductor export restrictions, the reason
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Speaker 2: why we've typically had them in place is because we
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Speaker 2: recognize that bad actors can use these chips in ways
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Speaker 2: that could be destructive for US national security concerns. I
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Speaker 2: think we all acknowledge this. I think we also acknowledge
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Speaker 2: that the Chinese government on occasion can be a bad actor. Sure,
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Speaker 2: so I think we understand why these you know, would
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Speaker 2: be in place. Historically. The issues that you run into
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Speaker 2: on the on the AI side of things specifically are
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Speaker 2: twofold in my opinion. The first is, even if you
5:40
Speaker 2: do have these restrictions in place when it comes to China,
5:43
Speaker 2: the fact that you've pretty much allowed the entire Middle
5:46
Speaker 2: East to buy whatever they want from this side of
5:47
Speaker 2: things means that there's a pretty clear conduit for these
5:50
Speaker 2: things to get into China anyways. To ye, So, like
5:54
Speaker 2: that's pretty obvious, just if you actually want to, like,
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Speaker 2: you know, track these things, and like doesn'vini just stick
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Speaker 2: like air tag on every chip they make to see
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Speaker 2: where it goes? No, they don't, So I don't think
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Speaker 2: that you really know exactly where your technology ends up.
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Speaker 2: The second piece that I was thinking of when I
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Speaker 2: read this Bloomberg piece reporting on the information I'll quote
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Speaker 2: here because it's like this is important Chinese artificial intelligence
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Speaker 2: startup Deep Seek has relied on in Vidia Corporation chips
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Speaker 2: that are banned in the country to develop an upcoming
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Speaker 2: AI model. In Vidio's Blackwell chips were smuggled into chinaviar
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Speaker 2: countries that permitted their sale, the report said, citing anonymous sources.
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Speaker 2: The report said that service containing the chips were dismantled
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Speaker 2: before arriving in China. A representative from deep Seek didn't
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Speaker 2: immediately respond to a request for comment. So what we're
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Speaker 2: talking about here is that deep Seek may have trained
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Speaker 2: their new models on the Blockwell chip. So the other
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Speaker 2: thing that I think is obvious to me now in
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Speaker 2: terms of also thinking about this, is it's not clear
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Speaker 2: that you need to even have these in China in
7:07
Speaker 2: order for it to be a national security problem, not
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Speaker 2: that in order for deep Seek to train on them
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Speaker 2: in that Hey, all you're really doing is you're getting
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Speaker 2: a cluster of these chips and doing that you know
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Speaker 2: the training that you need to on them. Is there
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Speaker 2: anything that prevents deep Zeke from contracting with a company
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Speaker 2: in wherever and saying, hey, we want to use your
7:30
Speaker 2: cloud for X number of hours at Y rate and
7:34
Speaker 2: then you can train on them anyways. Sure, right, I
7:38
Speaker 2: don't believe there's anything that says they can't do that. So,
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Speaker 2: like that's one piece. But the stuff that we're really
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Speaker 2: concerned about from a national security perspective is not Deep
7:47
Speaker 2: Seek training its new AI models on in Vidio hardware.
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Speaker 2: It's the Chinese government, specifically the Chinese military getting its
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Speaker 2: hands on this stuff right and using it for whatever
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Speaker 2: purposes it wants to know, in order to enhance the
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Speaker 2: Chinese military's capabilities. Sure, so, basically, like where we are
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Speaker 2: right now, is it's unclear to me ay that there
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Speaker 2: really is any meaningful restriction that is in place on
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Speaker 2: the actual movement of chips to China just because they
8:23
Speaker 2: can go through all of these other countries that are
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Speaker 2: authorized to buy them anyways.
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Speaker 4: Yes, I would say that having the restriction in general,
8:32
Speaker 4: is it full proof. No, it's probably like putting in
8:34
Speaker 4: the drinking age being twenty one in this country. Yeah,
8:38
Speaker 4: you can put the agent, but then there's also a
8:40
Speaker 4: lot of ways that kids are going to work around
8:41
Speaker 4: to be able to drink. There's also gonna be ways
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Speaker 4: that China worked around to get the chips that needed. However,
8:48
Speaker 4: it does prevent some of the outflow of chips there,
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Speaker 4: there's no question about that. Yeah, deepseek might be able
8:52
Speaker 4: to get their hands on them, but the access is
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Speaker 4: likely not as widespread because you have these restrictions in place.
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Speaker 4: I think they solve everything. No, not necessarily. It's an
9:02
Speaker 4: interesting policy pivot where to be clear, it's not the
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Speaker 4: most sophisticated chips that they're now permitting to be sold
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Speaker 4: to China.
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Speaker 2: It's the step down.
