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Is AI making us dumb? · The Financial Exchange Show

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Speaker 1: and Mike Armstraw, Chuck.
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Speaker 2: Mike Tucker with you here as we kick things off,
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Speaker 2: and well, got markets selling off modestly today, nothing crazy,
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Speaker 2: nothing huge, but uh, sm P five hundred is down
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Speaker 2: twenty four points, DOWS off two hundred points, NASDAK is
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Speaker 2: off about fifty five points, so about a quarter to
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Speaker 2: a half percent slide across major markets. Bond selling off
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Speaker 2: as well. Tenure Treasury up point I'm sorry, zero point
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Speaker 2: four to three percent zero point nope, gotta do this again.
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Speaker 2: Tenure Treasury up four point three basis points to four
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Speaker 2: point one eight two. Uh. We've got the dollar index
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Speaker 2: strengthening on the back of that up zo point one
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Speaker 2: nine ninety nine sixteen go down thirty dollars ten cents
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Speaker 2: now it's to forty two to twelve and ninety cents.
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Speaker 2: Crude oil down sixty nine cents of barrel on West
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Speaker 2: Text Intermediate to fifty nine thirty nine triple a national
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Speaker 2: average for gas prices, though continuing to slide as those
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Speaker 2: refineries get back up to full speed, down another three
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Speaker 2: tenths of ascent overnight to two ninety five and two
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Speaker 2: tents on the national average. And so that is what
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Speaker 2: we've gotten moving in markets today. Big things we're watching
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Speaker 2: for this week. Tomorrow we get the jolt support. That's
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Speaker 2: the job openings report. Wednesday, we've got a FED meeting. Thursday,
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Speaker 2: we have jobless claims. And then on the earning side
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Speaker 2: of things, we've got Oracle and broadcomm on Wednesday and Thursday, respectively,
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Speaker 2: And so those are going to be exciting for us.
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Speaker 2: Campbell Soup also reporting tomorrow, And yeah, Campbell Soup reporting tomorrow.
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Speaker 3: Didn't they have some controversy recently.
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Speaker 2: Yes, there it was someone in there because one of
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Speaker 2: their top executives. Yeah, one of their top executives said
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Speaker 2: something along the lines of we only make food for
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Speaker 2: poor people. Yeah, probably shouldn't say that, which probably shouldn't
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Speaker 2: say And by the way, especially in the winter, I
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Speaker 2: go through a whole lot of Campbell's tomato soup with
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Speaker 2: some grilled cheeses on the regular.
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Speaker 3: So yeah, there's not really a circumstance you want to
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Speaker 3: say that.
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Speaker 2: No, you generally don't want to say that.
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Speaker 4: And in fact, even if you want to express that
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Speaker 4: sentiment as a concern about your overall business model, there
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Speaker 4: are probably better ways to say it, Like, well, there's
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Speaker 4: seventy five percent of our sales come from this income demographic.
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Speaker 4: You're in business for a large, publicly traded corporation. I
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Speaker 4: think there's just better, better terms to use.
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Speaker 2: Yes, yeah, it's like you don't often have a CEO
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Speaker 2: being like, no, we're just not gonna do it. We're
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Speaker 2: just not gonna do it. Let's talk about stocks. Does
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Speaker 2: that sound good?
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Speaker 3: Yes?
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Speaker 2: Chicken or beef. There's Campbell soup. It was ay, it's
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Speaker 2: stocks piece here in the Bloomberg what bubble asset managers
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Speaker 2: in risk on mode stick with stocks?
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Speaker 3: Yeah.
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Speaker 4: So every month or so, I feel like we come
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Speaker 4: across an article or two where someone somewhere is trying
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Speaker 4: to justify stock levels at these prices. At least that's
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Speaker 4: been the case like this year and the year before.
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Speaker 4: And I guess the concern that I would bring out
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Speaker 4: is every time we read one of these articles, somebody
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Speaker 4: comes up with some new ratio or benchmark you can
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Speaker 4: use to try and prove that stocks aren't that pricey.
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Speaker 4: This time around, you have what's referred to as the
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Speaker 4: excess cape yield. The excess cape yield, which you know,
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Speaker 4: where is cape yield by the way, Yeah, it's is
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Speaker 4: that near Cape Cod. No, it's off South Africa. So
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Speaker 4: it uses the S and P five hundred. We've talked
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Speaker 4: about Cape in terms of price to earnings ratio, So
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Speaker 4: it tries to adjust over a longer period of time
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Speaker 4: for inflation and earnings.
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Speaker 3: And so it uses the S and P.
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Speaker 4: Five hundred companies average earnings from the past decade and
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Speaker 4: then adjust both those earnings and the ten year treasury
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Speaker 4: yield for inflation. So you're basically trying to figure out
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Speaker 4: how expensive are stocks compared to the current interest rate environment.
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Speaker 4: And they point out that it was really really the
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Speaker 4: lower this ratio is the arguably more expensive stocks are.
