Market & Economic Headwinds Are Building | Lance Roberts

Summary

• AI: Long-term bullish and still early in the buildout; recent weakness viewed as a buy-the-dip after extreme overbought conditions, though timing risks and job displacement concerns remain.
• Energy/Natural Gas: Building a thematic portfolio across oil & gas production, drilling, transportation, and natural gas to power AI data centers; expect near-term softness but a multi-year opportunity with DCA.
• Key Tickers: Accumulating Meta (META) on strong sales growth, ad engine, and passive indexing support; Nvidia (NVDA) remains a core AI beneficiary with a moat, though volatility and mean reversion are expected.
• Market Outlook: Managers are underweight tech and buybacks have resumed, supporting a potential year-end rally after working off overbought conditions; 2025 faces elevated valuations and earnings expectations in a slowing economy.
• Factor Rotation: Momentum, small-cap growth, and disruptive tech (ARK-style) screens as oversold, setting up for a bounce; defensive areas like staples and parts of healthcare are firming.
• US Dollar: The dollar rallied from oversold; consider taking profits on long-dollar trades; stablecoins could further bolster USD demand and provide a tailwind for Treasuries over time.
• Risks: Potential AI overbuild and data center upgrade cycles, aggressive 2025 small/mid-cap earnings assumptions vs. slower growth, and the need for careful sector and balance selection.
• Portfolio Strategy: Maintain balance with defensives (e.g., consumer staples) alongside AI leaders; manage risk via rebalancing, tax-loss harvesting, RMDs, charitable giving, and timely Roth conversions.

Transcript

The things I'm worried about are the fundamental factors. Economics, earnings growth expectations are too elevated. Economic expectations are too high. Valuations are too high. Those are those are all very problematic. Now, they're not problematic today. They're not problematic by the end of the year, but I think they become problematic next year. I think the headwinds are building. I still think next year we could see high volatility and lower rates of return because of the other factors that are still building in the system. [Music] Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. Welcoming you here at the end of the week for another weekly market recap featuring my good friend, the parapotetic portfolio manager, Lance Roberts. Lance, I'm going to ask how you're doing, but I already know not great. You you got a head cold, it seems. >> Yeah, I do. I do. So if I start sneezing, coughing, wheezing during the the conversation today, just sorry in advance. >> Yeah. Hey, but that's what the mute button and the editing is for. So So don't worry. Well, I'll say this. Um I always sort of fail when I make this commitment, but we'll try to end this one a little bit early to save you your voice, but I appreciate you. I appreciate you soldiering through. >> Sure. Yeah, no worries. >> Okay. Um All right. Well, look, Lance, um some interesting things to talk about. um the there's all of a sudden uh you know some palpable concerns about AI in the world and we'll talk about that in a moment. Um but first I I want to mention two quick things. Um one uh I just returned from the New Orleans Investment Conference. Um it was a great experience as usual. I always have a really good time there. Um it is uh Lance I I really want to bring you one year um a because I think you'd like it. Matter of fact, I think you'd be a great speaker there too. But um it's one of the times of the year where I get to sort of mingle with a lot of people, a high concentration of people that watch this channel. And I I got to say I I feel guilty because I get so much wonderful feedback from folks. And it's it's folks, if you're one of them who who came up and saw me in the hallway and said something nice, thank you. Uh it is the absolute best experience for me. Uh but I do feel guilty because I feel like so much of the uh of you know the the goodwill that they have and what they're reacting to is is the generosity of the guests who come on this channel. And Lance, you're one of the ones who comes on most frequently. And just so you know, there is a lot of love for you uh amongst the people out there. A lot of the people that came up to me said how much they enjoy you, how much they enjoy these weekly market recaps. I had one or two people say, "Yeah, but you know what? The they're kind of long. It'd be great if you could short them a little bit. Shorten them a little bit." And then the rest of the people around were like, "No, this is I get my lawnmowing done or I get, you know, whatever." And I I I've got a trip I've got to make and you guys are what carry me through. So, I'm sorry for those who want these things chopped down a little bit. Uh, I think the the market has spoken and and it likes the longer format. Um, but but Lance, there is a lot of great goodwill for you and and what's amazing is it's it's all over. It's it's um it's all over the age spectrum. Um, you know, obviously a lot of retirees there, but a lot of a lot of kids, I mean, even some teens saying that they they really enjoy this channel and really enjoy kind of the life riffs that we go on at the end. They feel like that's really useful content. Um, it's very geographic. uh a lot of people from Australia saying, "Hey, I like that Lance. He's great." You know, um so I I I want you to feel some of that love, but uh but also those of you again who either went or who send us, you know, very kind, uh emails or comments under these videos, uh they they totally are noticed. They totally are appreciated and they really are what kind of keep us going doing what we're doing here. So, thank you. Anyways, Lance, a lot of that a lot of that goes to you. >> Yeah, no problem. That's awesome, actually. So, yeah, I'd love to go sometime. That would be fun. >> Yeah. Yeah. And I know, you know, we both kind of work out of our offices, so we don't get to to mingle with real people all that often. And I know you got a lot going on in your life, so you're probably reading feedback and stuff like that a little bit less right now. So again, I just wanted you to hear it. And again, a lot of real concern, goodwill, hope, best wishes for you and your family, too, your wife and all. >> Well, thank you very much. That's that's most appreciated. Good news is uh we have chemo this coming Friday, uh, next Friday. So Michael Lee Woods will be here. I don't know if that's good news or not, but the good news is is we're twothirds of the way through. So, uh, almost there. >> Okay, that's great. So, twothirds, wait, this would be number five. >> Number four coming up. >> Number four. Okay, so you're about to be two-thirds of the way through. >> So, next Friday you'll be two-thirds of the way home. So, yeah, but yeah, she's doing great and um, you know, she's keeping her spirits up and she's up now working. She's actually, interesting enough, you know, we're going to talk about AI today. She's working very closely with one of the major like the major AI company. I can't tell you who it is, but you can probably >> the major AI company. I think we all know >> you could probably figure it out. But uh on building out power for a data center. So, you know, it's, you know, it's very interesting that this is, you know, kind of coming full circle, but she's uh yeah, she's out there killing it and doing a great job. So, slow down. >> All right. Well, so that's great to hear. Um I I do know it's got to be a little rough for you right now because >> I think you were saying because of her treatment her immune system is suppressed. So you while you got this cold you kind of have to keep yourself at a distance, right? >> Yeah, I do. So I So when we So we um we bought a house that was built in 1963. Um and you know remember when I was living in the rental house, you know, a couple years ago, we would talk about this is that we bought this house that was built in 1963. So, it's a little small house and we remodeled it and it had it needed a ton of work. So, it was pretty much a a remodel from the gut, you know, from the studs out and we had to do a lot of fixes and updating and those type of things. So, but part of that process was is that it had just a two-car garage downstairs. And so, I tore that the garage down and I built an office above the garage. And so, I have my own little man cave up here. So, this is where I'm actually broadcasting from right now. I've got my computers, I've got my workstation, I've got my videos, and I've got a whole like, you know, movie theater on the other side of this. So, pretty much I've been relegated to my man cave now for the next week. >> Oh, good. You're like sleeping on the couch watching old old Clint Eastwood movies and >> Door Dash there. So, she leaves food at the bottom of the steps for me. She yells at me. She goes, "Go get your food there and get it." So, hopefully I'll be well enough soon to actually see my wife again. This would be great. >> All right. So, she feeds the dogs and then if she remembers, she feeds her husband. >> Exactly. Exactly. I just need to get what's left over from the dogs most of the time. So, well, >> all right. Well, I hope I hope you recover soon and could be be reunited with her. Um All right. And um oh real quick to your point on maybe we'll talk about this in a little bit but to your point about powering AI big topic at the New Orleans Investment Conference um you know there there seems to be I think right now you know a lot of recognition amongst our community Lance which I would kind of call like the community that's paying attention that there does seem to be an imbalance or a mismatch between the size of the opportunity with the energy needed to power AI and the pricing that's going on in the energy markets um in the fuels that are going to p be used to power it notably you know natural gas um and uh and obviously the the companies in this space. So one thing I want to let folks know is I um I I get to spend a fair amount of time with Rick Rule at the conference and um told him I said hey I I don't know if you're going to do an oil and gas boot camp anytime soon Rick but I think it's something that would be of great interest to this audience. I mentioned it to the to I can't remember if I mentioned it on a video this week. I think I did with Stephanie Pomboy maybe and the folks just want to know the result. I I totally saw your feedback that said absolutely. So I talked to Rick unclear whether he's going to be able to do a boot camp anytime soon, but he said if I can't do an official boot camp, I'll happily do you know one or or sequ or sequence of you know here's my thoughts on where to invest in oil and gas for your audience. Um so folks know that I'm putting that together in the works. Um, Lance, if you and Michael want to do anything like that similarly as well, we could dedicate one of these. >> I'm I'm kind of chuckling because Mike and I actually started building. So, you know, on the Simplevisor platform, we've now added several thematic portfolios. We have >> AI, crypto, small small midcap, um, high growth stocks, you know, those uh, we have the all weather model which has gold and precious metals in it. Um, and we are actually building a oil and gas centric thematic portfolio that'll be up on Simplevisor here very shortly. But it's going to be the stocks that are directly related to the oil and gas drilling sector, the production side, and the transportation side that'll be needed to help feed into and including natural gas feeding into this uh power center data generation process. >> Okay. How close do you think you couple weeks, a month? >> Um, probably I should have that portfolio up next week. Really? Okay. Well, what would be great, I don't want to be too greedy here, but what would be great would be maybe on one of these weekly market recaps. We get both you and Mike on and you guys sort of walk us through how you constructed the portfolio. Maybe we do a live version of this where people can ask questions and stuff like that. Um, I I know that I I sense that would be really appreciated by the audience. And folks, if that's true, again, validate me in the uh in the comments here below. But there it just seems to be one of those moments sort of like with precious metals miners like a year ago where folks were just saying look the metals have moved so far the miners haven't really picked up this sector is likely to catch fire at some point than it did. People are sniffing something similar in in the energy space >> and and in the energy space I think it's going to be a little bit longer. Um you know this is going to be something if you build into this portfolio then you know I you you have to have an expectation of holding this for one or two years. Um, I think oil prices get worse before they get better. So, probably you buy the portfolio today, be prepared to be down 20 30% in the portfolio before it bottoms and turns back up. But, this is going to be one of those portfolios that you need a dollar cost average into over time and, you know, and and build into the position. So, but yeah, I think it'll be a really I I do think there's going to be a a shortage of supply relative to demand in the near future just because of what's needed to to not only build data centers. Don't forget about all the the impact on oil that's just consumed in the construction process of data centers, not just the power. You know, we're all thinking about the power power generation side, but don't think about all the the use of that that's going into just the building of the the building of the center, the products used inside the centers, the the miles and miles and miles of cable and >> to mine, refine, transport, construct. I mean, all that's fossil energy. Yeah, >> exactly. So, so yeah, I think there's a really good opportunity. Mike and I are working on that now. So, now don't forget next week, like as I said, Mike will be here with you because my wife's chemo treatment is there. So, he can certainly go through the portfolio with you next week. Um, but if you want both he and I to do it, it'll have to be the following week. >> Okay. All right. Well, we'll talk to Mike and see what works. I I'd like to have you both there if if this really was a team effort so that you guys can kind of, you know, play off each other's insights and stuff like that and then also let folks ask, but we'll we'll we'll do what works for you and your >> Yeah. And you're not going to miss anything. If I'm if you if you do it this next week, he we've have we've been working on this. He knows exactly what I think. He knows where he thinks. We're very much aligned. So, we'd probably just be sitting there nodding at each other the whole time. So, >> Okay. Okay. >> Yeah. >> All right. Um, uh, okay. Well, good, folks. We'll we'll one way or another, we'll make that happen. Um, and then last before we get to the good stuff here, um, just want to note for folks, um, uh, I I mentioned I don't know if I mentioned on this channel, but I mentioned on social media a little while ago that I was going to do a fast, a fiveday fast. Um, just started it. I was going to do it a week ago. got delayed because of the travel with the conference. Um but uh I'm here on day two, Lance and um everything's going fine so far. Um there was a joke somebody put in in OnX saying, "Oh, I can't wait to start watching the next couple videos where Adam just rips the heads off all of his guests because he's so angry." >> Probably true. >> And good news, I'm not I'm I'm not there yet, folks. Uh but we'll see. We'll see what happens. Um but I I do this periodically, folks. and and I I like to be transparent about it when I do because there are a lot of people I think there are a lot of benefits from it and maybe Lance in the ranch or some point we can talk about this if you want but um I I when I've mentioned this I've seen a lot of people say oh you know I've never done one but I've sort of thought about it and you know I think there's a lot of benefits you can get from doing a fast if you just like stop eating you know it's not a good way to do it um you you actually strongly recommend following a process and a protocol I'm doing a specific one u but