9:10
Speaker 4: Generation beyond, but still far it's far different from where
9:14
Speaker 4: the Biden administration was previously, which is said, you know,
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Speaker 4: no export of chips or significantly more water down versions
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Speaker 4: were going to China previously, the age twenties were being sent.
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Speaker 4: As of August, I think that agreement had come into place,
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Speaker 4: but then you bound battle the counter forces of China
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Speaker 4: really not wanting to endorse the purchase of these chips.
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Speaker 4: So the sentiment I had on yesterday with Mike is
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Speaker 4: it's kind of it's noteworthy, but it's a whole lot
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Speaker 4: to do about nothing, I think in a sense, because
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Speaker 4: I just don't know how much this changes the trajectory
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Speaker 4: of what China is going to continue to do, which
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Speaker 4: is to deploy a lot of investment into building this
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Speaker 4: out and deep Seek's going to continue to grab the chips.
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Speaker 4: So and I don't think Nvidia is going to get
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Speaker 4: a ton of sales bumped from this.
9:59
Speaker 1: No.
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Speaker 2: And look, the concern that the stages that we've gone
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Speaker 2: through on this this year and where I think we
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Speaker 2: are heading eventually is you know, the US government did
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Speaker 2: not allow China to buy many of these chips to
10:15
Speaker 2: begin with. And we said, like Tucker pulled the taper,
10:19
Speaker 2: Ben pulled the tape at one point, and we had said,
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Speaker 2: like in July or August, Gee, wouldn't the funny thing
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Speaker 2: be if the US authorized the export? And then China
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Speaker 2: said no, And it's kind of what they've done now.
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Speaker 2: And now the next place that this logically goes, just
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Speaker 2: based on how China historically operates, is they're going to
10:36
Speaker 2: figure out how to replicate as much as possible of
10:39
Speaker 2: the chip infrastructure. They're going to try to flood the
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Speaker 2: global market with it at cheaper prices, in turn putting
10:46
Speaker 2: pressure on in Vidia. And this is another thing that
10:49
Speaker 2: in video is gonna have to contend with over the
10:51
Speaker 2: next several years, which is okay, right now, you have
10:55
Speaker 2: been you know, the main game in town as competition
10:58
Speaker 2: comes in, your margin's probably aren't going to stay you
11:02
Speaker 2: know where they are, because that's never where margins for
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Speaker 2: computer hardware stay. Yep, we've seen this in every iteration forever,
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Speaker 2: that hardware manufacturers cannot continue to command a premium in
11:16
Speaker 2: that space.
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Speaker 4: Yeah, not only do they have to battle China, but
11:19
Speaker 4: there's plenty of domestic competitors that we've talked about a
11:21
Speaker 4: lot recently. Googled trainiums. Yeah, there's a bunch out there.
11:27
Speaker 2: So let's take a quick break and when we return,
11:30
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13:10
Speaker 2: Piece of the New York Times. Why the AI boom
13:12
Speaker 2: is unlike the dot com boom? Tell me Paul why? Well.
13:17
Speaker 4: One of the big factors is the platform of the
13:21
Speaker 4: Internet had not been built in the late nineties. The
13:24
Speaker 4: whole sort of lead up and build up to that
13:26
Speaker 4: bubble was all of the promise that it could bring,
13:30
Speaker 4: but you had to really start from from scratch. There
13:32
Speaker 4: were people who were not comfortable at all with buying
13:36
Speaker 4: something online. Now Amazon reaches pretty much every household throughout
13:41
Speaker 4: the country, or is really prevalent throughout the whole system. Now,
13:44
Speaker 4: what they're talking about here with the Boom is that
13:47
Speaker 4: with artificial intelligence, you're building on an existing platform. It's
13:50
Speaker 4: going to be based on utilizing your computer or any
13:53
Speaker 4: type of device that is connected to the Internet to
13:56
Speaker 4: get some of the efficiencies provided from it. And it's
13:59
Speaker 4: just it's a comparison that's been made. We've talked about
14:02
Speaker 4: on the show, and it's been brought up quite frequently.
14:05
Speaker 4: There are going to be companies that fail, of course,
14:08
Speaker 4: in this technology wave, but there are certainly going to
14:11
Speaker 4: be some that are extremely successful. Here and one story
14:14
Speaker 4: this is a little bit outdated, but I had just
14:17
Speaker 4: sort of caught up on this where Chuck, you and
14:19
Speaker 4: I have talked about so often on the show, when
14:21
Speaker 4: are we going to see concrete proof that artificial intelligence
14:24
Speaker 4: is actually driving an increase in business and productivity? And
14:28
Speaker 4: this comes from late October, but it's h Robinson, which
14:31
Speaker 4: is a freight logistics company which back in twenty twenty
14:34
Speaker 4: two started incorporating artificial intelligence.
14:37
Speaker 2: To what it does.