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Speaker 4: And they point out that in February is one point
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Speaker 4: two percent and now it's closer to one point seven.
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Speaker 3: I just want to point.
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Speaker 2: Out, though, does anyone making their investment decisions based on that?
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Speaker 1: No?
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Speaker 4: And I'll also point out that there's like very few
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Speaker 4: instances where this has been worse than it is right now,
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Speaker 4: and it's pretty much just one, which is the lead
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Speaker 4: up to the dot com bubble. We've talked about this
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Speaker 4: over and over and so like, oh yeah, it's gotten
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Speaker 4: a little better because interest rates have come down since
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Speaker 4: Nuary but we're still in historically expensive levels, and I
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Speaker 4: don't know if you're making your investment decision based on
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Speaker 4: a change to the excess KPE yield over the short term,
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Speaker 4: you might be missing some of the bigger picture.
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Speaker 2: If you want reasons why you can look for stocks
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Speaker 2: and say, hey, maybe they're not actually that expensive. The
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Speaker 2: only one that I think holds weight. And I'm not
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Speaker 2: saying like this is like go buy stocks or like don't.
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Speaker 2: I'm just saying this is one that holds weight with me,
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Speaker 2: at least in terms of like trying to justify it.
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Speaker 2: When we look at multiples, they tell you how expensive
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Speaker 2: a stock is based on either profits that have already
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Speaker 2: occurred or profits that are expected to occur. Yes, if
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Speaker 2: you believe that we are in a continued secular trend
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Speaker 2: where profit margins should move up, then that is something
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Speaker 2: where in theory you can command a higher multiple because
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Speaker 2: you are projecting that corporations are going to grow their
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Speaker 2: share of GDP over time as a result.
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Speaker 3: And to believe that.
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Speaker 4: Don't you kind of have to fundamentally believe that CEOs
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Speaker 4: of major US companies are being conservative in terms of
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Speaker 4: their earning growth estimates.
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Speaker 2: Not necessarily, I don't think so, but I think what
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Speaker 2: you do have to believe is that remember, if you
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Speaker 2: look at where like the money goes, if corporations are
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Speaker 2: taking a larger share, in theory, it is leaving less
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Speaker 2: for the other two pieces of the pie, one being labor,
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Speaker 2: the other being the government. And so you do wonder
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Speaker 2: based on like kind of the negative sentiment out there, Hey,
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Speaker 2: do we reach a point where like people just say, guys,
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Speaker 2: enough is enough. We're fed up with this and this
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Speaker 2: isn't gonna work anymore. And like, typically that's when you
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Speaker 2: see either you know, labor movements that occur or in
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Speaker 2: less developed parts of the world, that's where you see,
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Speaker 2: you know, the government thrown out and things like that.
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Speaker 2: Like that's kind of what happens when labor gets upset,
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Speaker 2: is like big changes happen. And so I think if
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Speaker 2: you want the case for yes, stocks are expensive, but
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Speaker 2: maybe that expensiveness is justified. It is that corporate margins
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Speaker 2: have continued to expand at a pretty consistent clip for
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Speaker 2: the last ten fifteen years. You can make a case
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Speaker 2: that it is aided and embedded by the level of
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Speaker 2: consolidation that we have gotten to throughout most of corporate America,
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Speaker 2: and the fact that we don't really seem to care
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Speaker 2: when it comes to anti trust and we're just kind
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Speaker 2: of cool with it because I don't really know why.
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Speaker 3: Big company office towers look cool. It's not sure.
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Speaker 2: Either like it, it's it's just kind of where we are.
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Speaker 2: So I can buy that as a case for hey, but.
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Speaker 4: If you're going to buy it, you have to very
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Speaker 4: like thoroughly believe that right now they continue, it's going
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Speaker 4: to continue, and that probably artificial intelligence is going to
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Speaker 4: be the cause of it.
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Speaker 2: The counterpoint to that is this probably isn't something that
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Speaker 2: is going to be able to increase forever, and may
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Speaker 2: in fact be mean reverting, meaning that, Hey, increase corporate
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Speaker 2: profits today may lead to lower profits tomorrow because not profits,
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Speaker 2: but profit margins tomorrow. Because when people get upset about,
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Speaker 2: you know, corporate profiteering, they tend to undertake actions to
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Speaker 2: stop that corporate profiteering. And can they mount a you know,
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Speaker 2: strong enough response to rein that in I'm not saying
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Speaker 2: this is good or bad. I'm I'm just saying, again,
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Speaker 2: let's talk about a few things like that are like
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Speaker 2: feeding my mind on this. Zora Muondami, Mayor of New
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Speaker 2: York City, talking about reigning in profits, President Donald Trump
10:17
Speaker 2: setting levels for profits on different healthcare drugs, like these
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Speaker 2: are the things that are actually happening right now, and.
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Speaker 3: Yeah, they're getting appeal from both sides.
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Speaker 2: I think we need to be aware that this is
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Speaker 2: the world that we live in now. And I don't
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Speaker 2: know what it means for corporate power and corporate earnings
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Speaker 2: going forward, but there's a reason why this stuff is
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Speaker 2: being discussed and acted upon now.