posting on X. I've got one of those scales that that measures a whole bunch of body, you know, percentages from you. So, I'm just going to post it every day so you guys can see what happens to a body during a fast. Um, the key thing here, as I've mentioned before, that I'm doing it for, uh, is autophagy, which is when your body starts going into a fasting state, it actually starts harvesting your cells, uh, breaking them down and rebuilding them for what's most needed by the body, but it targets your older and more damaged cells first. So, there actually are some some very scientifically proven health benefits from fasting for a moderate amount of time. No, for forgive this in advance if I get snappy with you by the end of this discussion. That's basically what I meant to say. >> Yeah, don't worry about it. I mean, my son was home over the weekend for his birthday and uh he was just eating everything inside the house. So, if you ever really want to talk to somebody who does a lot of fasting, talk to my son because when he runs out of money, he's on what what he calls ice soup, which is where he's just >> where he's just basically drinking water because that's all he can afford. So, yeah. Yeah, he's he's an expert on fasting right now, >> right? until he gets to your house and then he's >> Yeah. Yeah. Yeah. No. Yeah. He uh he he definitely cleaned out my pantry before he went back to school. So, yeah. >> Okay. Well, I'm sure there's some people here saying, "Guys, just get to the good stuff with the market." So, we'll get there now. >> Um so, as I mentioned at the beginning, uh there's, you know, uh the the narrative around AI is is suddenly striking a a sour chord or two. Um nothing nothing you know totally uh in crisis mode but we had a couple things this week happen this week that really kind of caught the attention. First is we were starting to talk about last week Lance the earnings calls of a lot of the AI companies didn't instill confidence in the AI space for one reason or another. Most of the stocks are down fairly notably. I'm going to bet you got your entry point in meta that you were looking for because I don't think meta's done all well done that well since >> um >> yeah we did we we've started building a position in meta now. >> Okay. And we'll get to that in a sec. Um but uh uh you know uh people are saying wow that's kind of weird. You know sort of raising questions like is the top end did we hit the top right? And then in conjunction with that, you've had um you know AI, sorry, open AI um kind of float a trial balloon um for like a pre-bailout guarantee from the government that hey you know if we get in trouble um we're really hoping that the government's going to offer some guarantees here so that we can you know all the guys that are building the whole AI infrastructure feel comfortable and confident to go ahead and continue doing that. That got a lot of blowback in the press. Now, Sam Alman and his CFO have come out and and given some qualifi qualifiers around that to say, well, that's not exactly what we meant. Um, but I think a lot of people think, yeah, it probably was. Like, you were probably just testing the waters to see how much the government was going to stand behind you. And there are some things they mentioned that I do think make some sense for the government to consider some loan guarantees on some of the infrastructure that's being built out. But in a way that that that the government would end up owning the infrastructure, not not these private companies. That's maybe a different discussion. And it was notable that David Saxs, the national aisar, he was very quick to come out and say, "Yeah, we're not doing bailouts for anybody in this space. You know, we got a lot of big companies racing for this and if one stumbles, the other will step in." Go ahead. No. Yeah. You know, look, a lot of this is just a bunch of mouththing rhetoric. So, you know what? Open I was saying is like, hey, we need cheaper financing costs, right? So, that's one thing. And then the government comes out, David Sax comes out and says, yeah, yeah, we're not going to bail you out. Look, at the end of the day, can So, just imagine this. So, you've got all this circular financing going on between these companies, right? So, you got Nvidia invested into AI, AI's invested in Oracle, Oracle's invested, whatever. So, everybody's just financing each other to create this future. So, can you imagine that you're the president or you're the congressman or wherever up in Washington and all of a sudden Open AI says, "Hey, man, if we don't get if we don't get a bailout, this game's over." And then all of a sudden, you've got Google, Apple, Amazon, Meta, all on your doorstep as a congressman saying, "If you don't provide us some funding for this, you're out of office next time because we're going to fund your candidate that will do this for us in the upcoming election." So, you know, it's this is all fine and dandy conversation, but here, let me just share a chart with you real quick just to put this into perspective of what's going on. >> All right. And while you're pulling it up, let me just mention two more things that were sort of verbally covered in the the markets this week. So, um one was um the um Jensen, forgetting his last name, uh but the CEO of Nvidia, um >> Jensen Wayne. Yeah. >> Yeah. Um he said, "Hey guys, uh I think China might is going to win the the AI race. They're only nanoconds behind us." And that kind of caught everybody by surprise as well. And it seems like since that statement, the administration just announced that, well, we're we're we're we weren't going to give our best chips to to China, but now we might even go down a level from that and prevent them from getting those chips as well. We'll see what'll happen. But but basically there's a lot of discussion saying whoa wait a minute is is is this truly something that's we need to pay a lot of attention to or is this is this a guy who needs a lot of you know funding for the AI ecosystem saying like you know kind of putting his gun to his head a gun to his head saying hey look you know you better you better continue to fund us or else you know China's going to take it all and and and you know we're not going to win as Americans. So >> well but but Jensen Wayne said again you got to be careful a lot of this stuff is taken out of context. What he said was, >> I'm sure a lot of it's being taken out of context right now. >> As Jensen Wang said, yeah, China's hot on our heels in terms of this. And he says, if we don't go full throttle into building AI, they are going to beat us. So he was just making the case that all the stuff that's being done in AI has to be done because we have to win this race. If we don't win this race, China will. And so this this is the space race that we had back in the 50s and 60s. This is a good thing, by the way. Back in the 50s and 60s when we had the space race with Russia, it was all bets were on to to get the first man onto the moon. And we developed all kinds of technology that did not exist previously because of that of that demand to beat Russia. If we let Russia beat us, would it have made a big difference? Maybe, maybe not. But in the process of that space race, we developed microwave microwaves, televisions, you know, all this kind of stuff that that we, you know, the cell phone actually came out from the the space race. So >> I I I totally get it. Let me just interject though because I would say this isn't the space race. >> I would I would say this is the nuclear arms race, >> right? It's a Well, >> here's a question. So if if China quote unquote wins the AI race, >> Yeah. >> can America remain the superpower that it is? >> Yes. You think so? >> Absolutely. Because China doesn't have Look, China's got a huge demographic problem. They're they're a communist country. So again, you just can't develop the capitalistic uh you know, system that we've developed here that has developed the economic power that has come out of come out of the US and over the last 50 years. So yeah, I mean, you know, but yes, if if China beats us in the AI race, it's certainly going to be important, but it's not nuclear weapons. This is very much akin to the space race because of all the technology that will get developed off of AI. Don't forget >> technology was delivered. >> Yeah. >> Technology came out of World War II, too. I mean, it's a similar >> Absolutely. So, this is just the this is the foundation. This is the Think about it this way. You were alive with this with the dot of the the internet, right? When we first created the internet, everybody's like, "Ah, the internet's a fad. We're having the same conversations about the internet back then. It's not going to No, nobody's going to use the internet. That's just crazy talk. And now we use the internet every single day. And what has come off of the internet has has been just phenomenal for advances in productivity and health and science and medicine and all these other things that we weren't able to collaborate and do previously has just expanded our lives enormously. So we do have to win the AR race and you know I potentially think they will. But yeah, I wanted to go back to show you this chart because this is this is exactly what you're talking about here. >> Okay. Sorry, I took it down because we were I thought we were going to take another sidetrack there. So, finish the thing here, J. Just for the record, I'm going to disagree with you. I'm going to say this this is something it is existential for America the way that the nuclear race was. We can disagree, but this may be a theme we continue discussing, probably will be for the next bunch of >> Well, all I'm saying is is that we developed the nuclear technology for for weapons, and that was about all that occurred out of it. We didn't develop, you know, a vast amount of new products, services, and and things coming out of the nuclear race, right? So, I mean, yeah, we we developed nuclear warheads, and we developed a lot of very destructive things, but that was a deterrent to keep everybody from going to war. I'm just saying that from a positive perspective, you're going to get a lot more positive benefit out of the development of AI than you are out of nuclear weapons. >> Yeah. And you probably will. Um, uh, I'll just mention this and then we can talk about later if you want. What I'm also seeing in the past week or two in the media is more than I've seen in the past, the question is, is AI going to become the villain in the story? In other words, they're starting to ask the question about jobs, right? It's starting to come up in quarterly reports and jobs reports that you know companies are saying hey we are not hiring or reducing you know our our workforce because of AI and it's you and I have been talking about this forever so this isn't a surprise but it's just entering the media dialogue in a way that I haven't really seen it enter yet of like hey wait a minute are we sewing the seeds of our own job destruction here >> um And again, that's not a new idea, but I'm just seeing that being asked a lot more right now as people are sort of taking a step back over this past week or two and saying, "Whoa, wait a minute. Is AI really everything we thought it was cracked up to be?" >> Well, no. You look, we destroyed a ton of jobs with the internet, too, right? I mean, you used to have receptionists at desk and we don't have that anymore. >> I know. I think this is going to be way way bigger. I I can't remember where you fall on that. I think you do, too, but >> Yeah. Yeah. No, no. I No, you are definitely going to have job destruction from an AI. There is I mean you're talking about why do I need parallegals when AI will do it for me? But there's a long way to go between now and then. Mike and I were just running an interesting test this morning. We were asking Grock the exact same question. We were typing into Grock the exact same question. Who were the best 10 presidents in US history? And we got different answers. >> Right. And and so you can't so if I'm running a legal case, I can't have different answers because I'm in Texas, a conservative state, and he lives in Maryland, which is a liberal state. So we're get we're getting different answers because of the state we live in. >> Oh, that's interesting. That's so interesting. I thought you were saying like, well, it's not perfect yet. It still hallucinates or whatnot, but you're actually saying it's it's giving the user a different answer. >> Yeah. >> Based on >> based on biases, states. I don't know where it got I don't know all the background where it's driving a state, but that's the only thing we can come down to. Yeah, which is interesting. I mean, is that a wrong answer or you asked it a subjective question, which is best? So maybe your definition of best is different than Michael's definition. >> And that that and that's the point though, right? So if I'm asking it a very specific now, we did ask some very specific questions, right? So we ask it some basic math questions. Um we ask it uh as an example um we we ask it specifically where the market closed on a specific day and those would give us so so very factual details it could answer precisely and and we got the exact same result from that but anything that had a slight subjective to it we would get different answers because we live in different states >> and so but so my point though is is that when it comes to that say if I wanted to ask it you know how to cure cancer we might get very different answers from from from that because you know I what I'm saying is is that AI needs to move past the point to where we're getting very subjective answers based on our search history our states those type of things >> and give us more factually based answers and and that's what I'm saying is like you know if if I'm if I'm a parillegal working on a case as an example because this is one of the areas that AI's you know people are worried about AI replacing those jobs I can't be getting different answers on legal status because of the state I live in. >> Yeah. Yeah. you you can't and I I I I kind of get worried about getting into these discussions about like how AI is you know results are imperfect right now >> because it incre it gets so better so much better so much faster that like yeah you're absolutely right today but in a year in three years you know like a lot of this stuff maybe have been completely resolved by then and we don't know but just looking at the trajectory we don't I will >> so but my point is but my point is is I I agree with you it is going to be a job replacer absolutely Um, and so you better learn to work with AI and not just sit around and go, "Oh, AI is not going to hurt me because again, and again, there's a lot of people in trade trade business as an example, there are electricians, plumbers, eti can't can't do my job." >> Uh, you stick AI in a robot, it can do your job, >> right? Right. Or it will within a short period of time. >> Yeah. So, you know, so I you know, nobody is immune from AI. So, you better learn to work with AI and understand how to adopt AI into your process because it will replace you if you don't. >> Okay. Yeah, to totally agree. Um, uh, all right. I had one more AI thing to say, but look, I I I I want to get to the chart. So, pull up the chart. >> No, my whole point was is that that you got to keep things in a little bit of perspective. So, that's why I wanted to show you this chart. So, this is MGK. So, this is the ETF that tracks the mega cap stocks. Now, there's other stocks in it other than the big MAG 7, but you know, as a proxy for the Magnificent 7, MGK is is a good this is the mega cap growth ETF. Um, and and so this this is a weekly chart. I just wanted to show you this because this is that big red candle. So, this week has definitely been a tough week for the MAG 7. Absolutely no way around that. But the MAG7 was pushing three standard deviations above its long-term weekly moving average last week. So this has just meant look the markets were extremely overbought and you know on a relative strength basis you're very overbought and if we go back in history here's you know back in you know we we had uh back in you know kind of March of you know kind of 2024 we had the whole Deep Seek