14:37
Speaker 4: It basically, it's a global freighter, so it takes trucking,
14:41
Speaker 4: you know, ocean line freight just moves goods around the country.
14:45
Speaker 4: They spike twenty percent on their end of October earnings
14:48
Speaker 4: report because they were able to prove through the use
14:52
Speaker 4: of this technology that they saw their operating margins jump
14:55
Speaker 4: seven percent, they reduced their headcount of employees by ten percent,
14:59
Speaker 4: and they saw that they were even in an environment
15:02
Speaker 4: that has pretty soft freight demand and there's a lot
15:05
Speaker 4: of global trade disruption out there, there was actually forty
15:08
Speaker 4: percent productivity increase from the end of twenty two to two.
15:11
Speaker 4: So that story that's older dating, that's late October, but
15:15
Speaker 4: starting to see tricking out some impact of this. Does
15:18
Speaker 4: this touch every business right away? No, a freight logistics
15:21
Speaker 4: company is a great early adopter of it. You can
15:23
Speaker 4: see why could be so helpful for what they do.
15:27
Speaker 4: Does it touch every business right away? No, but it's
15:29
Speaker 4: just an interesting subject to continue to fall and it
15:33
Speaker 4: will be debated for the next year or two as
15:35
Speaker 4: to where the impact lies.
15:38
Speaker 2: Howard Marx, who runs a oak Tree Capital, put something
15:42
Speaker 2: out on this yesterday. He writes a handful of these
15:45
Speaker 2: memos each year and I thought like his summary on
15:50
Speaker 2: this is kind of where I am, but it's much
15:54
Speaker 2: more elegant than I would ever say it, So I'm
15:56
Speaker 2: going to just quote from him. Here here's my Howard
16:00
Speaker 2: marx actual bottom line. There's a consistent history of transformational
16:04
Speaker 2: technologies generating excessive enthusiasm and investment, resulting in more infrastructure
16:08
Speaker 2: than is needed and acid prices that prove to have
16:11
Speaker 2: been too high. The excesses accelerate the adoption of the
16:14
Speaker 2: technology in a way that wouldn't occur in their absence,
16:17
Speaker 2: and the common word for these excesses is bubbles. AI
16:21
Speaker 2: has the potential to be one of the greatest transformational
16:23
Speaker 2: technologies of all time. As I wrote above, AI is
16:27
Speaker 2: certainly the subject of great enthusiasm, and if that enthusiasm
16:30
Speaker 2: doesn't produce a bubble conforming to the historical pattern, it'll
16:34
Speaker 2: be a first. So basically, look, it might not be
16:36
Speaker 2: a bubble now, but it will be at some point,
16:38
Speaker 2: because transformational technologies always produce bubbles. Bubbles creating this process
16:45
Speaker 2: usually end in losses for those who fuel them. The
16:47
Speaker 2: losses stem largely from the fact that the technology's newness
16:51
Speaker 2: renders the extent and timing of its impact unpredictable, So
16:54
Speaker 2: basically we don't know how big the impact is going
16:57
Speaker 2: to be and exactly when it's going to be realized,
16:59
Speaker 2: which I think is where we are. This in turn
17:01
Speaker 2: makes it easy to judge companies too positively amid all
17:04
Speaker 2: the enthusiasm, and difficult to know which will emerge as
17:07
Speaker 2: winners when the dust settles. Sounds like he's been listening
17:10
Speaker 2: to our show but writing better than we talk. Definitely,
17:13
Speaker 2: there can be no way to participate fully in the
17:15
Speaker 2: benefits from the new technology without being exposed to the
17:17
Speaker 2: losses that will arise if the enthusiasm and thus investor's
17:20
Speaker 2: behavior proved to have been excessive. The use of debt
17:23
Speaker 2: in this process, which the high level of uncertainty usually
17:26
Speaker 2: precluded in past technical technological revolutions, has the potential to
17:30
Speaker 2: magnify all of the above this time. And basically his
17:36
Speaker 2: final conclusion then is, since no one can say definitively
17:39
Speaker 2: whether this is a bubble, I'd advise that no one
17:42
Speaker 2: should go all in without acknowledging that they face the
17:44
Speaker 2: risk of ruin if things go badly. But by the
17:46
Speaker 2: same token, no one should stay all out in risk
17:48
Speaker 2: missing out on one of the great technological steps forward,
17:50
Speaker 2: which is a reasonable conclusion put all your eggs in
17:53
Speaker 2: one basket, diversify. So I think that gets to, you know,
17:58
Speaker 2: kind of what we've talked about, which is, look, there's
18:01
Speaker 2: a bunch of money that's being spent right now. We
18:03
Speaker 2: don't know exactly when or how it's going to pay off.