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Speaker 3: Well, yeah, I mean the reading is that it seems
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Speaker 3: to be what people want.
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Speaker 2: I'm not saying that it's good that people want that,
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Speaker 2: but I'm not going to bury my head and say
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Speaker 2: it's not happening.
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Speaker 3: It's happening.
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Speaker 2: Yeah, let's take a quick break here. When we come back, Well,
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Speaker 2: answer the question, is AI making us dumb?
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Speaker 2: Wall Street Journal with a piece titled is AI making
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Speaker 2: us dumb? The subheader no, the moral panic over technology
13:34
Speaker 2: is an excuse for a failing educational system. Can't both
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Speaker 2: things be true? Well, here's the thing. I I I
13:42
Speaker 2: really struggle in a lot of cases to put the
13:47
Speaker 2: blame purely on new technology, because like when I was
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Speaker 2: growing up as a kid, like I heard all this
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Speaker 2: stuff about like, oh, video games are gonna ruin your life,
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Speaker 2: and video games are gonna make you dumb, and they're
13:58
Speaker 2: gonna make you do all kinds of things, and I've
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Speaker 2: turned out like alright ish at least, and so I
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Speaker 2: kind of poop pool a lot of that. There's other places, though,
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Speaker 2: where I think you can look at technology and be like, yep,
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Speaker 2: this is screwing us up, Like the smartphone and social media, chuck.
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Speaker 3: We just got text from the text line at your
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Speaker 3: mother and she says she disagrees.
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Speaker 4: With which part the part of you using video games
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Speaker 4: and then turning it out to be okay.
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Speaker 2: I know it's an ongoing point of contention, but in
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Speaker 2: any case, even with social media and smartphones, the problem,
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Speaker 2: in my opinion, is that social media is not a technology.
14:37
Speaker 2: It's a way of talking, and like, we've just done
14:40
Speaker 2: a whole bunch of bad things because we converse that
14:43
Speaker 2: way instead of with actual human beings going forward. Do
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Speaker 2: you want me to dig in further on that.
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Speaker 4: No, I do agree, Like, I don't think AI is
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Speaker 4: a cause of making us dumb, and I think we're
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Speaker 4: kind of mixing together issues.
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Speaker 3: I do very firmly believe that social.
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Speaker 4: Media is an addict, is an addiction for a lot
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Speaker 4: of people, and I don't think that I would call,
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Speaker 4: you know, people addicted to heroin dumb.
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Speaker 2: No, so I just making us dumber. It is removed
15:15
Speaker 2: to save our ability to actually have meaningful conversations with
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Speaker 2: other human beings, right, and in turn is making us lonelier,
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Speaker 2: more prone to outrage, and generally unhappier.
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Speaker 4: On the a On the AI side of things, I
15:35
Speaker 4: do worry that we might eventually get there too, And
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Speaker 4: I think there is a tendency to want to reach
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Speaker 4: for the fast answer than rather than using critical thinking.
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Speaker 4: But I'm willing to buy that, Like, yeah, are our
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Speaker 4: are our teaching systems approaches to new and emerging technology
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Speaker 4: the best?
15:53
Speaker 3: No? Probably not.
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Speaker 4: And could we be doing a better job of how
15:58
Speaker 4: we implement new technology and you know, using it as
16:02
Speaker 4: part of the education system rather than trying to block
16:05
Speaker 4: it and then catch people using it and things on
16:06
Speaker 4: those lines, Yeah, I'm also down with that. But you know,
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Speaker 4: on the other hand, when I hear parents of teenagers
16:14
Speaker 4: who tell me that like kids wake up and ask
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Speaker 4: AI what they should do with their day, those are
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Speaker 4: things that concern me a little bit in the same
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Speaker 4: way that social media usage with a fourteen year old
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Speaker 4: concerns me.
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Speaker 2: So I think Ultimately, no, AI is not making us dumber.
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Speaker 2: It might be revealing our own innate dumbness that's always
16:35
Speaker 2: been present throughout humanity, because like we're all kind of stupid.
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Speaker 2: If like we're gonna be honest with ourselves.
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Speaker 4: What I'll say about it is if you are a
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Speaker 4: parent that's out there that's like pretty good at policing
16:48
Speaker 4: your parent your kid's social media usage, and you're just
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Speaker 4: ignoring the AI side of it, I don't know that
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Speaker 4: that's a great policy either, right, Like, oh yeah, I
16:57
Speaker 4: don't let my kid use Facebook, but they spend three
16:59
Speaker 4: hours a day talking to chat GPT also seems like
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Speaker 4: a problem to me.
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Speaker 3: And we've got this twenty year history with social media.