thing and the market sold off and everybody's like oh it's over now Deep Seek's going to replace Nvidia and then that was a good buying opportunity and then we've had a lot of people come along and say oh you know well you know you know you know Mag 7's going down now so it must all be over and then that's been a great buying opportunity. So, you know, as I talked about before, we're very early into this whole AI development chase, you know. So, if you go back to the development of the internet, what was going on back then, we're still very early into this. There's going to be a lot more to come out of this in terms of this. So, it's way too early to be calling, you know, this to be over because of just somebody said something or somebody did something. You know, you got to look at what's where where things are going. And these stocks were extremely overbought. Palunteer had certainly pulled back this week. Um, but they were they had run up 10% into earnings and then sold off after earnings. And they were they were almost four standard deviations over by that point. So things were just extremely extended because of this April through you know you go back and look at the the lows here in April. This April through October run was just outstanding. Up 35% in basically five six months. You're going to get a correction here at some point. And look, breath has been terrible. The the you know, a lot of the underlying internals have been very weak. So, you should expect a a little bit of a cooling off in the market, but that's going to very likely be a good buying opportunity heading into year end because again, we go back, stock buybacks have now started back. That's 5 to six billion a day. Corporate managers are way underweight uh technology exposure going into year end. They've got to get technology exposure back on their books. And this selloff certainly not helping that at all, but they're going to have to gross up on tech exposure because they're underweight tech going into the year and they've got to rebalance their portfolio. So again, there's a and and you still have a lot of momentum. There's still a lot of buyers out there just waiting for an opportunity to get money to put into work because there's a lot of cash still sitting sitting in there. So again, I you know, I I think these you know kind of conversations are good. It's great to to certainly analyze the negative comments, but I think you got to look at the broader long-term trends, then come back to the technicals and just realize that things were very overbought. You want corrections so you can buy these positions into your portfolio. And and again, that's kind of you want to keep that process in mind. >> Okay. And that's where I was going with this. So, um you we we've talked in previous weeks. Um, I'm thinking about the interview with Mark Newton, um, from Funstrat, you know, who who said back at the beginning of October, hey, I'm still bullish, but I think that October, November could have a downdraft for the market. Um, or, you know, pullback for the market, but I think that's going to be a buying opportunity and then rally into the end of the year. I haven't talked to him recently, so I don't know if that's still his case, but I know that you were sympathetic to that, Lance. And so it seems like you think that yeah, this probably is a buy the dip uh opportunity here, especially in some of the mag seven names, and that you still think it's more likely for the reasons you just mentioned, stocks will likely pick up and and end the end of the year stronger than they are now. >> Yeah. And you know, we've had a lot of people come out, you know, we've had people uh, you know, talk about, you know, shorting Nvidia because of this, that, or the other thing. And you know, those have been those have been actually good buying opportunities when those those type of commentaries come. So again, just you know, you got I think that's just for us, right? You know, I just think we're still early in this cycle. And I think there's more upside than there is downside at this point. And again, doesn't mean there's not going to be a lot of volatility along the way. You're definitely going to have pullbacks, but I think on those pullbacks, and again, you have to be specific about the stocks that you're buying, too. I mean, there's a lot of companies out there that are in the AI space that I wouldn't touch because they have no revenues. So, make sure you're buying good quality companies and you make sure you're investing in the right areas. But I think there's going to be long-term opportunities in some of these things as as as this cycle continues to mature itself. Now, the the downside risk to that is is that this all turns out to be a big puff of smoke. AI never works and it and it and it goes away. Yeah, that's >> we talked about this last week that that I mean I don't think anyone really thinks that AI is going to be a nothing burger, but if it turns out uh that the the expectations are that oh this might take a decade or two longer than we thought to fully materialize and all that stuff. You had said catastrophic is too big of a word but but it would be very injurious to the markets as the markets repric for that and we talked about that would create a negative wealth effect that would then impact the economy. So, it would be a big deal if the bloom truly fell off the AI rose, but we don't know. And that's one of the issues when you're in a uh a capital expansion. I'm trying to avoid using the word mania right now, but I mean, >> yeah, >> because nobody nobody knows. Nobody knows how high is, right? You know, like with the internet, everybody knew it probably had a limit, but a lot of people thought we were near it at the start of 20 at 1997 and there was still three more years of unbelievable gains to get before we hit the limit. >> Yeah, exactly. And look, this this will end um you know, and just like we saw in the com crisis, there's there's a lot of similarities, you know, and I don't I don't want anybody to think that that I'm dismissing the risk because I'm not. Um we're very sensitive to the risk that are building in the marketplace, valuations, earnings expectations, etc. There's a lot of concerns out there, but again, these can run for a while. Um, and again, you know, when we got to the.com era, there was a lot of problems, you know, that that that developed, you know, the Enrons, the Lucent Technologies, the global crossings, the um MCI uh data centers, and they were all building out this fiber optic cable, and it wound up that we didn't need it for the internet, and we had all this dark cable. And then, >> well, we didn't need it yet. That's my whole point is that you know that's the risk to the markets is that there's all this buildout of data centers >> and all these earnings projections based on what these data centers will will provide and it doesn't matter that if that eventually becomes to fruition but let's say it's 10 years out and not 5 years out and that was the same thing with all this fiber we built all this fiber we just didn't need it for another five years until Google came along and said hey I've got this idea for YouTube and there was all this c fiber optic cable for them to push video through. So if if if the earnings reality becomes more extended and let's say it's 10 years to hit that mark versus 5 years, that's going to be a real problem for valuations in this market. Um, so you know, Lance, on that point, I've actually had a number of discussions about it this week, some on this channel already, but I don't know if I've had it with you yet, which is this is pretty much how all transformative um infrastructure eras begin overbuilding. You get kind of this mania where everybody sees the potential. Capital chases after it, right? Nobody knows how high high is. And then eventually they get a better picture of what demand's going to be like and they realize, okay, we pass the overbuilding point. There's a big correction, right? And then kind of out of the rubble, right, the the the the bubble burst survivors and new companies then come in and build the sustainable businesses off of that new infrastructure, right? And we saw that in railroads. We saw that in in the dark fiber of of the dot era. One of the questions I've been I've been hearing raised here is, hey, it may be different this time. So, if we end up with a bunch of dark compute, right, a bunch of data centers that we don't really need right away because we overbuilt, right? >> Mhm. >> The shelf life of the chips in those data centers in terms of their their power and capabilities is is finite. In fact, it's relatively short. Right? So, in other words, back in the um in the railroad days, if you didn't use a railroad line for five or 10 years, the iron was still good. You could still run a train on it, no problem. Same thing with the fiber optic cables, right? If it took five or 10 years to finally light that up, fine. It worked just fine. >> But these chips that are sitting there in the data center may be just tremendously less powerful than chips 2 3 5 6 years around there. And I don't know what the depreciation of a data center is, but I'm pretty sure it probably depreciates a lot faster than say, you know, iron, right, or silica. Yeah. And this is actually you're hitting on one of the concerns that Mike and I have been talking a lot about lately is the, you know, life expectancy. So Nvidia's got a really good position in in terms of this because they're building the chips and those chips out very quickly, right? Because new technology is coming along. This chip's faster than that chip. it does this that that didn't do etc. So every time, so if I build a data center, right, and I've got this data center built, the problem that I see for the data centers is the guy actually constructing the data center because he's got to constantly be upgrading that data center >> for the latest chips, technology, etc. Because if he doesn't, somebody's going to build a better data center down the street with the latest new technology. And you know, the data is very portable. I can just lift it out of this data center and put it in that data center over there, no problem. And so, you know, Nvidia's got a really good moat around them for this. I, you know, the the area that I'm a little more skep a lot more skeptical about investing in is the guy actually building the data center, right? You know, there's >> I think there's going to be a real issue with that. So, you think about digital realy reats and some of these real estate uh REIT companies that are building these data centers. They're looking at this. Oh, yeah. builds data centers be those long-term cash flow, but I'm not sure they're actually pricing in how much consistent upgrade is going to be required on those data centers to stay up to the latest technology. >> Yeah, this is going to be really interesting and I' I've heard from some folks that they'd love to learn a little bit more about this and and it's pretty I hope it's pretty clear. I don't I'm not an expert on this. Um, so folks, if you'd like me to bring in somebody who's kind of a data center expert to talk about this, again, let me know in the comments section below, and if there's enough interest, I'll I'll go out there and hunt for somebody to do that. Um, all right. I I want to, Lance, in just a second just get to the the general TA on the S&P. Uh, if that chart looks any materially different than the one you just showed us for the semiconductor industry, I mean, AI is so much now a part of the market that that maybe they're the same and it's not worth showing the same chart twice. But >> no, no. Well, well, well, no, there's there's there's more to go into on the TA side. So, whenever you're ready for that, we can we can >> Well, I just want I just want to bring up something real quick here and and it's only it's just total human interest, folks. Um, it's only because you were talking about the the great technology that we got out of the space race and I mentioned World War II and whatnot, right? >> Yeah. Yeah. >> Um, so here's just an example I saw this morning that really caught my eye that I thought was really cool. Um, all right. So, this image, Lance, let me see if I can blow it up here. >> It's Christmas. >> Yeah, this is the clearest image we've now ever had of the uh atomic level. So, this is a molecule. Um, and let me see here if I can pull up here. Um, this is pricemium. Um, let's see. Yeah, it's a prymium scandium oxide crystal. And basically these are um scandium atoms here. The ones that are bright and the ones that are dark are oxygen atoms. Uh and you can see the atomic pairing here. Um it it's it's unbelievable that we now have this level of clarity here at the uh at the atomic level. So um you know Essentially what this does is I mean it's really cool just to be able to look at and if you're listening to this on the podcast folks you don't have the visual I'm sorry go online and type in pricemium and and see what comes up but one of the things you're saying is this is going to be really useful in basically like um uh you know coming up with new innovations because you can actually see you know with now crystal clarity see how you know certain structures happen at at the atomic level and and recreate them, you know, in the real world. Um, creating new new types of molecules, atoms, whatever, right? Um, it's just a it it it amazing time. And again, you know, you throw AI on top of this and say, hey, you know, AI, this is this is what makes a spider silk so uh uh strong, you know, make me something like this that's even lighter and stronger. Right. >> Right. >> Yeah. just uh >> look the again, you know, this is my whole point about technology is that, you know, I think, you know, you've got to be careful thinking that everything's going to turn out the way the.com bubble did. There was a lot of things in the.com bubble that were primed for failure. I mean, just companies were committing all kinds of fraud. There was no revenue in a lot of these companies. Everybody was just sticking on the end of their name because that was, you know, the that was the thing to do at the time. And you know, we're seeing and and don't don't get me wrong, we're seeing a lot of that today. I mean, we're seeing, you know, the same circular financing. We're seeing a lot of the same issues. There's certainly concerns that time, but I I think that you got to be careful about assuming that everything's going to turn out exactly the same way because again, you know, this time is different only in the standpoint that situations are different, backdrops are different, these companies have revenue, those companies didn't. I mean, there's there are a lot of differences that you have to at least pay attention to. You know, I'm not saying that everything's going to turn out to be just roses and and it's just onward and upward from here. There's definitely going to be some bumps and and hiccups along the way. But I think if you're a long-term investor in the AI space that you're going to profit from it, but it's going to be bumpy. It's not going to be a smooth ride. You're not going to make 100% a year on your AI investments, >> right? And and I mean, who knows? And that's the whole point of what you're saying. Um, you know, personally, I feel like whether or not it if whether or not we're in a bubble, whether or not it bursts like the.com bubble did, >> I would say you should be prepared for everything just to happen faster going forward. That that's sort of the what's happening here with the technology. That's what happens over time, right? So, we may go through a boom, a bust, and a recovery, but we may do that in a much more compressed cycle than we did before because I mean, how long how many years does it take for the NASDAQ to get back to where it was in 2000? like 15 years. >> Yeah, it's like 13 14 years. >> Yeah, it might take three this time, right? And I'm just making up a number there, right? But we we and to your point, you know, this this will likely be through that whole process spinning off technologies that we may not even be able to imagine right now, right? Like I'm pretty now that we have that level of crystal clarity at the atomic level, that's going to enable some material