18:07
Speaker 2: Usually when you see this kind of stuff, there's losses
18:09
Speaker 2: that end up happening, and you don't know when and
18:10
Speaker 2: how large they're going to be. But it's unlikely that
18:14
Speaker 2: this is going to be the first technological leap forward
18:16
Speaker 2: that doesn't result in an over investment right but then.
18:20
Speaker 4: Could lead to tremendous productivity gains down the road. The
18:23
Speaker 4: question is like looking back to the internet.
18:26
Speaker 2: The internet, radio, airplanes, like railroads, all of these had
18:30
Speaker 2: huge boom and bust cycles and yet they all positively
18:33
Speaker 2: transformed the world in the end. But investors during that time, well,
18:38
Speaker 2: they took big losses on the back end of that
18:40
Speaker 2: that malinvestment once there was once it was realized that
18:43
Speaker 2: there was too much money spent there. Two things can
18:45
Speaker 2: be true at the same time, this is a transformational
18:48
Speaker 2: technology and investors are going to lose a bunch of
18:51
Speaker 2: money when they spend too much money supporting it initially,
18:55
Speaker 2: I think that's completely reasonable.
18:57
Speaker 1: Uh.
18:58
Speaker 2: And to anyone who just you know, loves to post
19:00
Speaker 2: all the dumb things that AI does, I can tell
19:03
Speaker 2: you there are plenty of, you know, positive things that
19:06
Speaker 2: it does as well, Just like you know what C. H.
19:08
Speaker 2: Robinson is saying, Uh, you know, do I want AI
19:11
Speaker 2: making my movies? Do I want AI you know, writing
19:16
Speaker 2: the you know letter to you know, my kids for
19:19
Speaker 2: me or something?
19:20
Speaker 1: No?
19:20
Speaker 2: Like, I think ultimately we have to be human beings too,
19:22
Speaker 2: because otherwise what's the point of this whole thing? But
19:27
Speaker 2: to deny its uses is short sighted as well. Quick
19:30
Speaker 2: Break Wall Street watches.
19:32
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20:15
Speaker 5: Department of Massachusetts, and thank you veterans for all you've done.
20:21
Speaker 1: Time now for Wall Street. Watch a complete look at
20:24
Speaker 1: what's moving markets so far today right here on the
20:27
Speaker 1: Financial Exchange Radio Network.
20:29
Speaker 3: FED meeting days finally upon US, and markets are all
20:34
Speaker 3: expecting another twenty five basis point interest rate cut at
20:38
Speaker 3: the conclusion of its meeting this afternoon. All eyes will
20:42
Speaker 3: shift to FED Chairman Jerome Poll at two point thirty
20:45
Speaker 3: for more insight to the Fed's decision. Right now, the
20:50
Speaker 3: Dow is up about a half a percent, or two
20:53
Speaker 3: hundred and forty three points. SMB five hundred is up
20:56
Speaker 3: about a tenth of a percent, NASDAC down two tenth
21:00
Speaker 3: of one percent of forty six points lower. Rust of
21:02
Speaker 3: two thousand is up about a quarter percent. Tenure treasreeled
21:07
Speaker 3: is down two basis points at four point one six
21:10
Speaker 3: two percent, and crude oiled down about eight tenths of
21:14
Speaker 3: a percent, trading at fifty seven dollars and seventy nine
21:17
Speaker 3: cents a barrel. Game stock falling over four percent after
21:21
Speaker 3: the video game retailer's quarterly revenue fell short of forecasts
21:25
Speaker 3: as hardware, accessories and software sales declined. Meanwhile, ge Vernovas
21:30
Speaker 3: stock is rallying thirteen percent now after the energy giants
21:34
Speaker 3: said its twenty twenty five revenue was trending higher toward
21:38
Speaker 3: the higher end of its guidance. The company also doubled
21:41
Speaker 3: its quarterly dividend to fifty cents per share. Elsewhere, shares
21:46
Speaker 3: and Cracker Barrel are flat after the restaurant chains quarterly
21:50
Speaker 3: revenue missed expectations. However, the company cut its annual outlook
21:55
Speaker 3: as controversy surrounding its new logo impacted sales. Online pet
21:59
Speaker 3: food retailer Chewy is seeing gains of over one percent
22:03
Speaker 3: after posting it's quarterly results In After Today's Clothes, We'll
22:08
Speaker 3: see more tech earnings from Oracle and Adobe. I'm Tucker Silvan.
22:13
Speaker 3: That is Wall Street Watch And in the previous segment,
22:15
Speaker 3: we asked you the trivia question what year was Scrooge
22:18
Speaker 3: McDuck created by Disney? It will be nineteen forty seven.
22:23
Speaker 3: Gene In Haveril Mass is our winner today taking on
22:26
Speaker 3: a financial exchange show T shirt congrats to Gene. We
22:30
Speaker 3: play trivia every day here in the Financial eks Change.