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Speaker 4: I hope we have a better approach to AI than
17:10
Speaker 4: we do, and I see no evidence of that, by
17:12
Speaker 4: the way, right, I've seen zero evidence whatsoever that we
17:14
Speaker 4: are approaching artificial intelligence, this new emerging technology in a
17:20
Speaker 4: thoughtful way with you know, guardrails in place to make
17:26
Speaker 4: sure that people and specifically kids don't get hurt. This
17:30
Speaker 4: is kind of an obsession of mine, but you know,
17:32
Speaker 4: we've covered we like to cover this.
17:34
Speaker 3: Over and over again.
17:35
Speaker 4: That Meta, the owner of Facebook, had written policies on
17:39
Speaker 4: what type of romantic interactions a thirteen year old could
17:43
Speaker 4: have with an artificial intelligence. A thirteen year old, they
17:46
Speaker 4: had written policy, so you thought about, like, Okay, this
17:48
Speaker 4: is the level of romantic interactions there are AI can
17:52
Speaker 4: have with a thirteen year old, rather than saying, hey,
17:54
Speaker 4: that's probably inappropriate for thirteen year old.
17:56
Speaker 2: Yes.
17:56
Speaker 3: So there's a lot of evidence that we have given.
17:58
Speaker 4: Zero thought as a society to the long term implications
18:02
Speaker 4: of this new emerging technology that everyone's using.
18:06
Speaker 2: We've given thoughts to it, just bad thoughts again, like
18:10
Speaker 2: meta thought about it.
18:11
Speaker 4: Yeah, and the it was like and then they came
18:14
Speaker 4: up with a disgusting policy.
18:16
Speaker 2: Yes, you're right, yes, and so yeah, like we've got
18:21
Speaker 2: the problem isn't usually the technology, it's the humans and
18:27
Speaker 2: how we decide to implement said technology.
18:29
Speaker 4: But good news, Jamie Diamond predicts that AI will not
18:32
Speaker 4: dramatically reduce jobs in the next twelve months.
18:35
Speaker 3: So thank you, Jamie.
18:39
Speaker 2: He's got good track records on this stuff.
18:42
Speaker 3: Right.
18:43
Speaker 4: Just again, you know, sometimes he tosses something out there,
18:46
Speaker 4: We're like, I don't know a lot of people that
18:48
Speaker 4: were calling for AI to dramatically reshape the job mark
18:51
Speaker 4: in the next twelve months, but Jamie doesn't think that's
18:53
Speaker 4: going to happen, So I guess I'm happy with that.
18:58
Speaker 2: Why does Jamie Diamond get interviewed on like everything? I'm
19:01
Speaker 2: not again, really smart guy, the absolute best risk manager
19:07
Speaker 2: in the system.
19:08
Speaker 3: Here's all I think it is.
19:09
Speaker 4: I think he's just simply willing to answer these questions,
19:12
Speaker 4: whereas other people, for you know, whatever reason, Like I'm
19:15
Speaker 4: sure Taylor Swift gets asked the exact same questions and
19:19
Speaker 4: she's like, I don't know, don't ask me that question,
19:22
Speaker 4: whereas Jamie Diamond seems to be willing to answer any
19:24
Speaker 4: question that gets tossed his way.
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Speaker 2: Blake, How can I never hear what Brian moynihan has
19:28
Speaker 2: to say about anything?
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Speaker 4: Yeah, you know, I don't know? Well again, because I
19:32
Speaker 4: think Jamie diamonds of answering these questions. Do you even
19:35
Speaker 4: know who the CEO of City Bank is right now?
19:37
Speaker 3: I do not know?
19:38
Speaker 2: Jane Frasier.
19:39
Speaker 3: I knew it was a woman. I couldn't remember her name.
19:42
Speaker 2: Honest question. Who is the CEO of Wells Fargo right now?
19:46
Speaker 3: Don't know?
19:47
Speaker 2: Yeah, let's take a quick break here. When we come
19:51
Speaker 2: back we will give the answer to the trivia question.
19:53
Speaker 2: We do know that, and we've got Wall Street Watch after.
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Speaker 6: RUSSA two thousand is up nearly two cents of one percent,
21:01
Speaker 6: Tenure treas reeled up four basis points at four point
21:05
Speaker 6: one eighty two percent, and crude oiled down over one
21:08
Speaker 6: and a half percent lower, trading at fifty nine dollars
21:11
Speaker 6: and fifteen cents a barrel. In a hostile takeover bid.
21:14
Speaker 6: Paramount is now offering an all cash, thirty dollars per
21:17
Speaker 6: share deal for all of Warner Brothers days after Warner
21:21
Speaker 6: agreed to a deal with Netflix. Paramount argues its offer
21:24
Speaker 6: is better for shareholders and more likely to be approved
21:27
Speaker 6: by regulators than the Netflix offer. Paramount stock is rallying
21:31
Speaker 6: seven percent, while Netflix shares are dropping by four percent.
21:35
Speaker 1: Meanwhile, we have.