science breakthroughs that that you and I probably can't even if we just got a couple of beers and lean back and try to get as creative as we could be, might even exceed our own imagination. >> Yeah. Well, but this but this all goes back to why it's so important in your portfolio that you have some defensive positioning within your portfolio. So, just a good today's a really really good example. Um you know yes AI is definitely under pressure today. So here let me share this heat map with you. Um so you know AI is definitely under under pressure today or am I not >> I hope that's not the market heat map. It looks like it's on fire. >> It's it's what it says. I'm clicking on the button. There it is. I don't know why it keeps giving me a different window. Anyway, um but yeah, you can certainly see look Google's under pressure. Nvidia Eli. >> Yeah, that's under pressure. Look at that. 4% 5%. >> Yeah. Yeah. So you definitely get some pressure today. But look over here, Walmart, Costco, Coke, you know, these really boring companies. Exon Mobile, Chevron, Berkshire Hathaway. You know, this is why you need to have some of these companies in your portfolio because days like today where you're getting some of this riskoff rotation, it's important to have this balance in your portfolio. So like right now, the S&P today is down, you know, 1.24% 24% and our portfolio is down about 40 basis points, 45 basis points today because of that defensive positioning. So this allows you, you know, having a well diversified portfolio allows you to kind of weather through this storm a bit when these occur. But again, you want to keep this in perspective. You go, "Wow, look at Nvidia. It's down four and three/4ers percent today. It was just at an all-time high uh after a major runup in in kind of over the last couple weeks. You know, it just it was four standard deviations above its moving average. So you're just getting a reversion back to the mean, which is what you should expect. And you know, this is why it's important is that when these things do occur, you keep them in some perspective or you're not just panic selling stuff on, you know, at at a whim because, oh my gosh, it's down. I I got to get out of it. >> You know, you know, having a balance in your portfolio of some of these defensive positionings allows you to to to to just look at what's happening your portfolio as a whole and say, "Okay, am I still okay? Yes, I'm doing fine because I have these other positions. that are holding up my portfolio. >> So, absolutely. C can you go back to Nvidia for a second? I just have a naive question to ask you about it. >> Sure. >> Um so, and well, let's let's start. Yeah. Okay. So, um you see how it looks like it is broken down below the whatever that real long-term bright trend line is. >> Uh that's the 50-day. >> The 50-day. Okay. So, sure it can go below the 50-day and go right back up. the fact that it's cracked beneath it, you know, for a day doesn't really mean too much. But if you look at the the scope of time of it, um, you know, if you look from what is that after April, right? So after liberation day, >> here's here's your April lows. >> Yep. It it spent four, five months way above that average. >> Yeah. >> Dip below, came up, dip below, came up, dip below, came up, tried to get up again, now dipping below again. Does that suggest that like gravity is starting to weigh on the stock there and it's going to start spending some more time beneath that? It >> Yeah. No, it's very it's very possible. I mean, you know, you you actually, you know, here's the April low, right? But Nvidia had broken the 50-day moving average back in early January, traded below it, you know, through April and then finally bottomed and took off. So yeah, you could definitely spend a little bit of time here somewhere between this 150 160 level and kind of working off some of this overbought condition because again this is a daily chart, but once you pull back on weekly. So here's a weekly chart. You've had a monster move in this stock from basically 2024 all the way through 25, you know, 2024, 2023, you were at $10 a share, you're now at, you know, 160. So, you know, you could have a a correction back to 150ish and still be in a very bullish trend for the stock. >> Okay. Okay. >> So, again, this is why I'm saying you got to be cautious with taking one week's worth of action, you know, and and again, this is why we talk about taking profits, rebalancing, doing these type of things on a consistent basis. We've we've pulled so much profit out of Nvidia that we're just playing with house money now, >> right, at this time. And yeah, and so this is this is why you want to rebalance risk. You know, buy stuff on opportunities. You know, we're we're starting to build a position in Meta very slowly. That'll eventually be 5% of the portfolio, but we've got it's going to take time to get there. It's working through a corrective process, which is good. We want that because it allows us to buy, you know, as as it comes down, we can keep averaging into that price at a little bit lower level, lowering our cost basis. So, we're going to work through that over some time. But yeah, I mean, long term, you know, these companies are just killing it on revenue growth. So, I definitely want to buy this the companies that are growing revenue the fastest. >> Okay. And maybe you just answered my question, but I was going to ask, so why do you love Meta so much? >> Um, have you looked at the revenue growth on that? >> Well, yeah, pull it up. Pull it up. I mean, because I think a lot of people are >> thinking of it at this point as this may be the first also ran in the AI space. >> Yeah. So, so two things. One is that if you take a look at at revenue growth, this is sales going back to 2006 uh sorry 16. Um and they have just continued to grow sales. This is what happens at the top line of their business, right? So they're continuing to grow sales at a very rapid pace. EPS growth is just accelerating at this point also. And and look, they're not creating any of this revenue off of AI. That's an expense on their books right now. This is just what their normal business is generating in terms of growth. >> Yeah. Is how much of this is advertising? Like all of it? >> All of it. They're not generating anything on AI right now. >> I mean, unless they're using AI to sell ads, >> well, they are, but what I'm saying is is that their AI their AI buildout, all the stuff they're building on their data centers and stuff. >> Yeah. >> That's not generating any revenue for them yet. That's that's all loss, right? >> Right. Because all the capex and everything's going into that. That's all cost. So, this is all the revenue growth. And so this is the important thing is that I can buy this company that is growing revenue by leaps and bounds. And even if AI turns out to be a complete dud, they're still growing revenue on earnings. I mean, yeah, it's going to whack it would certainly, you know, whack the stock for a while because of the the basically the waste of the capex that was done on building out AI, but AI could go to zero for them and they're still growing revenue like crazy. >> So that's, you know, so in and so there's three reasons. Why do I want to own beta? Why do I want to own Meta in my portfolio? One, passive indexing effect. Every time somebody buys an S&P index fund to chase the market, they but they buy Meta. >> Sure. Same same for the other MAG7, but Okay. Yeah. >> Exactly. So, I mean, it's just that that's 40 cents of every dollar going into that stock or those 10 stocks every single time somebody buys an index. So, you you have the the the impact of that. Corporate buybacks, they're certainly involved in that. And then, of course, the the revenue growth on the other side of it. So I mean there's three good reasons why that you know if if I'm looking for position to play in AI I can go speculate some of these other companies like for instance you know I could buy you know Ollo as an example because Ollo is uh you know in the the nuclear space is going to be there you know >> got no revenues yep >> no revenues all right they they generate this is sales zero you know I don't want to buy that company until they actually start generating some revenue this is all great this whole run has been great fine and dandy because it's all the expectation they'll eventually provide that. But what if it's 15 years out? What if it's >> Yeah, totally. But but but don't don't compare it to a storage stock. I mean, I guess I'm what I'm wondering is why not one of the other Max Evans? Like why why is this one catching your attention so much? >> Well, here's Apple. I mean, Apple's doing doing fine, but it's its growth rate of sales is basically flat. >> Sure, get that. But how about Google? How about Amazon? You know, there's >> we Well, we own Google, right? We own Google. We've own Google for a long time. same reason. Um, >> is it 5% of your portfolio? >> We've owned Amazon for, you know, since for the ever since we launched the portfolios because of its sales growth. So, at the end of the day, what we're looking for are companies fundamentally that can grow sales. And what I'm not interested in is companies that either have no sales or can't grow sales. Earnings are fine, right? But you got to remember earnings are all manipulated. Earnings are, you know, if you take a look at earnings per earnings per share, a lot of that is manipulation. A lot of that's corporate buybacks. about 75 cents of every dollar generated in terms of EPS growth is all accounting gimmicks, right? Only about 25% is actual revenue. So, what I look for, what we look for, me and Mike, when we're buying stocks for our portfolio or companies that are aggressively growing sales because that's what generates earnings at the end of the day. >> That that is Let me ask you this. Do do you look at free cash flow? >> Yes, absolutely. >> Because yes, you want revenues, but you you do want something positive coming out at the end of the day. Yeah. And earnings you can't trust. so much because you said they could be manipulated but free cash flow is a little more honest. Right. >> Exactly. So then then look you can't really manipulate sales too much at the top line and you can't and you can't really manipulate cash free cash flow. So, so again and then there's also so and and also the reason we own Apple and so sorry the reason we own Amazon and Google and and you know these companies is because of a we realize we recognize the passive index in the market right we we recognize that effect on the overall market so >> don't fight the robot >> yeah you you look you you have your choice like oh I'm not going to own them because you know I don't like those companies whatever the reason is that's fine but it's kind of like trying to sell a boat without any sales up. I mean, you're not catching the wind. And so, part of the part of the the market gravity that that momentum in the market is just that passive indexing effect. And until that reverses, you're just kind of really fighting an uphill battle, not owning those companies. So, you have to own some. And then we but we feather around that with really boring stocks cuz we own Costco and Walmart and Proctor Gamble and Berkshire Hathaway and JP Morgan and all these really boring companies that are out there just, you know, doing their thing. But in days like today when those mag seven are getting hit, those guys start kind of holding up the boat. >> Yeah. They're saving your butt. I mean, they're doing what they're supposed to do, right? Yeah. All right, last last meta question, then we'll move on. Um, >> so I believe you still think that the economy is slowing as we head into 2026. >> Yeah. >> In a slowing economy, and I know you're not predicting recession, but in a slowing economy, when things start getting tight, companies start cutting their advertising budgets first. >> How much of a concern for you is that with a company like Meta that is like 100% advertising? Um it's it's definitely a concern and you know this is part of you know the conversation that we've had here for a while you and I uh both is that you know when you start thinking about next year as an example so this is a this is a chart of earnings expectations right now uh forward earnings let me let me enlarge this here before I I share it I just posted this morning on this on X this morning um notice this is so this is S&P 500 at the top. Okay. >> Um, and this is midcap 400 in the middle and small cap 600 at the bottom. Do this is forward estimates. So, this is 2025, but this is this is 2026 estimates, right? So, this is forward estimates for next year. >> All right. Sorry. Let me just make sure people understand there are different companies in each one of these things, right? There's not overlap. >> No, there's not no overlap. So, this is large cap, midcap, and small cap. >> Okay. >> So, so Apple Meta, Google, those are in large cap. Um and the midcap is a totally separate set of companies and the bottom the small cap those are totally separate. So no there's absolutely zero overlap between these indexes. >> Okay. Good. >> Okay. Um so but I want you to notice the the sharp upward slope of this in terms of earnings growth. This is estimated for next year. Now in 2023 2022 2023 2024 let's just look at the bottom line. Let's look at small cap 600. They had negative growing earnings for the last three, four years. >> Yet the economy was absolutely bonkers on fire because of all the stimulus that we injected back in 2021, right? So we were producing, you know, 4% economic growth. Everything's great. We've got all the stuff going on. They cannot produce earnings in that environment. Same thing for Midcap. Midcap didn't really produce any earnings growth of of consequence during that entire time. Now going into next year, they suddenly expect this massive resurgence in earnings growth in the small cap and midcap sector, but the economy is expected to slow down. We should be running around 2% growth next year. Europe is going to grow around 1%. So the the problem I have going in next year is really in the small and midcap space, small and midcap space, which are very economically sensitive, but they're expecting this massive earnings growth to to emerge in an environment of slower economic growth. I think that's the risk to markets next year. >> Okay. >> I'm just curious, Lance, in in if we had if we were looking at this chart a year ago. >> Yeah. >> Would it have a would it have had a similar trajectory in >> Yes. >> for 2025 forecasted? I mean, that's kind of the way it always is, right? >> It is. Yeah. And this is >> But you think the rubber may meet the road this time just because we don't have the pig left in the python of of all that stimulus. >> I I I think that is the risk that we're going to run into next year. >> Okay. Well, I think that's quite real. So again, just tying it to Meta, does that slow does that slow your entry into Meta because you want to see how things are going or you just >> Well, no, don't forget that we that part of our portfolio management is is also we have a little bit of a trading bias to it. In other words, you know, we're trying to buy stuff cheap and then if it has a good rally, we'll sell into it. >> Y reduce our position size and then we manage that that risk over time. So, you know, we're not just looking to buy something and hold it for the next 10 years. Um, you know, we're looking for opportunities of things that are getting really oversold, outdone in in some shape, form or fashion where there's an opportunity. We buy stuff cheap, we sell it expensive. So, we may own Meta for 6 months, we may own it for five years. It just depends on what happens next year. >> Okay. And in terms I know you're building the um you're building your thematic portfolio for um for energy. Um are you guys actively starting to increase your positions there at this point or are you are you waiting? >> Uh no, we've actually we've actually so one of the companies that we own. So now this so that thematic portfolio is a little bit different because it's going to be 100% energy, >> right? And it's just going to live on as that portfolio. Yeah. >> Correct. So, but in our 6040 allocation and our in our dividend equity models and and our