22:32
Speaker 3: See complete contest rules at financial liks chainshow dot com.
22:36
Speaker 2: According to data from Fidelity, fifty three percent of investors
22:40
Speaker 2: with a required minimum distribution in RMD for this year
22:45
Speaker 2: still have not taken it as of the end of November.
22:49
Speaker 2: To be honest, I'm not entirely surprised, nor does this
22:54
Speaker 2: worry me for most investors who need to take them,
22:57
Speaker 2: simply because, based on my experience, a large number of
23:02
Speaker 2: investors either take them all entirely in December or take
23:07
Speaker 2: a portion each month, with the last portion coming out
23:10
Speaker 2: in December, and so I'm not really surprised that this
23:14
Speaker 2: is the case. I would have expected maybe like thirty
23:17
Speaker 2: five to forty percent to be the number, but like
23:19
Speaker 2: fifty three is totally reasonable. I don't think that half
23:23
Speaker 2: of RMD payments are missed each year by investors, and
23:29
Speaker 2: so I do think it's you know, worth saying, Hey,
23:32
Speaker 2: if you are seventy three years or older this year
23:35
Speaker 2: and you have retirement accounts, make sure you are taking
23:39
Speaker 2: your RMD if you need to. There are some situations
23:43
Speaker 2: where you may not need to, such as if you
23:45
Speaker 2: are an active employee at a company with which you
23:48
Speaker 2: have a four to one K plan. There that four
23:50
Speaker 2: to one K plan does not have an RMD then
23:52
Speaker 2: even if you're over seventy three, But those exceptions are
23:55
Speaker 2: few and far between.
23:56
Speaker 4: If you don't twenty five percent penalty on the amount
23:59
Speaker 4: that you should take out that used to be far
24:01
Speaker 4: more punitive. That usually fifty percent come down significantly since then.
24:05
Speaker 4: And then the biggest and this is from the straight
24:08
Speaker 4: from the cnbcpiece, the biggest landmine out there is an
24:10
Speaker 4: inherited IRA. The rules on those have changed since the
24:14
Speaker 4: Secure Act, and now you have two different tranches of
24:17
Speaker 4: inherited iras out there, one which is subject to a
24:21
Speaker 4: ten year rule where it's if it's a non spouse
24:24
Speaker 4: inheriting the IRA, the account has to be depleted after
24:28
Speaker 4: ten years. And then you have some of the legacy
24:30
Speaker 4: ones that were prior to twenty twenty which could be
24:34
Speaker 4: taken out over the person's life expectancy. So important to
24:37
Speaker 4: really keep on the different types of accounts that you
24:40
Speaker 4: have and understand what do I need to take out
24:43
Speaker 4: and when.
24:44
Speaker 2: Yeah, this stuff can get confusing, and so if you
24:46
Speaker 2: do have questions about it, the Armstrong Advisory Group does
24:50
Speaker 2: have advisors who can help to answer those questions. How
24:54
Speaker 2: do you set up a time to meet with someone
24:56
Speaker 2: called eight hundred three nine three four zero zero zero one.
25:01
Speaker 2: Again that number is eight hundred three nine three for
25:06
Speaker 2: zero zero one. Whether your questions are about required minimum distributions,
25:10
Speaker 2: roth IRA conversions, or any other item related to financial planning,
25:15
Speaker 2: and specifically making sure that you are maximizing the tax
25:20
Speaker 2: efficiency of your investments. Hey call Armstrong Advisory Group eight
25:25
Speaker 2: hundred three nine three for zero zero one. Again, that
25:29
Speaker 2: number is eight hundred three nine three for zero zero one.
25:33
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:35
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:38
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
25:41
Speaker 1: your own financial, tax, and estate planning advisors before making
25:44
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
25:47
Speaker 1: advisory services.
25:48
Speaker 2: I want to talk a little bit about insta suck.
25:51
Speaker 2: Oh yeah, you did. I gotta tell you this sucks. Okay, Noah,
26:00
Speaker 2: I'm really upset about this in case you can't tell.
26:03
Speaker 2: So here's the deal. There were a bunch of people
26:07
Speaker 2: in Washington, DC who got together and did a zoom
26:12
Speaker 2: chat or something like that, and they wanted to test
26:14
Speaker 2: a hypothesis that they had, and they all tried to
26:19
Speaker 2: place instacart orders from the same store a safe way
26:22
Speaker 2: in Washington, DC for the same brand of eggs, and
26:26
Speaker 2: they all chose to pick it up at the store
26:28
Speaker 2: rather than have it delivered. So basically all someone had
26:32
Speaker 2: to do was like get the eggs ready for them,
26:35
Speaker 2: the exact same kinds, so no transportation involk of you're
26:38
Speaker 2: getting it, nothing else.