21:36
Speaker 6: Some acquisition news in the tech sector this morning, after
21:39
Speaker 6: IBM announced it is buying data streaming platform Confluent and
21:43
Speaker 6: a deal worth eleven billion dollars. IBM shares are now
21:47
Speaker 6: up over one percent, while Confluent stock is surging twenty
21:50
Speaker 6: nine percent. Elsewhere, according to the information, Microsoft was in
21:55
Speaker 6: talks of moving its custom chips business to Broadcom from
21:58
Speaker 6: Marvel Technology. Burbellstock is down nine percent on that news,
22:02
Speaker 6: while Broadcom shares are up over two percent. Berkshire Hathaway
22:06
Speaker 6: announced the departure of an investment officer in Geico CEO
22:09
Speaker 6: Todd Combs, who will be joining JP Morgan Chase. Berkshire
22:13
Speaker 6: stock is down over two percent. In manufacturer CEE our
22:17
Speaker 6: HVAC company, Comfort Systems in online car retailer Carvana are
22:21
Speaker 6: all seeing gains following news that all three companies will
22:25
Speaker 6: join the S and P five hundred on December twenty second.
22:29
Speaker 6: I'm Tucker Silvan. That is Waltree Watch. And in the
22:32
Speaker 6: previous segment we asked the trivia question, which you, as
22:34
Speaker 6: president appointed Paul Volker as Chairman of the FED. They'll
22:39
Speaker 6: be Jimmy Carter. Greg from Fitchburg, Mass is our winner today,
22:42
Speaker 6: taking home a Financial Exchange Show t shirt. Congrats to Greg,
22:46
Speaker 6: and we play trivia every day here on the Financial Exchanes.
22:50
Speaker 6: See complete contest rules at Financial Exchange Show dot com.
22:53
Speaker 2: A couple questions who gave IBM eleven billion dollars? And
22:59
Speaker 2: what's a confluent?
23:02
Speaker 6: Have you ever heard of data streaming platform?
23:04
Speaker 1: Chuck?
23:05
Speaker 6: Who are these people's data that streams.
23:08
Speaker 2: Eleven billion dollars? Like, that's a lot of money for
23:12
Speaker 2: a company that, again, I've never heard of. I know
23:15
Speaker 2: that I don't know every company out there, but I
23:19
Speaker 2: never heard of this one. Yeah, IBM, their revenue has
23:23
Speaker 2: dropped from one hundred and seven billion dollars a year
23:25
Speaker 2: in early twenty twelve to sixty five billion today.
23:28
Speaker 3: Yeah, but Chuck, Ai, do you heard about this?
23:34
Speaker 2: When you put it that way?
23:36
Speaker 4: Sure, let's talk about this I'm sorry to tease that,
23:39
Speaker 4: but like that seems to be the answer to everyone's
23:44
Speaker 4: concerns and questions today.
23:45
Speaker 3: But yeah, Chuck, I mean, Ai.
23:47
Speaker 2: Here's the thing with IBM and aar Donald's quarter was
23:50
Speaker 2: pretty bad.
23:51
Speaker 3: Yeah, Chuck, But Ai, I.
23:53
Speaker 2: Remember fifteen years ago hearing about Watson from IBM. Yeah,
23:57
Speaker 2: and how it was going to revolutionize this, that and
23:59
Speaker 2: everything so much for first to market.
24:01
Speaker 1: Huh.
24:02
Speaker 2: So, like, I forgive me if I just look at
24:05
Speaker 2: IBM and AI and just kind of go eh, Yeah,
24:09
Speaker 2: it's a maybe for you. America gets retirement wrong. Can
24:13
Speaker 2: Vanguard fix that? Is a piece in Bloomberg Opinion? What
24:17
Speaker 2: is the opinion of Bloomberg Opinion?
24:21
Speaker 3: Yes, with annuities.
24:24
Speaker 2: Discuss.
24:24
Speaker 4: Yeah, I'm not sure I agree with the columnists I
24:27
Speaker 4: saw this last week. Yeah, So, the Vanguard and many
24:32
Speaker 4: other four one K providers are toying with the idea
24:35
Speaker 4: of putting pension like annuities into retirement plans. So again,
24:43
Speaker 4: some form of income generation that will be a guaranteed
24:47
Speaker 4: form of income generation for retirees at a certain age.
24:51
Speaker 4: And I'm not sure that it's going to get off
24:55
Speaker 4: the ground here, but I do fully understand the desire
24:59
Speaker 4: for it. Right, We basically offloaded all Americans from the
25:03
Speaker 4: pension system starting.
25:05
Speaker 3: Like fifty years ago and year migration.
25:09
Speaker 4: Yeah, without much of a great plan to replace it, right,
25:14
Speaker 4: Like the four to one K came about, but it
25:17
Speaker 4: wasn't really Hey, we're going to use this thing to
25:19
Speaker 4: fully replace pensions. And so I see the desire. I
25:22
Speaker 4: understand why, but there's a bunch of big questions that
25:26
Speaker 4: I have about this. So one, I don't know how
25:29
Speaker 4: putting a product like an annuity into a four oh
25:33
Speaker 4: one K would work, given Americans propensity to change jobs
25:38
Speaker 4: these days.