all- weather models and those type of things where we own stocks longer term, >> then yeah, we've actually we own energy stocks now, but for instance, KMI is one of the stocks that we own and yeah, we've been adding to that position on weakness as well. >> Okay. All right. All right. Good. Um All right. Uh I I might have in all of this we might not have actually brought up a chart of the S&P. Do we need to we already talked about all the Yeah, we haven't we haven't we haven't done the TA yet on >> All right. So, yeah, why don't we bring up the S&P and then if need be, why don't you bring up the um I don't know what you call the chart, but the the chart with the quadrants that shows what's looks overvalued and undervalued. Yeah, >> sure. We can do that. Um so, this is the uh S&P again. You know, we're we have are are flirting today with breaking the 50-day moving average. So, this is the first time that we've actually done this in a while. So, the last time was about three Friday, three, four Fridays ago, >> we had that 2.7% sell off in one day down to the 50-day moving average. So, again, just because we're flirting with the 50-day moving average today. Even if we close below it today, that's okay. Um, that's not that's not like, oh my gosh, I got to sell everything right now in the markets. Um, we need to see if we stay below that next week. You know, we can break these moving averages, but then we've seen we've kind of seen buy the dip step in and then immediately buy these things back up. So, be a little bit cautious just reacting on a one day selloff. And again, this we're recording this on Friday and it's currently 11:00 a.m. uh Central Standard Time right now. So, you know, this this market could rally into the into the end of the day and be back above the 50 before the close. So, again, be a little bit cautious with this right now. We've got to see how the day closes, but we're working off that relative strength uh overbought condition. The one thing that that has been bothering us lately a lot is this negative divergence in relative strength versus the rising market that typically is not a very bullish sign and suggests that you could have a little bit bigger of a correction process on your hands. Also, breadth has been absolutely terrible. So, you know, we could very well work ourselves down towards this 100 day moving average towards uh 6,500. that would not be out outside the realm of possibility, but probably somewhere between where we are now and 6500ish on the S&P, we're going to get very very oversold and that's going to be a good setup for a bounce into year end. So again, we're kind of getting the a late October selloff. what what should have happened in October has got pulled into into early November here, but I think at some point in here, we're going to work this off and that'll give you a good setup for that year- end rally uh to close out the year because again, as I said, you've still got buybacks coming in and portfolio managers in general are very underweight equity. So, they're going to have to get, you know, they're going to have to buy stocks and get it back on their books before year end reporting. >> Okay. All right. Look, well, thank you for walking us through that. >> All right. And I I want to I want to try to I want to try to wrap up a little early today if we can. Oh, no. You're right. Let's do this first. >> Yeah, I was I was gonna get you there. So, uh a couple of weeks ago, I had showed you this chart and I want to show I'm going to show you two different variations of this chart. We're going to talk about sectors and then factors. Um couple of weeks ago, I showed you this and technology was extremely red, right? So, red is overbought. So, technology was way up here in the corner and now we >> and it was like the only one in that quadrant too. >> It was. and and you know back then we had a lot of stuff in in kind of this very lower lower quadrant and so since then we've seen Staples Staples was the most oversold. It's now it's still oversold but it's starting to come back again. That's that defensive rotation occurring. Real estate's been getting a little bit of a lift here. So we're seeing that money now rotating back from that those sectors back into these more defensive sectors. Healthcare was was really beaten up. It's now has moved up sharply here. is now moving back into the kind of the overbought arena. So, healthcare's had a really good rally. A lot of that's been Lily, Eli Liy over the last week. It's a stock that we own in a portfolio for the weight loss drugs. And there were some good announcements from the administration this past week. So, we're seeing that rotation occur here. But factors is more factors is is very interesting to me because this is more of what happens internally. Let me sort this. So for the last few weeks, um, Gold Miners, uh, ARC basket, the the, uh, ARC ARC innovative fund, you know, Kathy Wood and the whole ARC ETFs, the disruptive tech, those were really, really grossly overbought. We were seeing those up here. MGK, uh, the charter was showing a few minutes ago was was way up over here in this corner. That's all migrated back here towards the center. And everything that was very, very oversold is starting to work its way back up. So, we're starting to see here's moment the momentum basket is now really oversold. Again, this is also discussing that, you know, this pullback in the market is now setting up for a good entry opportunity into some of these more aggressive positionings into year end because what was really over overbought that needed to get some some selloff done has been has been occurring and now we've got momentum and small cap growth and buyback achievers here, disruptive tech, here's ARC um very very oversold and so that's going to give them an opportunity to rally into year end. So again, the stuff that was really, really, really overbought has now gotten really oversold and and we've seen some improvement, some of the more defensive stuff. So again, you know, that's kind of we're kind of clustering in the middle. So we we may still see some of this rotation occur. And so again, it's not necessarily out of the woods just yet, but you know, the sellout the setup here for a little bit better outcome by year end is starting to look a lot more appealing. >> Okay. Um let me ask you this real quick. Can you quickly just summarize how it calculates oversold and overbought? >> So, so it's so what this is is this is absolute and relative performance of each sector relative to the index. Okay. So, and and so this first column is absolute. So, in other words, >> the index being the S&P, right? >> Yeah. So, so what's its so this? So, the first column is its absolute performance, right? So it's looking at the absolute performance of the sector itself. So this is more think about like relative strength or momentum measures, right? So it's it's overbought in terms of its absolute performance or it's oversold to its absolute performance. Relative is how it performs relative to the index. Is it outperforming the S&P or underperforming the S&P? So right now for instance momentum is underperforming the S&P. So this score range one runs from negative -1 to positive one. So if it's at if it's at one, it's extremely overbought. If it's at negative 1, it's extremely oversold. So we're at a negative 48 uh on momentum. Now just last week when you and I were on the show talking, MGK as an example, um here, let me let me take this off and let's just pull up MGK. So here's MGK. So last week when you and I were talking, MGK was at 98. It was up over here in this corner, right? It was almost as extremely overbought as it could be. Today it's at 0.02. So there's been a big reversion over just the last three, you know, three, four weeks. Here's the tail. This is where it was last week. This is where it is today. So you've had this very sharp reversal in MGK just in the last week. So this is just looking at the and this is why it's this is why we build port how we build portfolios and when we're when we're constructing portfolios we're looking at you know how these assets perform over time relative not only to their index but to themselves. Are they are they how do they perform relative to itself? That's absolute. How does it perform relative to the market? That's relative. And by combining these together we can start modeling out how performance should react within the portfolio. And then that's why we own things like a Bergkshire Hathaway as an example versus a Meta because if Meta is selling off, Berkshire Hathaway is probably gaining ground because of its defensive nature. >> Okay, super helpful. Thanks. All right. Well, look, let's try to move on here. Um, we could talk for a long time about these next few topics, but let's just get your kind of high level thoughts on them. um you wrote a piece this week um basically addressing the question, hey, is the Fed doing money printing? >> Yeah. >> Um so I'd love for you to just comment on that really briefly, but yeah, I have seen I have I have seen so you and Michael have have um just so we don't cover territory we already have recently in recent um videos uh weekly market recaps, I think both you and Michael have said, "Hey, look, the Fed doesn't print money. It's actually printed through the banking system." the the banks actually sorry the banks create money through the banking system. The Fed actually creates reserves not actual currency. >> Um let's not cover that territory. Um but uh what the Fed has announced it's going to do is is freeze the size of its balance sheet >> and let the mortgage back securities roll off and therefore as those roll off that would that would that would shrink its balance sheet. So to keep its balance sheet at its current level, it's then going to step in and buy treasuries. And I think and the Fed is saying, "But that's not really QE guys." And I think some people are saying, >> "Is it truly?" So >> first, yeah. So first of all, so so real quick, let let me You're let me let me clarify a couple things because there's some things behind the article today that that are important to understand. And this has been something that, you know, we've been kind of writing about for a while. So, so last week, uh, sorry, two weeks ago, I wrote this article. I'm going to share a couple of of screens with you just so everybody can kind of be up to speed on what we're doing here. Um, so last, so two Fridays ago, I published this article called money supply growth, a thesis with the fatal flaw. So this has been one of the primary arguments about oh the money supply is just going like crazy and and you know this is the know the whole world's going to collapse because of this increase in in money supply and the whole debasement argument etc. So, we pretty much just went through and explained how that money supply has to grow with the economy because if it doesn't, the economy can't grow. And as long as the money supply isn't growing faster than the economy, you don't have debasement. Debasement only occurs when when money supply grows faster than than GDP. And so, we go through and explain all this exactly why. We talked specifically about the sectoral balances of what happens with government government debt when it gets moved into the economy and how this all works, right? So, so we went through this this debate. So, a guy named he writes on Substack, super nice guy. I'm not, you know, I have all the admiration for him in the world. So, I don't want anybody to think that, you know, I don't appreciate, you know, good counter counterpoints. um he he wrote a piece last week, you know, counter count, you know, saying, "Well, yeah, I understand your whole point about M2, but the Feds print the, you know, don't don't discount the Fed printing money." And I'm like, "The Fed doesn't print money. The Fed creates reserves." And so, we went through explaining, you know, how exactly, you know, there's two ways that money gets created. And and we have the deficit funding process which is where the government needs needs to you know needs revenue for the government to spend which winds up in in household bank accounts. Um that's done through issuing bonds that creates money. And then we have the other side where banks use reserves to create money. But the only way that money gets created as we talked about before and again don't want we don't have to rehash all this is that money gets lent into creation. Nobody's up there with a printer cranking out money. This is kind of one of the, you know, there's all these pictures of, you know, Ben Bernanki with the money printer, right? Just printing out money >> and that, that doesn't really happen. And so, we just go through this explaining how money gets into the system. And most importantly, one of the other kind of arguments that gets thrown around a lot, well, well, when the Fed creates reserves, that doesn't wind up back into the markets. Yes, it does. Because when the Fed creates reserves, who borrows those reserves? And this goes with the the overnight repo process. So, this weekend's newsletter on the website, uh, which will be out tomorrow, is all about the repo issue going on right now. And I and I'm just a very basic overview of what the repo system is because a lot of people don't understand what the repo system is and how it works. And who uses it and who uses the repo system? Yes, the banks use it, but also hedge funds. >> Yeah. >> So, you know, >> we should really go through that, I guess, in two weeks when you're back on in two weeks because I think it's really important for folks to understand. >> So, we can. But anyway, so this article is on the website right now just kind of going through, you know, how how how the the Federal Reserve creates reserves and it's just an asset swap between the Federal Reserve and the banks and then the banks use the reserves to create money through lending. >> Yeah. >> So that's that's kind of where we are. I don't know if I answered your question, but if you want to read >> Well, you didn't. You didn't. You kind of did the opposite where I said, "Let's not walk through all that because we talked about it already." But it's good. And folks now know they can go to this article and get, you know, all the details on the plumbing. But now that the Fed is letting the mortgage back securities roll off and is is having to step in and now you know and a reminder folk I mean the Fed has been buying treasuries um as it's been winding down QT uh because it's been managing the pace of the QT windown but a couple years ago the Fed was by far the biggest marginal buyer of of treasuries. It's been out of that game for a long while. It's now starting to step back in. So the question to you Lance was is this really a form of QE even though the Fed doesn't want to admit it? Well, there's actually two things that are coming up that are about to happen that are going to be equity positive. Um, so first of all, so so just to just a real quick explanation, I think just to make sure everybody kind of is on the same page with you, we were doing 25 billion a month in uh quantitative tightening. So the the Federal Reserve every month would let$2 billion worth of their bonds mature off their balance sheet. And but there was a lot of articles written as like, oh, the Fed's still doing QE because they bought $50 billion worth of bonds last month, right? And or whatever. And that's true because they had 75 billion mature. They let 25 billion roll off. They bought 50 billion. So they were keeping this balance sheet roll off. >> They were managing the pace of QT. Yes. >> Correct. So very important that the Fed has still been buying bonds. It's just not they they're not selling bonds either. They're just letting bonds mature >> off their balance sheet. So, and and you you made the the exact point earlier and this is actually all part of the repo article this weekend in the newsletter. Uh I go through this exact question that you're asking is there's two things that have now happened that are going to be equity positive. The first is the government shutdown and everybody's like well how's the government shutdown positive? Well, the government's not spending money. The TGA account is that's a treas Treasury general account that has surged to almost a