Odds Of New Highs For Stocks Increasing | Lance Roberts

Summary

• Market Outlook: The Supreme Court tariff ruling adds trade uncertainty but is seen as mildly equity-supportive; GDP volatility is viewed as transitory while core inflation may stabilize near current levels and 10-year yields hover around 4%.
• Sector Rotation: Energy, materials, and utilities are extended after parabolic runs, while tech and financials remain the key index drivers that must re-accelerate for a broader rally.
• SaaS Opportunity: The guest sees value in application software despite AI disruption fears, highlighting durable moats and attractive valuations in names like DOCU and peers, with a plan to selectively add exposure (including via selling puts).
• Retail Valuation Gap: Detailed comparison of WMT versus AMZN argues Amazon’s larger revenue base and lower forward P/E may offer better value than Walmart’s premium multiple.
• Private Credit Risks: OWL (Blue Owl) freezing redemptions spotlights liquidity and opacity concerns in private credit/BDC structures, with strong caution against retail and 401(k) exposure.
• Geopolitics & Energy: Tensions around Iran and the Strait of Hormuz present a nearer-term volatility risk for oil and energy markets than tariff policy shifts.
• Portfolio Positioning: Recent trims in overextended defensives and energy, with readiness to rotate into undervalued software; bonds have supported 60/40 returns as equities churn in a range.
• Regional Angle: Japan is discussed as an underappreciated opportunity given critical manufacturing strengths, improving dynamics, and recent market outperformance.