25:38
Speaker 2: And want to take early distributions from four to one
25:42
Speaker 2: k's in a lot.
25:42
Speaker 3: Of cases, yeah, like these.
25:44
Speaker 4: You know, if you're not familiar with annuities, it's we
25:48
Speaker 4: don't have enough time in a two hour program.
25:50
Speaker 3: To fully educate you.
25:51
Speaker 4: But there's a lot of different flavors, but the main
25:55
Speaker 4: component to them is you are giving up in some way,
25:59
Speaker 4: you access to your principle to ensure that you have
26:02
Speaker 4: an income stream in the future.
26:03
Speaker 2: It's a contract with an insurance company.
26:05
Speaker 4: And so I just don't know how that fits within
26:08
Speaker 4: today's world of constantly changing jobs. I also just don't
26:13
Speaker 4: I don't think American consumers are generally good at assessing
26:18
Speaker 4: how their four O one k's work now, and trying
26:21
Speaker 4: to add something as complicated as an annuity into it
26:25
Speaker 4: seems like it might be faced with some issues there.
26:29
Speaker 4: And so what I don't like about it is putting
26:31
Speaker 4: all of this on the individual person. There's gonna be
26:34
Speaker 4: a if it's going to be successful in any meaningful way,
26:37
Speaker 4: there's going to be a boatload of education that's going
26:40
Speaker 4: to be need to be that's going to need to
26:41
Speaker 4: be done that I don't see happening anywhere in our
26:45
Speaker 4: education system or on the employer side of all of this.
26:48
Speaker 4: So I'm not saying it's coming from a bad place
26:50
Speaker 4: that they want to put a new like. I genuinely
26:52
Speaker 4: don't believe that this is all about creating a new
26:55
Speaker 4: revenue source for four one K plans, although that's clearly
27:00
Speaker 4: contributing factor. But I think that it's not going to
27:05
Speaker 4: go terribly well. Wan Americans have a terrible opinion of
27:08
Speaker 4: annuities by and large. Two, it's really complicated.
27:14
Speaker 2: The other piece on this that I'll be curious to
27:18
Speaker 2: see is what the expense structure looks like. And I'm
27:25
Speaker 2: going to approach this from the opposite perspective that most
27:29
Speaker 2: people do. Vanguard, I think, in general, has been a
27:32
Speaker 2: real positive for the industry in terms of leading the
27:36
Speaker 2: charge to reduce expenses. Sure, I think some of the
27:40
Speaker 2: stuff that they are doing now is to the point
27:42
Speaker 2: where it's gratuitous, to the point where it doesn't make
27:45
Speaker 2: a difference for the individual investor, but prevents competition in
27:51
Speaker 2: that Hey, if you cut a fee on a product
27:55
Speaker 2: from one percent to half a percent over a forty
28:00
Speaker 2: appeared that's a meaningful shift, sure in savings for investors.
28:04
Speaker 2: If you cut an expense ratio from point zero five
28:08
Speaker 2: percent to point zero four that doesn't really improve the
28:12
Speaker 2: overall picture for the person investing in it, like it's negligible,
28:16
Speaker 2: but it makes it harder for new competitors to come
28:19
Speaker 2: into the market who might have a better way of
28:23
Speaker 2: doing things. So this is why I kind of wonder
28:26
Speaker 2: where they may go on this, because I do think
28:29
Speaker 2: that when you look at how a lot of annuities
28:31
Speaker 2: tend to be priced, they tend to be pretty steeply priced,
28:34
Speaker 2: and I do think it's one area where if someone
28:38
Speaker 2: could come in and improve the pricing structure, there sure
28:41
Speaker 2: like I think that's great, But in other parts of
28:44
Speaker 2: the market, I think they may be starting to kind
28:46
Speaker 2: of abuse the market position they hold and preventing more
28:50
Speaker 2: competition rather than encouraging it.
28:52
Speaker 4: Here's my conclusion overall, regardless of the success or failure
28:56
Speaker 4: of annuities and retirement plans, retirement plans are about to change,
29:00
Speaker 4: not just because of this. They've been changing quite a
29:02
Speaker 4: bit for the last couple of years. I think they're
29:04
Speaker 4: going to change at a more rapid pace over the
29:06
Speaker 4: next few years. And my assessment is that most Americans
29:10
Speaker 4: aren't going to be prepared for that change. But if
29:13
Speaker 4: you want to be, and if you want to better
29:16
Speaker 4: understand how your current retirement plan actually might work for
29:20
Speaker 4: you in retirement and all the complications that come along
29:23
Speaker 4: with that, please give the folks at Armstrong Advisory Group
29:26
Speaker 4: a call. You can book your free consultation by calling
29:28
Speaker 4: eight hundred three nine three for zero zero one. You
29:32
Speaker 4: can go to Armstrong Advisory dot Com to schedule time
29:36
Speaker 4: for us to call you back. But this is one
29:38
Speaker 4: of the least understood topics that I discuss with clients
29:42
Speaker 4: of mine and other people that I meet with, and
29:44
Speaker 4: so I understand why folks have questions eight hundred three
29:47
Speaker 4: nine three for zero zero one.