trillion dollars. Um there's about a $700 billion increase that's growing every day here because of this government shutdown. It's money that's not getting spent. As soon as we flip on the as soon as the government shutdown ends immediately that money has to go out to everybody that gets brought back to work gets all their back pay. Where does that money go? Goes into the banks. All the contracts that the government was doing, those get funded. That money goes where? Into the bank accounts of those companies. >> Corporate America into the banks. Yeah. Yeah. Yeah. So it all winds up into the bank accounts of these money. So when that when that 700 billion hits the banks which it will immediately that increases the liquidity of those banks and those reserves of the banks which they can then fractionally lend out. Now again who borrows that money? Hedge funds. Hedge funds borrow in the overnight window. So they can immediately go to that repo window and start borrowing money and that just increases liquidity in the system. So, so to your point, there's two things that are going to happen is that and and and part of the reason why the Federal Reserve ended QT so quickly. You know, we expected them at the meeting, we had said this earlier this year that we expected QT to end this year. >> And we just didn't expect it that they would announce it at their at their meeting and then end it in the same month. Right. Well, I figured they would say, "Hey, we're going to end QT by next April." Right. Right. But they end of November and it's like we're ending QT end of the month and and that's because of what's happening in the repo market. There is there is some stress occurring in the repo market, liquidity issues in the repo market that are very reminiscent to what we saw in 2019 and the Fed wants to be ahead of that. >> So you've got a couple of issues here that are going to be providing liquidity to the banks in forms of reserves, right? And it's not QE, but it's going to act like QE by providing by increasing bank reserves which wind up back into the financial markets. >> Okay. So, as uh Michael How calls it not QE, which is pretty much >> technically not Q. No, this is technically not QE. It's just going to wind up in the same place, >> but but it but it basically has the same effect. >> Yes, it does. >> Yeah. >> So, it's also why we're not overly bearish on the markets right now. >> Well, okay. So, and that was my next question, which is, you know, these are early signs of stress that we're seeing. Um, how worried are you about them? Sounds like not that much. >> Well, I I'm I'm bearish by nature, right? I'm always worried about this stuff, >> right? But you just said you're not that bearish the markets right now, >> right? I'm not that bearish on the markets because I because I don't discount the fact that there's liquidity coming, right? So, I know that's coming. But, yeah, I'm you. But to say I'm not worried about stuff is Yeah, I worry about this stuff all the time. >> Well, but I mean, but this is new. How how much is this raising your worry needle, if at all? >> It's it's Look, I I think the the the things I'm worried about are the fundamental factors. Economics, earnings, growth expectations are too elevated. Economic expectations are too high. Valuations are too high. Those are those are all very problematic. Now, they're not problematic today. They're not problematic by the end of the year, but I think they become problematic next year. That's okay. That's my assumption right now. Now, that could change, but I think there's I think the headwinds are building into next year that that I think we need to be prepared for, again, you know, like I like I said earlier this year, I expected earlier this year, I wrote that article that we talked about about curb your enthusiasm because we just come off two 20% year-over-year return years. and I said expect a year of higher volatility and potentially lower returns. Well, we got higher volatility, but returns have been great. So, you know, it's it's that I was wrong on the second part, but we definitely got the volatility. I still think next year we could see high volatility and lower rates of return because of the other factors that are still building in the system. >> Okay. All right. Um All right, folks. Well, you've heard it. You know, some folks call Lance an uber bear. I think uh not too many people on this channel. you probably get more. You're too bullish, Lance. But I think you were just trying to be the eagle here. And the eagle says 2026, it's not a lock. >> Um, >> we're not selling everything going to cash. I mean, we're just going to navigate it, you know. >> Yeah. Not at all. Exactly. Yep. Um, but but I I would say to I will say too that another blockbuster year in the or another double digit year of returns in the markets next year would be historically pretty aberrational, right? You don't usually get >> there's also some statistics. Yeah, there's also some statistics that we watch that certainly worry me about next year as well. >> Okay. All right. Um, uh, real quick, um, you know, you were going through your your charts and stuff there. So, Lance, I was at this conference. A lot of your peers were there. A lot of people came up, you know, who follow you came up to me. And I will tell you first and foremost, Lance, not everybody agrees with you. >> Of course, >> that's what makes not a huge surprise, not a problem. A lot do, but but not everybody agrees with you. But pretty much everybody has a lot of respect for you in the terms that when you make an argument, you make it with data, right? You're not a guy who's slinging opinions. You're the guy who actually does the work, goes and finds the data, creates the charts, and says, "Here's why I think the way I do, and I'm going to try to prove it to you right now empirically." People have a lot of respect for you for that, and I think it is very well earned. >> Well, thank you. And and look and and again I don't know everything and so when somebody poses an argument that's why I go get the data and say you know this is what the data says and because again that that forms all of our opinions about how we manage money as well and again our job is to try to be right 70% of the time and we're going to be wrong sometimes but you know we're just trying to separate out kind of this fact from fiction. There's so much stuff that gets circulated around the markets that, you know, has no basis in reality, but it it it gets people all worried. And and again, what you know, your job is, and this is why you call it thoughtful money, right? Is >> to be thoughtful about the things that we're being told and how we're letting that impact our our investments, right? Because we're trying to grow money for retirement. We're trying to do these things. And so it's important that when you hear a narrative, no matter what it is, debasement or, you know, bull markets or bare markets or whatever it is, think, okay, that's fine, but what's the real risk of that? And that's, you know, that's what I feel. And Mike and I both, that's what we feel our job is. And and so if you read our articles on our website, they're answering those questions all the time. And and every week we post three articles a week. We post newsletter on on Saturdays. Um, we also post on Substack at Lance Roberts. We post on Twitter at Lance Roberts. So all these they're really easy to find. But you'll see a bull you'll see a bullish article and I get I get push back on this all the time because like well Lance just last week you wrote this really bullish article on the markets about AI and this week you got this you know end of the world narrative about recessions and and debt and deficits and and it's not I'm not trying to make a case of why the markets are just going higher or why the markets are lower. trying to just arm you with the information that says this is what the data says and we need to try to navigate this together and and try to make money and and you know everybody wants to argue and and have fights and these type of things and that's not me I don't want to fight with you I'm just like saying okay here's the data if you disagree with it it's fine but it's just like a good example is this article that today about fed money printing uh Michael Garrett great article he disagreed with me and so I w I wrote a rebuttal for him just basically going through the data >> and saying this is what the data says and and you know this is how this works in reality and so it's just important that we all have a good base to work from. >> Yeah. And look, you know, a market is made by people who >> look at sim similar data but come to different opinions. And you know what I try to do with this channel and you're exceptional at it is is >> get people on to actually make their case in full and wherever possible show the data so that you can look at it and then determine whose argument you find most persuasive so that you can then make a more informed decision. But I just want to again Lance give you props for that. Um, all right. Um, >> another thing we could talk a lot about, I really just want to spend a minute on it. um dollar outlook in general. I believe you've been saying yeah look the dollar weakened a lot over the past you know couple years versus other currencies but um you know you think could actually start strengthening again versus them you still have that outlook. Um well you know the dollar's rallied uh this week we were back over a hundred uh on the dollar and you know the one and this is you know this has been my kind of my my statement for a while is that you know it's like you know there was all these you know the word you know the world's debasing the dollar and we're all leaving the dollar nobody wants to own the dollars anymore and it was great you know that was great narrative for you know pushing people to buy gold and those type of things um but that's in reality that wasn't what was happening at all and the dollar is going to trade either at a premium or discount to 100. Um, that's just the way it works over time. And right now, we're back over 100. The dollar's been having a very nice rally here lately because it was very, very oversold. And, and the dollar works just like every other commodity, works like every other stock, works like bonds, is that when things get really really overbought, you're going to get reversals. Everybody gets on one side of the trade. When it gets really, really oversold, people are going to start buying it because they can make money in it. And so it's always important to try to set aside these narratives and just look at the dollar and just realize the dollar is a commodity that trades against other currencies. And when there's an imbalance either it's overbought or oversold relative to those currencies, it imposes an economic impact on one country or another based on exports and imports. >> Right? >> So those those countries are going to act to resolve that imbalance accordingly. And this is what we've been seeing as of late. The dollar has been rallying nicely from an oversold condition. It's getting a bit overbought here. So, if you've been long the dollar trade, which we kind of recommended, you know, two months ago, take some profits. >> Okay. Are are you guys doing that on your dollar trade positions? >> We don't we don't trade the dollar directly. We trade off of the dollar. Um Okay. And the positions that we own. So, you know, our multinationals, those type of things, they're impacted by the dollar. We'll we'll be take, you know, we we rebalance around the fringes because of that that we we focus on that dollar currency imbalance relative to the revenues. >> Okay. All right. So, how it'll impact those countries, companies. Okay. Um, one of the reasons why I just wanted to touch on that was a to get an update on what your thinking was, but also, we don't have time to go into it here, but folks, if you have not watched the interview that I released uh right before this one with Lance with Brent Roberts that I recorded when I was at the New Orleans conference, highly, highly recommend you. You should. It is a mindexpanding, mindopening, perhaps mind-blowing discussion around, you know, Brent is the dollar milkshake theory guy. So he's the one who's generally says, "Look, don't count the dollar out even though, you know, to your point, Lance, a lot of people are saying it's days are over and nobody wants it anymore and all that stuff, right?" So he's got the whole dollar milkshake theory. You probably heard him discuss in this channel a number of times. He now has looked at stable coins and in my opinion sort of had a Eureka moment about how they could become the they may well become the vehicle that not only maintains the dollar uh global dominance but actually expands it dramatically and and and would be a red dollarization uh of the rest of the world or an increasing dollarization of the rest of the world not a dollization. And uh Brent's the first one to say he's still thinking this through. Um but spending some time with him and some other thinkers this week really going through it, my mind just kept like every every discussion I have with him, I was like, "Wait a minute, that opens this other massive opportunity or question." Um, it really is you owe if this is something that you have even marginal interest in, I think you really owe yourself to to uh just listen to the discussion and then afterwards decide for yourself whether you think it has merit or think it doesn't. But if it does, if Brent is right here, this is I mean really kind of like a new monetary regime uh for the world. It it it's at that level of importance. But anyways, no, >> he's absolutely right. It's also a huge tailwind for US treasuries too. >> Well, it absolutely would be. Um and and I mean it would eventually this this this is really the Treasury doing all this and the this could replace the Euro dollar market over time. It could replace the Swift system. >> It it actually has implications for the banking system. Um if so you you may not actually well the Fed's importance may diminish a lot in this world. I mean, there's just all these different things. And of course, if we're doing this internationally, is there a reason why we wouldn't do it domestically? Probably not. If we did, all those concerns about a CBDC in terms of privacy and control, all that stuff comes into play. I mean, it is it is a massive massive tangle of really interesting implications. So, I'll just leave it at that. >> And no, we we absolutely agree with him. Um, Mike and I wrote this article called Stable Coins to the Treasury's Rescue back in June of this year. So, he's absolutely right. You know, this is something we're we've been looking at now for the last 6 months is the impact of of stable coins. In fact, I just interviewed a guy from u um a cryptocurrency uh company. It'll be airing on Monday on our real investment show. But part of our conversation is around digital treasuries as well as as other factors. So yeah, you know, the the the future of what happens with stable coins is going to be massively important to the strength of the dollar and the treasury market. >> Okay. And and folks, I bring this up just because I think for most people, >> they kind of heard of the word stable coin. They don't really know much about it or care about it and they sort of think about it as like a fringe of the whole crypto space that they're maybe not even really looking at anyways. >> This is something I think you need to really look at because it could have, like I said, just massive implications. Um, way bigger than I think most people are imagining right now. >> Absolutely. >> Um, okay. So, go watch the the video with Brent. Uh, all right. Um, let me move on to this next thing real quick. I didn't mean it to be the rant, but it might need to be the rant just because we're starting to get uh short on time. Um, it's just a comment that was made below one of my recent YouTube videos that I thought really captured the gestalt of how the middle class is is feeling right now in terms of their their frustration about their financial situation. Um, he said, "If you've get if you have zero dollars, you get welfare. If you have a billion, you get a bailout. if you've got 2,000, you