26:40
Speaker 1: Yep.
26:41
Speaker 2: The prices they were offered ranged from three ninety nine
26:44
Speaker 2: to four seventy nine at the exact same time that
26:48
Speaker 2: they were doing this. And this, to me is the
26:53
Speaker 2: danger of algorithmic pricing, where stores and or marketplaces figure out, oh,
27:01
Speaker 2: you've you know, historically like paid X for this, even
27:04
Speaker 2: though the store is offering it at why we can
27:07
Speaker 2: charge you more. And so it's basically stores and other
27:11
Speaker 2: company's middlemen trying to goose their profit margins, not by
27:15
Speaker 2: offering you an improved product, but by realizing, oh, you're
27:19
Speaker 2: trying to order this from a wealthy area code, we
27:22
Speaker 2: can charge you twenty percent more than the person over there,
27:26
Speaker 2: and I gotta tell you it's it really speaks to
27:30
Speaker 2: the lack of innovation in human minds these days that
27:34
Speaker 2: just like you can't think of how do I make
27:37
Speaker 2: my product better so more people will buy it? But
27:40
Speaker 2: instead it's how can I algorithmically screw over as many
27:44
Speaker 2: people as possible? And that's why instat sucks. Sucks. I
27:48
Speaker 2: say this to someone who uses INSTACRT occasionally I do, yeah,
27:52
Speaker 2: but like this sucks. This sucks so bad. I mean,
27:55
Speaker 2: that is just that is the fear with the technology.
27:59
Speaker 4: And we had talked about the story before where they
28:01
Speaker 4: would digitize prices in supermarkets, and this is the fear
28:05
Speaker 4: that you would have. Is rather than that old fashioned
28:07
Speaker 4: sticker that you could point to, something could change in
28:11
Speaker 4: an instant based on a certain time or seasonal effect.
28:14
Speaker 4: That's this is the fear that you would have. And
28:17
Speaker 4: in the instance of being in a brick and mortar,
28:19
Speaker 4: you're a little bit pocular in a sense, like you're
28:21
Speaker 4: at the store. Theoretically you could go and walk out
28:24
Speaker 4: to another store, but this is the concern that that
28:27
Speaker 4: rings out. There's other examples cited in this piece, and
28:30
Speaker 4: a target in North Canada, Ohio, some shoppers were charged
28:33
Speaker 4: three fifty nine for a jar of Skippy peant butter
28:36
Speaker 4: that others could get for to ninety nine, and it
28:39
Speaker 4: goes on and on a safe way. In Seattle, three
28:42
Speaker 4: ninety nine for a box of wheat things while others
28:44
Speaker 4: were paying forty. You're talking about huge margins in grocery,
28:48
Speaker 4: which is notoriously famous for tiny margins.
28:51
Speaker 2: What does this say for garlic pole? You know, it
28:54
Speaker 2: was up to fifteen dollars an ounce for colic, But
28:57
Speaker 2: I thought that was the out Listen to our show
28:59
Speaker 2: and charge Paul twice what everyone else. But I thought
29:01
Speaker 2: that was a fair price. So I'm with instacrat on that.
29:05
Speaker 2: So I just like I gotta say, this is really
29:09
Speaker 2: bothersome to me because it's it's not the company doing
29:12
Speaker 2: any work to improve the product or the experience. It's just, hey,
29:17
Speaker 2: how can we get a little bit more from this person? Okay,
29:20
Speaker 2: Like fine, they accept that. Like I gotta tell you,
29:25
Speaker 2: it really makes me just want to move to like
29:31
Speaker 2: mountaintop hut somewhere and interact with no one.
29:37
Speaker 4: It's well established. I wouldn't survive there long. But I
29:40
Speaker 4: support your a couple of I have.
29:43
Speaker 2: A a small set of skills that makes me marginally
29:47
Speaker 2: useful in an apocalypse scenario. I would very much need
29:51
Speaker 2: to hang out with at least name one set of
29:54
Speaker 2: skills that would be good in an apocalypse.
29:55
Speaker 1: Skin.
29:56
Speaker 3: What are we dealing with here.
29:57
Speaker 2: Eagle scout. I can do any kind of outdoor project
30:01
Speaker 2: I can do. You need me to garden? You need
30:03
Speaker 2: me to move? Like that's helpful for food, sir, Stucker,
30:07
Speaker 2: don't laugh. Just picture you just you know, flowers. You
30:13
Speaker 2: know I can plant freaking tomatoes and lettuce and corn
30:17
Speaker 2: and Okay, and category is that is farming gardening? What
30:23
Speaker 2: do you think?
30:24
Speaker 3: I didn't say farming. I said gardening, Right, That's what
30:27
Speaker 3: I'm saying. What you're saying is farming, not gardening. Gardening
30:31
Speaker 3: is like, you know, continue on some what is lowess?