29:50
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
29:52
Speaker 1: registered investment advisor. Nothing in the ad or in any
29:55
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
29:58
Speaker 1: your own financial tax into state planning advisors before making
30:00
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
30:04
Speaker 1: advisory services.
30:05
Speaker 2: Could paper checks be on the way out like the penny?
30:09
Speaker 2: Your thoughts, Michael god I hope so discuss I I I.
30:16
Speaker 4: Have somebody who is buying a space in a retirement
30:21
Speaker 4: community soon and they only accept checks, like dump only
30:27
Speaker 4: accept no wires, dump, no electronic funds, transfers, check only.
30:32
Speaker 2: Wait you Dump only accepts checks. That's correct, So no cash, cash,
30:37
Speaker 2: no credit cards, no credit card checks, that's right for
30:41
Speaker 2: a dump, that's correct. That's crazy, which they then throw
30:44
Speaker 2: in the dump.
30:47
Speaker 1: You know.
30:47
Speaker 2: My first job was as a cashier and at a
30:51
Speaker 2: at a grocery store, and you'd get one maybe two
30:55
Speaker 2: people shift that would come in with a check in
30:58
Speaker 2: order to buy their grocery. And it was always the
31:01
Speaker 2: toughest thing to deal with because like there's a whole
31:04
Speaker 2: process for like validating it, and it slowed the whole.
31:07
Speaker 3: Thing down, no kidding.
31:09
Speaker 2: And you know, at that time in my life, I
31:12
Speaker 2: was I don't know what, like fourteen fifteen years however
31:15
Speaker 2: old you are when you can, you know, first start
31:17
Speaker 2: legally working. And I was like, okay, like get rid
31:20
Speaker 2: of these the older I've gotten. I kind of like
31:23
Speaker 2: writing checks now, Oh my god, I don't. I don't
31:26
Speaker 2: go into the grocery store and buy them there.
31:30
Speaker 4: But I don't know's they are constant sources of fraud. Yes,
31:34
Speaker 4: they are challenging to deal with, but everything is a
31:39
Speaker 4: constant source of fraud. Yeah, but I mean really low
31:43
Speaker 4: hanging fruit there for somebody to open your mail, find
31:46
Speaker 4: the check and just rewrite it really easy, especially with AI.
31:53
Speaker 2: Right like here. Here is the thing I guess is
31:56
Speaker 2: the real problem with the check is that it has
31:59
Speaker 2: to have your full bank cold count number on it
32:01
Speaker 2: in order for it to be a real check. It's
32:03
Speaker 2: just fraught with issues, you know, like that there's a
32:06
Speaker 2: real from a security perspective, if blockchain can do one
32:10
Speaker 2: thing for me, it should be able to allow me
32:12
Speaker 2: to make a payment without having to physically write out
32:14
Speaker 2: of check. The counterpoint is there's also I now believe
32:19
Speaker 2: value in the slowness of the check in that if
32:23
Speaker 2: I realize something's gone wrong, yeah, I can stop payment
32:26
Speaker 2: on it pretty easily. Fair And like I kind of
32:32
Speaker 2: value that overall. Like, where are we going with this?
32:36
Speaker 3: Tucker?
32:37
Speaker 2: Can we put this on the board? Will there still
32:38
Speaker 2: be checks in our lifetime?
32:41
Speaker 3: No?
32:41
Speaker 2: We cannot put that in. We can't put that on
32:43
Speaker 2: the board. I don't think they're going anywhere anytime soon, agreed.
32:47
Speaker 2: I think you're going to have them for at least
32:48
Speaker 2: the next twenty thirty years. But after that it's a
32:52
Speaker 2: hard maybe for me. Just take a quick break when
32:55
Speaker 2: we come back. Stack Roulette.
32:57
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34:15
Speaker 2: Mike, what do you got for me?
34:15
Speaker 4: For stock Rich A text from a listener. AI is
34:20
Speaker 4: not making us dumb yet, but it will. The example
34:23
Speaker 4: is what is referred to as Google brain, the phenomenon
34:25
Speaker 4: where people no longer seem to have the ability or
34:27
Speaker 4: desire to remember common things because they'll just look them up.
34:31
Speaker 4: When I was a kid, I remembered everybody's phone number.
34:33
Speaker 4: Now I barely remember my wife's phone number. So I'm
34:35
Speaker 4: going to debate this one. I again. I will acknowledge
34:39
Speaker 4: that I think social media and AI might make us different,
34:45
Speaker 4: but I'm not sure that this one adds up to
34:48
Speaker 4: me right. Like I don't remember phone numbers now either.
34:51
Speaker 4: Very rarely can I recall a phone number, but I
34:54
Speaker 4: do remember passwords to some ten or fifteen different websites.
34:58
Speaker 4: I do remember specific apps that I need to use
35:01
Speaker 4: if I want to turn up or down the temperature
35:03
Speaker 4: in my home.