get to fund the whole system and get lectured about how to budget your money better. And I I I I did think that was a really effective, concise capturing of the the frustration and the plight of of you know, what remains of the middle class here, Lance. And so, one, I'm sure you probably have a a reaction that I'll let you go on in a second, but I I I Well, let me get your reaction and then I want to ask the question I was going to ask. >> Well, no. I mean, he's right. I mean, you know, the the reality is is that if you've done well for yourself and you're in the, you know, top, you know, 5 10% of the economy, you know, you get a lot of support from, you know, your the growth of your dollars because you're investing, you're taking advantage of markets, you're doing these type of things. He's right. if you're in the the bottom 50% of the economy. Again, the the the wealth charts show this and and is that, you know, you look at the the wealth gap between the bottom 50% and everybody else, they barely show up on the charts, right, in terms of of equity wealth. >> So, they're they Yeah. And they're getting welfare, they're getting support, they're getting, you know, food stamps. Well, not right now, but they get food stamps, they get all this this other help. And then if you're in the middle class just paying bill, I saw a great TikTok this week. There was this lady, she was crying on TikTok and she was like, "It's your responsibility to feed my five kids, you know, cuz she was she didn't have her snap." And so the the a guy did a, you know, he was responding to it and it flips over to him. He's out in the middle of an oil well, you know, he's like, "Lady, I'm working on it. I'm working on you know, needs out there working hard, you know, and and that's true is that the the, you know, kind of that bottom, you know, between 50% of the economy and 80% of the economy, those are the guys that are that are working hard, paying bills, trying to make ends meet, but there's absolutely nothing left over for investing or doing anything else. They're just they're just trying to get by. >> Yeah. Um, Charles Hugh Smith has a term that I've I've long uh used called, you know, tax donkeys where that's just how the middle class feels, right? Where they're like, you know, we're doing all the work. We're paying a crap ton of the taxes. You know, we're not getting any real tax breaks, right? And getting ahead is getting harder and harder and harder. It's not news necessarily to anybody but um you having been at this conference that um you know is a investment conference and you know it's it's it's the people who are paying attention and really trying to get ahead right not get left behind not not be stuck forever in tax donkey status. Um, you know, we're in the business lands where we we talk to a lot of people um all over the wealth spectrum and uh my heart is increasingly going out to to people who I mean of all age ranges as we talk about but but really to the people who were kind of 40 through 60 who are just working hard. They're they're they're again they're they're they're getting squeezed by the forces that you just talked about and you know many of them are aspiring to have a million dollars, right? >> Sure. >> And for a lot of for a lot of people like and I know this might be uh hard to believe for some listeners and maybe even insulting for some listeners, but like a million dollars doesn't go as far as it used to go to, right? No. So when when when I see these people who are like, "Look, I want to I want to get a million dollars so I can retire by age 65." I'm thinking, "Well, let me just do some math here." Like, I mean, you better have no mortgage at this point in time. You know, you better have a pretty low cost footprint to make that last the next 25 years of your life. >> Right. >> Right. Um, and for a lot of people, you tell them that, and I understand, they're like, I mean, a million dollars almost feels like impossible for me to get to right now. you tell me if I get if I get there, it's not even going to be enough, right? And I'm I'm not trying to depress people and and I I think there are many ways to still have a very happy, fulfilling life, even if you don't get to the million-dollar status level. But, you know, I did just want to kind of lean back for a moment and look from a high level to just say it's getting hard for I mean everybody who's not in that top 10% that owns the vast majority of all the world's, you know, financial assets. But, um, but I'm I it's getting hard. People can feel how hard it's getting, but I'm not even sure they appreciate how how hard it's getting numbers wise. >> Well, and and again, but this also goes back then and see I find it very passing. So, we're we're going to have our conference in on January the 17th. You're going to come down. It's going to be great. We're going to meet a lot of people. Got some really cool speakers this year on uh cryptocurrency and you know the the future of artificial intelligence. Got a guy from Black Rockck coming on artificial intelligence. It's going to be absolutely awesome. Um but there's a very defined group of people that attend a financial conference and it's people that are serious about investing, serious about saving. And it's always interesting when you look at the top two reasons for divorce, it's infidelity and financial and finances, right? And generally if you have trouble with the finances, it leads to the infidelity. So I, you know, you can really put finances probably at number one because it's probably at the root cause of everything else that's going on. >> But you know, the problem is like look, I we meet with people all the time that have half a million dollars saved up and they can retire because they have a very normal living standard. They're not driving fancy cars. They, you know, they drive an old beat up pickup truck and they live in a normal house and, you know, it's it's they have a very moderate lifestyle and they can retire with with between that and social security and, you know, whatever other little trinkets they've saved up over time, they're able to retire and they they can do okay, you know? So, your retirement is only a function of what your monthly cash flow needs are, right? And so, you know, if you're going, "Well, I need a million dollars to retire." Well, maybe you do, maybe you don't. Look, I will tell you for a fact, I just met with a guy two weeks ago that had $20 million, cannot retire. No way he can retire. Probably will never retire because his cost of living is so far above and beyond what $20 million can generate. He'll never be able to get there. >> Right. Right. And there are people like that. It will probably play the tiniest violin for them. But yes, there are people like >> Yeah. But my point is is that part of part of what our job is, your job in particular because you interview a lot of people and my job and and what I do is to make sure we have realistic expectations of what retirement is going to look like, but more importantly that we're doing what's necessary to get there. And again, you and I have talked about before is that, you know, so many people they get up in the morning, they go to work, um, and they're doing all these little things that are just eroding their financial capability to save and invest money. Just things like I stop for Starbucks every day and I get a Starbucks on my way to work. You know, that's $5 a day that's just leaking out of your your savings. And and you start thinking about all these little things you do. And this is why it's so important to have a financial plan and and do some budgeting and take control of your financial situation. >> It is why the plan is so critical. Yeah. >> Yeah. And and we do more, you know, more people could retire with that half a million or a million dollars if they were willing to do the work today. And and instead instead of doing the work and accepting responsibility, I see so many pe I talk to so many people, they blame everybody else. It's the system. It's the economy. It's capitalism. It's this, it's that, it's everybody else, and it's everybody else's fault but my own. But in reality, it's all our fault. It's my fault. It's Adam's fault for ourselves, right? What I do in my life with my family is my fault. And if I don't do what's necessary to build wealth and and do the things to take care of my family, it's my fault. It's nobody else's. And I can fix my situation if I'm willing to take responsibility and start taking small actions today. And and again, we don't have to do we don't have to go through massive extremes, you know, you know, and this is why people fail on diets all the time, right? They go, "All right, Adam, I'm going to start a diet, right? So, I'm going to do your fasting diet for, you know, a week. I'm not going to eat for a week." And then, you know, by the end, they just they go to this massive extreme and you can't change habits overnight like that. It takes time to change a habit. You know, Adam and I go through fasting. you know, we go to the gym, we work out, but that's stuff that we didn't just start doing overnight. These are things that we've built routines and regimens around and and we've built structure around and and has become a habit in our lifestyle. The way that that Adam and I eat, those are habits now. Those aren't like I'm I have not been on a diet in 10 years, 20 years, right? Unless my unless my mom unless unless my wife puts me on one of some sort, right? She's I'm doing the Mediterranean diet. Okay, honey, I'm with you. But you've learned how to make better bad decisions around your food over time. >> And so when I'm making a choice to eat, if I'm going to eat a hamburger, which I do every now and then, you know, I just cut the mayo, cut the cheese, right? It's it's it's just small things that can lead to better outcomes. And so it's the same thing with finances. Don't try to jump off the cliff and just, okay, I'm going to cut it down to the bone and I'm going to save everything else because you're going to be miserable and it's not going to work. You're going to wind up in a divorce. It's not going to be happy. But small changes. And and the biggest factor is if you're married in particular is making sure your spouse is on the same page with you. If if he or she is not on if they're if they're out there spending left and right and you're trying to save money, it's not going to work. Y'all have got to be on the same page and making sure it all works together. But if you can make small changes today and start investing, saving, you know, we on Simplevisor, we built an accumulator portfolio. It's very basic. You need about $1,500 to get it funded. Once it's funded, put in $500 a month, $250 a month, $100 a month, $50 a month, whatever it is, and we'll get that money allocated as it accumulates and so it grows over time. But it's a way to get you started into that process and get that money growing for you. So again, there's there's all these tools available for you to to help you start building wealth, but you got to take responsibility and take the first steps. >> So, absolutely. And look, I didn't raise this to depress people and certainly not to like demoralize someone to the point of like, well, then why even try? Maybe it's a little bit more to light a fire on everybody to just say, hey, look, you know, is what it is. Maybe the mountain's a little bit steeper than than we, you know, we thought it was going to be or wanted it to be. Doesn't mean you you still don't want to climb it to get to the top to get to, you know, the destination you want to get to. But to Lance's point, you got to take responsibility. You got to avail yourself of the tools that are out there. As we said, you know, it really all starts with the planning. And that's the key thing here, right? Is you got to be you got to have a vision, a goal, and you got to have a realistic way to get there. And once you have the goal, then you can start really making intelligent decisions around the levers you have to pull. Okay. Well, if I'm not on track to get there, what do I want to do more of? Do I want to make more? Right? Do I want to be able to save more and put that away towards investing? Do I want to invest that in such a way that I I I I can have more confidence in the return that it's going to have for me, you know, or is it on the spending control? Right. So, to your point, Lance, yeah, you could retire on on half a million dollars. You're going to be able to do a lot less things >> perhaps than somebody who retires with 5 million. And that's not necessarily a bad thing if you've constructed a life that you you've liked. But I can tell you that if you're going to retire with five half a million dollars, if you haven't really gotten serious about your cost foot, like reducing your cost footprint in ways that are sustainable, you're going to have some nasty surprises down the road if you run out of money, right? >> Absolutely. >> And again, you know, and and don't go into this idea with, oh, I'm going to get to a million dollars. Don't don't do that. It's it's this is the same problem with dieting and exercise, right? I'm I'm going to start, you know, I'm going to start exercising and in six months I'm going to look like Arnold Schwarzenegger. That's not going to happen, right? But set instead of >> or it's not going to happen overnight, but Yeah. >> Exactly. So, don't don't go out there with this massive goal of a million dollars. It's it's so far out there, right? That's that's decades down the road to get there. Start out by, hey, you know what? This year, this year, I'm going to save $5,000, 10,000. Pick a number, whatever is reasonable for you. But pick a pick a reasonable number. even this month. You know, this month I'm going to save $1,000 this month or $500 this month, whatever it is. But pick a number that's reasonable that you can obtain because once you obtain that number, hey, I feel good about myself. I I achieved a goal, right? I I I got out of bed this morning and I achieved a goal. I say $500 a month. Hey, let's try 600 this month, right? Let's try to bump that up a bit. >> Yeah. Get competitive with yourself. Yeah. Yeah. So So I I agree. Although I what I would say is actually start with it with not an end goal, right? I want to retire with a million dollars. Say, I want to get to X by next year or the year after, right? Absolutely. And then then come up with your number per month, right? What's an achievable, you know, >> realistically aggressive, you know, target to try to hit every month. And then once you start hitting it, to your point, then start getting in competition with yourself. All right, I'm putting five away every month. Well, let's see if I can get to six, right? Let's see if I can pull that that midterm goal in by a couple of months, right? >> Yeah. I I'll tell you this. I have met with so many couples that have done exactly this. And what's so funny about it is is like they they come in, I meet with them, they're not saving a penny, right? And I'll meet with them a year later, their account's grown now, and and their their total view is like they're in together, right? They're they're in there trying to figure out all these different ways to save extra money to try to increase their goals. They're selling everything that's not nailed down. They they've quit doing all these wasteful habits that they used to have. But it becomes a competition and they're more excited. >> Well, but they're on the same team in this competition, which is the best thing. >> And they're see and and they're being rewarded by seeing their account balance grow and they're seeing that number go up every month. They see, hey, I'm actually achieving something here. You know, I've gotten out of credit card debt now. I feel so much better. You know, it's so freeing once you can actually just start getting control of your finance. Again, you you don't have to be a multi-billionaire, right? It's that's not the goal for for everything. It's just taking getting control of your financial situation will make you so much happier because you're in control of it rather than it controlling you. >> Yeah. And and you know the motto for thoughtful money is to help people fund you know make better decisions to be able to fund