30:36
Speaker 2: Give my topper thumbs down. What I'm talking about is.
30:38
Speaker 3: Garden gardening, corn now and tomatoes gardening.
30:41
Speaker 2: I don't own a farm, Tucker. I'm not doing industrial scale.
30:46
Speaker 2: It would be in a front to our actual farmers
30:49
Speaker 2: listening if I said I was a farmer.
30:51
Speaker 3: If it's an apocalypse though it's to a larger scale,
30:54
Speaker 3: well I have to graduate to that.
30:55
Speaker 2: I got to get a certificate Okay, you know, but
31:00
Speaker 2: at this point it's gardening. But yeah, I can plant
31:02
Speaker 2: some stuff. I know how to fertilize, I know how
31:05
Speaker 2: to trim, I know how to prune, I know how
31:07
Speaker 2: to you know, I can do the whole cycle. Basically,
31:09
Speaker 2: I got my three crop rotations down.
31:13
Speaker 1: The thing.
31:13
Speaker 2: I could waite hedge clippers. I could be the mule
31:16
Speaker 2: that just goes off to get wood and carry it back.
31:20
Speaker 2: I'm not talking hedge clippers, Tucker. I'm talking. Hey, if
31:24
Speaker 2: you've got blueberry bushes, do you know the best time
31:27
Speaker 2: of year to trim them so that you get the
31:29
Speaker 2: best harvest next year?
31:30
Speaker 1: November?
31:32
Speaker 2: There you go? Was it is that true?
31:33
Speaker 1: No?
31:34
Speaker 2: Uh, let's take it quick. Instacars down six percent. Trim
31:38
Speaker 2: your bushes in the middle of winter when it's thirty
31:40
Speaker 2: two degrees. Yes, right, let's take a quick break here,
31:42
Speaker 2: and when we return, we're gonna do some stack roulette. Here.
31:47
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31:50
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32:03
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33:00
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33:02
Speaker 2: Paul, what do you got for stack Roulette? Chuck?
33:05
Speaker 4: SpaceX is potentially planning in IPO for twenty twenty six.
33:10
Speaker 2: Now I'm trying to determine here they take me to Moon.
33:14
Speaker 4: That's one of my calculations that I'm trying to determine,
33:17
Speaker 4: but also what the valuation is going to be, because I
33:20
Speaker 4: had seen some headlines pop across Bloomberg as we're in
33:23
Speaker 4: studio here at one and a half trillion, but other things.
33:25
Speaker 4: I'm reading an eight hundred billion from a tweet from
33:28
Speaker 4: Elon Muss days ago. So I'm not really sure what
33:32
Speaker 4: valuation they would be looking for a lot, maybe to
33:35
Speaker 4: simplify for listeners, a very high valuation. And this is
33:38
Speaker 4: only if they were to go public. It looks like
33:40
Speaker 4: they're potentially trying to raise about thirty billion. Would put
33:44
Speaker 4: Elon Musk from a wealth standpoint into a whole stratosphere
33:48
Speaker 4: onto them.
33:48
Speaker 2: I see what you did there, Yeah, I like that. Yeah.
33:52
Speaker 2: I mean I'm always interested to see, you know, what
33:57
Speaker 2: comes down the road from an IPO perspective and SpaceX.
34:01
Speaker 2: I mean, the thing that's you know, tough about them
34:04
Speaker 2: is the cops are pretty few and far between. There
34:08
Speaker 2: are a few companies in Europe in the commercial space
34:12
Speaker 2: business that don't trade it anywhere near those kinds of multiples.
34:16
Speaker 2: I mean, if you were talking one point five trillion,
34:18
Speaker 2: that's one hundred times revenue, not earnings, but revenue. Ye,
34:23
Speaker 2: and most of the other companies that do this stuff
34:26
Speaker 2: not most like Again, there's a handful are like one
34:29
Speaker 2: and a half to four x revenue, So that's a
34:32
Speaker 2: pretty big you know, multiple especially given Look, I love
34:38
Speaker 2: space as much as the next guy I do. I'm
34:42
Speaker 2: I have a big space nerd. I got a freaking
34:45
Speaker 2: telescope at home so I can look at the moon,
34:47
Speaker 2: got it and other stuff. So you've seen the starlinks satellite. Oh,
34:51
Speaker 2: you see all kinds of stuff. Man, Like you get
34:53
Speaker 2: up like in the mountains in the summer, and it's
34:55
Speaker 2: like you can you can see all kinds of cool stuff.
34:57
Speaker 2: But I'm just you're not sure how much money there
35:01
Speaker 2: is out there for like launching stuff into space. You know,
35:06
Speaker 2: like how many customers do you really have? At a
35:11
Speaker 2: certain point, you just run out of people who want
35:13
Speaker 2: to launch stuff into space.