35:04
Speaker 3: Like I feel like I've just replaced my phone number.
35:07
Speaker 4: Recall with other types of recall that I didn't use
35:11
Speaker 4: to use, and so I don't like as society. Like
35:16
Speaker 4: you know, if I'm sitting with a group of friends
35:18
Speaker 4: and we're asking a question about, you know, something that
35:21
Speaker 4: happened in nineteen eighty five, and somebody just googles it
35:24
Speaker 4: and we no longer get to have the fun conversation.
35:27
Speaker 4: But I don't know that that's because we're dumber. I
35:30
Speaker 4: guess is where I'll leave it. And I'm not sure
35:32
Speaker 4: that our ability to recall has also gone away because
35:35
Speaker 4: of these technologies. But interesting thought exercise. I would be
35:39
Speaker 4: interested to see if it's there's any evidence that our
35:41
Speaker 4: ability to recall information has gone away.
35:44
Speaker 2: There is evidence out there that our ability to focus
35:47
Speaker 2: has diminished because of smartphones and the reward system associated
35:51
Speaker 2: with you know, notifications of positive reinforcement, and they're always
35:54
Speaker 2: checking your phone to see if like something came in.
35:56
Speaker 2: But I think that's that's different from recall.
35:59
Speaker 3: Inherently.
36:00
Speaker 2: I want to talk about online gambling, and not sports gambling,
36:05
Speaker 2: but specifically digital casinos and digital slot machines. And here's
36:09
Speaker 2: the thing. Pennsylvania collected over a billion dollars from digital
36:14
Speaker 2: casinos last year, compared to one hundred and eighty eight
36:16
Speaker 2: million from digital sports book apps.
36:18
Speaker 4: Sorry, hold on, this is the tax revenue or this
36:21
Speaker 4: is tax revenue?
36:22
Speaker 2: Oh wow, tax revenue. Pennsylvania's entire state budget is fifty
36:26
Speaker 2: billion dollars, so two percent of their budget for the
36:30
Speaker 2: year came from digital casinos. So I have two feelings
36:34
Speaker 2: on this. The first is, if I'm a resident of
36:36
Speaker 2: Pennsylvania who does not use these online casinos, I'm like, fine,
36:41
Speaker 2: you want to take money from all these people, fine,
36:44
Speaker 2: like have at it, keep my taxes low. Like I
36:46
Speaker 2: get that perspective. Unfortunately, the place that I come back
36:51
Speaker 2: to that's more important, is man. The state is literally
36:54
Speaker 2: like encouraging gambling addiction to the tune of a billion
36:59
Speaker 2: dollar a year and its own residents in order to
37:03
Speaker 2: figure out how to balance its budget without raising taxes
37:07
Speaker 2: on people because they're too cowardly to do so or
37:09
Speaker 2: cutting services because they're too cowardly to do so. And
37:12
Speaker 2: that really sits badly with me. Yeah, that's a uh,
37:18
Speaker 2: because I'm willing to bet that that billion dollars in
37:22
Speaker 2: taxes from digital casinos, it's probably like five percent of
37:25
Speaker 2: Pennsylvania residents that are ending up, you know, putting that in,
37:30
Speaker 2: and it's not the wealthiest five percent.
37:32
Speaker 4: Going to say, think about the round trip that happens
37:34
Speaker 4: here is you gamble all your money away on a
37:38
Speaker 4: Maybe it's not state sponsored, but it's in some cases
37:41
Speaker 4: it might be because.
37:42
Speaker 3: The lottery is, for example, are state sponsored.
37:44
Speaker 4: You gamble all your money away and the state collects
37:48
Speaker 4: a bunch of revenue, at which point you are forced
37:51
Speaker 4: to go on federal benefits because you're impoverished and have
37:53
Speaker 4: no money.
37:56
Speaker 3: Like, this is a pretty bad system.
37:58
Speaker 2: Are you though, Because here's the thing, most of those
38:00
Speaker 2: systems are based on income. If you have income that's
38:04
Speaker 2: coming in, but you're just spending it gambling. I don't
38:07
Speaker 2: know what you qualify for.
38:08
Speaker 4: Necessarily eventually medicaid, I mean like it might take a
38:13
Speaker 4: little while, but yeah, you're not gonna earn income forever
38:15
Speaker 4: either way.
38:16
Speaker 2: I look at this and like, the societal implications are
38:19
Speaker 2: like the place I get to, the states want the revenue,
38:23
Speaker 2: but they are too chicken to raise taxes or cut services,
38:27
Speaker 2: and so they just end up basically hosing a small
38:32
Speaker 2: portion of their population that can't stop gambling on their phones.
38:35
Speaker 2: And that feels really bad to me. It feels really
38:38
Speaker 2: bad to me. Let's take a quick break for the
38:41
Speaker 2: rest of the day. We'll see it tomorrow with more
38:44
Speaker 2: financial exchange.
39:00
Speaker 3: Ye