their life goals. Right. I'm not saying make life decisions so you can sit in a big pile of money. It's so that you can do the things in life that are important to you. Right. And in most cases they're not going to be monetary related at the end of the day anyways. Right. Um, okay. So, it's so interesting, Lance, because we're getting into the territory now of what I was going to make the rant. We'll we'll save it mostly for a later day, but I'll just conclude by saying, you know, to your example there about the couples, um, uh, my wife, now that we're empty nesters, my wife has started being able to travel with me when I go to conferences, and it's it's new and novel, but it's it's a lot of fun. And so, when I was invited to the New Orleans conference, you know, I told the team there, they said, "Adam, do you want to do a workshop?" happened. Initially, I said, "No, that's not really my my my bag." But then I said, "Actually, you know, my wife's going to be with me, and we're going to this money show where everybody's super focused on money." Um, but to your point, Lance, money issues are the number two reason for for uh cause for divorce, right? And and at these money shows, there's never any discussion around, you know, the importance of money in our relationships, right? And wh I just lost your answer. Sorry, I had to blow my nose. Keep talking. >> Oh, okay. Sorry, I didn't know if that was your uh Okay. Uh three, two, one. Um and you know, it it it's just struck me as sort of so odd that we we'll all go to a a conference to talk about making money, right? But we don't actually talk about how it's going to impact our lives, right? And so I tossed out to the guys who are running the the conference. I said, "Hey, look, um, kind of a tangential idea, but my wife's coming. She's a she's a couple's therapist. Um, what if we put on a workshop about how to talk about money in your, you know, with your spouse without blowing up your relationship?" And they were like, "Huh, I don't know. It sounds kind of I mean, yeah, I guess it's relevant. Have no idea if anyone's going to be interested, but sure, let's put on the program and see who shows up." So, um, my wife and I, yeah, we were like the last workshop, the last day. We had five people come in and we were like, "All right, I guess we're going to do this with five people. Fine." You know, we're just trying this out anyways, right? And then within the next like 10 15 minutes, probably like 25 more people came into the room. So, it actually was was pretty well attended. It was really interesting and I I'll I'll I'll save most of the the learnings uh for the next time we talk about this. But one thing that was really interesting is I asked every and most people were there by themselves. You know, they were the money person in their relationship. They came to the conference. Their spouse was back home. >> But we did some interactive workshopping. And one of the things I asked them to do was, hey, like what's all this money for in your relationship? Like what what is your why as a couple? What do you think your why is around your money goals? like why are you guys scrimping, saving, sacrificing to to to make all this money for the future? And so I had everybody share their why with the person next to them. And then I asked them, all right, look, if your spouse was here and they were asked the same question, do you think they would have given the same answer you did? And way more people than I had expected said no. Now that I think about it, I don't think they would have. >> Right? meaning couples are just so often times not on the they're either not on the same page or they're just not talking about this, right? >> Um and that that to me I mean I shouldn't say it surprised me. I was sort of expecting, I guess, more or less of a mismatch. But it's so crazy that, you know, we we we lock ourselves with somebody on this journey and we're we're we're all going to work in the mornings and we're, you know, having fights around money, whatever, and and yet we might not have actually just set the groundwork at the start of wait a minute, what are we doing all this for? >> Yeah. >> No, it's great. It's really interesting you bring that up because my wife and I had this conversation right after we first got married and, you know, back when we first got married, you know, life, you know, wasn't as as easy as it is now. You know, things have gotten things gotten better over the years, but things were pretty tough back then, just, you know, making ends meet. She's working, I'm working, we're just trying to pay bills. We're trying to raise four kids. Um, you know, get them where all they're supposed to be. And we had this conversation. I go, "Okay." I said, "Look, we have to do these things together." and and she's very frugal. She's very mindful. She doesn't do crazy stuff with money. She's she's very good. And I said, "But what?" I said, "Why are we doing this? And what's the goals?" And she and and she said something to me at that at that time that has just stuck with me and it's probably made me work harder than I would have worked otherwise. >> She says, "Look, all I need you to do is make sure that I'm safe, >> right? I just need to be able to raise our kids, make sure they have what they need, make sure they where they want to go, and that they're safe. We're in a good neighborhood. We have good schools. Safety. That's all I care about. As long as you make sure that we're safe and secure, I don't really care about anything else. And for her, that's all money is. It's safety and security. It's that, you know, if something happens, she's got money to take care of it. If if something, you know, needs to happen, she can take care of that. If one of our kids gets, you know, in bad trouble, she that she feels like she has the ability, the control to take care of that. So safety and security for her was far more important than you know buying a Louis Vuitton purse or Gucci shoes or whatever. Th those are not even on her radar of of what she wants monetarily. But safety and security is number one. >> So you know interesting is that exact exercise I just mentioned to you. There was a couple that was there was a couple there and they were kind enough to share their answers with the room >> and the the the wife said I asked if if the husband you know if his was his wife was similar to hers and she said well yes and no she said he said security right just like you said right male provider I'm here to provide security she said that is part of mine so he got half of it but the other half is that you know, money's to like life's to be enjoyed. I I just don't want to be all about saving for tomorrow. I want to have at least a little bit to enjoy our lives together in the here and now, right? >> And there's nothing wrong with that, right? But what what's what's interesting is if you're a guy who's just laser focused on only providing, only security, you may be building some marital resentment because you're not taking a little bit of time to smell the roses. And I don't mean being wasteful with your money or whatnot, but to your point about celebrating the milestones as your as your bank account grows. Generally, you want to celebrate those in ways that don't slow down your progress. But you might want to take a little bit and just say, "Hey, look, you know, let me take you out for a nice dinner or, you know, let me just in some way, let's take a little bit of of what we're working so hard for and make sure we enjoy some of it in the here and now because we don't know what tomorrow's going to bring, right?" >> So, my wife and I do that. We have a uh an account that's set up, just a savings account at the bank. No big deal. And every two weeks when we get paid our salaries, um, it automatically extracts some dollars out of each of our paychecks and puts it in that savings account. And that savings account is my wife's travel vacation account because it's where she gets to pick where she wants to go and then we go do that. So like she wants to go to Beaver Creek over Christmas and have Christmas at Beaver Creek in Colorado. Fine. As long as it's in that savings account, you can do whatever you want. Now, if you run out of money in that account, we're all sitting at home eating pasta, right? So, >> but it but you know, it is important that and then again, it's important for her, too, to be able to Great. I'm I'm you know, I'm contributing to my HSA at work and I'm getting my triple tax benefit for retirement on my HSA. Super important. You need to do this. If you have an HSA, you got to be funding that to the max, right? But for Hurst, it's like, why am I funding all this, right? Why am I doing that? It's like, honey, trust me, it'll pay off in retirement when we get there. you need to do this. Fund your 401k plan. Why am I doing this? It's for your retirement. Trust me, get there. But for her, that's too far away. That's too far out there. This is like the million-doll goal. I want to get to a million dollars, but it's so far out there. She can't see that far. So, she needs and in order to keep her on track for savings, she needs that ability to have the reward, right? She needs that reward every now and then. And so, we've set up this whole little account that gets automatically funded. And then she can we can go on a trip. we can we're going to go to like I said Beaver Creek and over Christmas next year we're going to go see our son in in the UK. So she gets to look forward to that and she gets to see that money going into that account and she goes I know what that's for. I get to go see my son in 12 months because of that money. >> Yeah. >> So that gives her that that ability to stick to the diet so to speak >> to to get there. >> Well, so kudos to you too. So it sounds like you've had the communication and earlier on enough in your relationship to understand each other and to put all this this into place. Um, you know, certainly what we kind of got, well, my wife has gotten just from her her day-to-day job, but what we got from this conference is is, you know, a lot of people have it, right? And when one guy, I don't want to oversell this, this, this was very generous, but one guy came up and said, >> "This is the most important part of this conference to me." It's like, I don't know why we don't put this at the start of an event like this so that we kind of get why we're all here and then we get into all the money stuff, right? >> So, anyways, >> great idea. Bring your wife in January and we'll we'll set up a workshop. >> I mean, if you want to, we certainly could. Um, we are going to kind of, this was sort of a little pilot, a little trial trial pilot just to see how this stuff would be received and whether folks thought it was useful or not. I think the initial feedback has been pretty darn good like I mentioned. So, anyways, um, we're going to start doing some small additional um, kind of virtual versions of this. So, folks, if that's something that you're you have any interest in, um, either just let me know in the comments as usual or you can literally just email supportthoughtfulmoney.com and just say, "Hey, I'd like to raise my hand for this." just put put me on a list somewhere and when and if you do the the first one of these virtual ones, let me know and we'll we'll include you in on it. Um all right, Lance. Um I'm trying to get us out of here before the 2hour mark. So I totally promised you to get out early. >> You blew it again, >> but I have not asked you about your trades and I would get crucified I think by the audience if I did forget to do that. So what if any have you done over the past week? >> None this past week. Uh we we started building our position meta couple about a week or so ago. Um, we're probably going to do some rebalancing in the portfolio next week. Maybe taking, you know, just taking in some of the gains that we've got. Um, we'll do a little bit of tax loss selling. It's that time of the year, by the way. If you haven't looked at your portfolio, this is, we're getting to that time of the year where you need to start considering if you're, you know, pushing up in age. You got to do your RMD. If you haven't done your required minimum distribution out of your IRA this year, you need to start thinking about how to do that. Get with your adviser to get that done. And that's that's is that 57 and a half or that's 70 point 70 >> 72 right now but it goes up to 73 next year. So that's eventually going to keep creeping up. >> Um I'm not the expert on that. That's Danny or Richard. But >> um but anyway, you got to do your RMDs on that. Um this is also the time of year to start thinking about your uh charitable donations and gifting. Look, you can give money to the government when you pay taxes or you can reduce your taxes by giving money to a cause that you support. So you can kind of decide how you want your money spent. But if you're going to make the uh charitable contributions, you're in the last two months of the year. So you need to get that done. And then you also need to start thinking about your tax loss sales for this year. Start thinking about your gains for this year that you've gotten a lot of stocks. You probably got some losses in some stocks. You can sell some of those gains, offset that with some of your losses for tax purposes. So again, if you don't have an adviser, don't really know how to do any of that stuff, you don't know how to do charitable gifting, those type of things, certainly get with an adviser, call my guy, call Danny or Richard at my office. They can walk you through it. Um, they they know that stuff inside and out, but you definitely need to start thinking about getting some of that stuff done. It's also also, by the way, by the way, very important, Roth conversions for this year. U, you need to get that done before year end as well. >> They have to be done before year end, not before end of tax. Well, if you if but you you would be best if you're going to do the Roth conversion is do all this as you're kind of wrapping up this tax year because again that part of that Roth conversion is going to be your tax loss sales also. >> Got it. You want to use those Yeah. against any gains. >> Okay. Um great. So I would agree with everything Lance just said. I would just add on to it. Um if you do not have a financial plan or if you have not looked at your financial plan in a year or longer, uh also update that. And if you don't have an, you know, if you're DIY and want to do it all yourself, great. Do everything Lance just mentioned on your own. But if you want some help, um, and I think most people watching this video probably would benefit from professional help on this. Then talk to your adviser or talk to Lance and his team there on Raia. To do that, just fill out the very short form at thoughtfulmoney.com. Only takes a couple seconds to fill out. And then, uh, the firm you're matched with. Or if you just say, "Hey, I want to talk to Lance specifically," you can do that, too. They'll be right in touch with you. Um, all right. Well, look, folks, um, if you think the best way to marital bliss in uh, your finances is to sit down with your spouse and watch Lance Roberts on his channel week in and week out from here on out. Please let them know that by hitting the like button and then clicking on the red subscribe button below as well as that little bell icon right next to it. All right, Lance, as usual, I'll let you have the last word. >> No, look, um, there's lots of moving things going on in the markets right now. nothing worth panicking over yet, but certainly stuff worth paying attention to. So, again, you know, we'll just kind of navigate this as we go. But, you know, as we get into the last, you know, kind of this last few weeks of the of the year, um, expect higher volatility. Expect there's some things to to potentially not go the way you think they're going to go and just make sure that you're paying attention to it. >> All right, my friend. Have yourself a great week. We'll see you in two weeks. Hope the next treatment goes great for your wife. know that she's got all our thoughts and prayers and we're wishing you guys all the best. >> That Thank you very much. I appreciate that. >> All right, and everybody else, thanks so much for watching.