35:16
Speaker 4: I have heard some these are going to be kind
35:18
Speaker 4: of crazy, crazy ideas of this idea of launching whether
35:23
Speaker 4: it be data centers into space like all these but
35:26
Speaker 4: these are really far reaching ideas, to be clear, I'm
35:28
Speaker 4: not talking about this tomorrow. But there's been some mention
35:31
Speaker 4: of like whether it be for pollution and for like
35:35
Speaker 4: reducing emissions and launching data centers into space like other
35:39
Speaker 4: ways to basically take advantage of the conditions in space
35:42
Speaker 4: versus the conditions on our planet. To try and optimize
35:47
Speaker 4: revenue for a company like this, that would be the play.
35:50
Speaker 4: But it's a lot that goes into that.
35:52
Speaker 2: It's not something for tomorrow.
35:53
Speaker 1: It is.
35:54
Speaker 2: I mean, like, just to put this in perspective, the
35:58
Speaker 2: payload capacity on modern rockets right now, depending on what
36:03
Speaker 2: kind of orbit you're trying to launch stuff into, is
36:07
Speaker 2: twenty to fifty pounds. That's a lot of launches to
36:11
Speaker 2: put a whole data center into orbit that's supposed to
36:14
Speaker 2: be ten times the size of a home depot. Yeah,
36:16
Speaker 2: you know, like it's just we don't really have the
36:19
Speaker 2: rockets that do that yet. No, So it's not to
36:23
Speaker 2: say that this stuff won't happen eventually, like I hope
36:26
Speaker 2: it does because I think it's incredibly cool, just to
36:31
Speaker 2: be honest, But there are some real limitations. I mean,
36:35
Speaker 2: right now, basically you're talking, Okay, you can launch like
36:40
Speaker 2: three suburbans into orbit, and that's about as much weight
36:44
Speaker 2: as you can get up there. Right you know, you're
36:47
Speaker 2: kind of limited. How much data can you move through that?
36:50
Speaker 2: I don't know? And this is before you even get
36:53
Speaker 2: into Okay, how do I then package all of what
36:58
Speaker 2: needs to go up in such a way that the
37:01
Speaker 2: forces imparted on it through the launch don't damage it right, right,
37:07
Speaker 2: because you got some g forces and stuff that you're
37:09
Speaker 2: dealing with there that you're not if you're just putting
37:12
Speaker 2: this stuff in a big warehouse and hard to get
37:14
Speaker 2: the g GPUs the lined under that you know, like, uh, billy,
37:18
Speaker 2: it came unplugged during the launch. We got to send
37:20
Speaker 2: you up to go plug it in. Do a space walk.
37:22
Speaker 2: Like there's two different paradigm CMI's out again.
37:27
Speaker 4: If there's two diferent paradigms here, it's the valuation you're
37:30
Speaker 4: gonna pay for this company to participate in this IPO
37:32
Speaker 4: is gonna be outrageous relative to what it does. I mean,
37:35
Speaker 4: Tesla was kind of like that a little bit too
37:37
Speaker 4: and all. But there's the cool factor of this is
37:42
Speaker 4: a transformational company and it's fascinating to read about and understand.
37:45
Speaker 4: But when your investor there, there's two different ways to
37:49
Speaker 4: look at things. One is, hey, this is cool and
37:50
Speaker 4: very interesting. The second though, is, man, I'm paying a
37:53
Speaker 4: huge price for this and you're really kind of the
37:56
Speaker 4: the last money in I mean, this has been venture
37:59
Speaker 4: back for years. I mean, I twenty three. It was
38:04
Speaker 4: two thousand and two was when it started. Wow, I
38:06
Speaker 4: was gonna guess twenty ten. So it's there's been a
38:08
Speaker 4: lot of fundraising ahead of you before a company going
38:12
Speaker 4: public of this size and scale.
38:14
Speaker 2: But fascinating.
38:15
Speaker 4: Nonetheless, if it does IPO in twenty six, I'll be
38:18
Speaker 4: really interesting.
38:19
Speaker 2: I'm rooting again. It's a profitable company. It's a growing company. Yeah,
38:23
Speaker 2: But like what's realistic, I don't really know, but it's
38:28
Speaker 2: it's it's really interesting. Says some crazy stuff. But man,
38:31
Speaker 2: he's produced some big they're waunching some they're launching some rockets. Man,
38:35
Speaker 2: Like I've never launched anything, you know. Like I can't
38:39
Speaker 2: put my money where my mouth is. But you got
38:41
Speaker 2: some farming skills. I'm a gardener. I'm a gardener. Take
38:46
Speaker 2: a quick break for the rest of the day. When
38:47
Speaker 2: recap the FED meeting tomorrow on the show
39:00
Speaker 1: F