Transcript

The good news about all this is that we've been working off a lot of those previous overbought conditions that we had last year. Uh heading into November, this kind of slog we've been in since really November has worked off a lot of those momentum indicators that were very overbought. We've got relative strength has worked off a bit. We're more neutral levels there. So that's kind of reloading the the bullish support for the market. So, if we can get if we can kind of get through this narrative environment that we're in at the moment and start seeing money flows kind of return to the markets, um, you know, we should start to see a push higher. Welcome to Thoughtful Money. I'm the money founder and your host, Adam Tagert, welcoming you back here at the end of the week for another weekly market recap featuring my good friend, the Intergalactic portfolio manager, Lance Roberts. Lance, how are you? >> Okay, why intergalactic? >> Well, because uh former President Obama when being interviewed a few days ago slipped out that yeah, aliens are real. And uh it got so much interest that President Trump just I guess gave an order last night to the Department of War to say, "All right, share everything around UFOs, aliens, whatever that we may have." C >> can we just be honest about this? Aliens have already come, realized there was no intelligent life here, and left. So >> aliens are real, but they're not here. They're they're they just said that nothing salvageable on that planet. Let's move on. >> They they got better stuff to do in these than than waste their time with us. Yeah, I wouldn't I wouldn't doubt it. >> Um All right. Well, look, um lots to talk about, Lance. And as I was sort of putting together, uh the topics to talk about today, we had breaking news, which is that the Supreme Court struck down the Trump tariffs. Um so, uh immediately on that news, the S&P vaulted higher by like 500 points. Um, that being said, from from from the brief, um, analysis that I've had a chance to read, um, you know, it it doesn't seem like this is by any way the end of tariffs here. Uh, and let me just read this piece by Goldman here. >> Uh, quote, "This won't be the end of tariffs. The administration will almost certainly roll out alternative legal frameworks. Net result is probably slightly fewer tariffs, materially more trade uncertainty, and some incremental deficit concerns. net net that's mildly supportive for equities and mildly negative for bonds but largely priced for both. Um so I guess first question for you Lance is is do you agree or do you have a different take? >> Nope. I absolutely agree and it's you know I think we talked about this once before is that you know even if they rule against them they have other you know measures to impose tariffs and so they'll just you know one of them is most likely they'll use this kind of rolling I think it's 180day window that you can impose 15% tariffs which are well within the bounds of what we're already tariffing other countries >> so let's do that kind of yeah just kind of renew them every you know 150 180 days so you know it's great I mean it's you Again, I I think that analysis is right. It's it was the both the tariffs themselves and the expectation of the Supreme Court, you know, ruling against the tariffs and that there's alternatives. I think that's all been priced into the market and that's why the market was a little bit negative this morning. Um it wasn't really because of that ruling so much that came after kind of futures were down going into the market this morning >> and um right after that announcement, futures took off. But also futures are up today because you know GDP came in uh weaker than expected but personal consumption was strong. So you know that's also kind of fueling this narrative that the economy is not falling off a cliff. Everything is fine and earnings growth should be okay. So I think just combination of both of those just kind of gave the markets a little bit of lift this morning. And and most of the money is going back into the stuff that's beating up. I mean it's Google, it's Meta today, it's Amazon, it's Apple, it's Nvidia. Those are those are what's driving the market and stuff has been beat up lately as kind of leading the market today. >> Okay. So, I actually want to talk about those data releases that you just mentioned too. Let me just ask you this question though. So, Goldman's analysis which you agree with is that um slightly fewer tariffs but materially more trade uncertainty. >> The markets jumping on that, right? Wouldn't you think more trade uncertainty would make the markets more jittery? Well, again, it's this is assumed that this is going to be more trade uncertainty, but again, most most everybody's already used to the tariffs that are there. This doesn't potentially change a whole lot of that. And also depends, of course, a lot of this will depend also on what the administration does next. If, you know, if they come out with another legal framework to do tariffs, then, you know, this will all kind of just be kind of status quo. >> I mean, I think I think that's baked in the cake, right? It's like, we couldn't do it under that act, so we're going to try to do it under these >> acts. So, I don't know if it leads to a lot of trade uncertainty. I think everybody knows is, hey, they're going to do tariffs. It's just going to be in what form are they doing tariffs? And and for some countries where, you know, he's threatened 25% increases or whatever. Well, that just locked that down to 15 max, you know, under the under that that one structure. So, you know, we'll see. Uh, you know, it's always it's always hard to tell how these things are going to work out. I think that, you know, the bigger concern for the market right now is really kind of what's just this kind of tension we've got built up between us and Iran at the moment. We're back to, you know, talking about the, you know, the straight of Hormouth and what does that mean for oil prices. So, I think that's that's I think that's probably a bigger threat to market volatility near-term than than probably tariffs are in >> interesting because tariffs were kind of a neutron bomb going off for the markets, you know, a year ago back in April during liberation day. But, okay. But but but but also too see B rep back then you know remember we were right you and I had these discussions back then we wrote some articles that you know everybody's freaking out over tariffs like oh this is going to cause inflation to surge and everything else and we were saying back then it's like no that's not going to be the case that's not how tariffs work they're actually more deflationary than inflationary which has turned out to be the case and I think now most market participants are starting to realize that tariffs aren't really the big issue that everybody was making them out to be a year ago >> right um okay so two things here on this though Um, so one, um, it's hard for me not to see it this way, but maybe I'm seeing it the wrong way. Um, I think the administration knew that this was a potential outcome, right? But their I think their decision was sort of, you know, ask forgiveness rather than permission, right? Like, let's do these things. Let's see as let's ride them for as far as we can, as hard as we can to try to get the trade deal struck, right? And hopefully we can strike these trade deals before the Supreme Court rules. So even if they take away our ability to use tariffs as aggressively as we have been, doesn't matter. They achieved their purpose. We already got, you know, and and if you look across the trade deals, I mean, you can basically sort of say, all right, yeah, then mission accomplished then. I mean, with with I think with every world economy that's larger than Russia's, um, we've struck a trade deal with. >> That's right. >> Yeah. So to a certain extent, I mean, I know the administration is probably highly likely going to keep trying to find ways to rationalize using tariffs. But even if the worst case scenario, they just couldn't. I I'm guessing they're going to say, "Well, you know, we kind of kind of did what we needed to do." >> Yeah. Well, remember we talked about this is that, you know, the whole issue with tariffs were just the stick and carrot. You know, he needed something to negotiate with. If, you know, think about it this way. If I was going to go to, you know, Europe or China or wherever and say, "Hey, let's, you know, I need to restructure our trade deal because you're taking advantage of us, right? You're tariffing us, but we're not tariffing you, but would you just please stop tariffing us and and we'll just go there?" There there's no leverage there, right? There's no reason. >> Exactly. I That's why Trump loves him. >> Yeah. Yeah. You know, it's like, "Yeah, yeah. Okay, we'll be nice guys, right? We'll we'll we'll negatively impact our economy for your benefit. Sure, we'll do." He he needed that leverage. And I think this is a big point that most of the media analysts missed. I think it's a big point that most of the the anti-tariff people missed is that, you know, this was just a negotiating position to get to a better trade structure, which he accomplished by and large across, you know, across numerous countries. Even if tariffs rem, you know, the the, you know, the tariff revenue is nice. Um, it's, you know, certainly helping increase the revenue structure into the country. I mean that's >> I mean I mean it is tens of billions of dollars a month. I mean it's it's not nothing. >> Yeah. It ain't nothing. Um so that's great. I mean that takes some of the pressure off you know debt issuance and some other stuff that you don't have, you know, it's increasing your revenue base that you can work off of. But even if they go away, you know, the trade structures are still there and and I think ultimately we're probably in a better position than we were, you know, than we were to the previous administration. >> Okay. And that was sort of the whole spirit of my question there. Um, you mentioned this. I so I don't know and I'm curious if you know or or right now we're both just sort of guessing. Um, but um, under today's ruling, yes, it's going to limit the administration's ability to use tariffs under the current act, which is, I think, referred to as EPA, and I can't remember exactly what the acronym stands for. Um, but as we said, there are other legal acts that the administration can cite to try to still continue a lot of the same tariffs. Um, but how about the tariffs? So, so Trump, you know, loves to use the the tariffs for this negotiating leverage as you talked about, you know, for better trade deals and to also just a threat. Hey, don't go back to your old terms, right? Because I can always dial them back up again, right? Maybe that's going to be more limited going forward. But how about tariffs as a as a um geopolitical deterrent? So for several of the um you know hostile breakouts around the world, you know, Trump has said, "Hey, if you guys continue doing this, I'm going to slap you both with 100% tariffs or you know, with Iran, hey, anybody that trades with Iran, if they start killing their protesters, I'm going to put a massive tariff on you." Is the decision that was just made by the Supreme Court, does it prevent that or is he still able to do that under some sort of emergency act or is he going to have to go to Congress and get a congressional approval for a sanction? Do we know? >> Yeah. Well, so so first of all, the EA is is is the 1977 law. It's the International Emergency Economic Powers Act. >> Okay. >> So that was that was the acted under, right? So it it does it does going to make this a lot more challenging because again it's kind of his big stick so to speak in terms of leverage like okay if if you don't do what I want then I'm going to hit you with this 100% tariff you know and again I don't know for certainty under these other abilities for instance the you know under the potential you know law that there's is available there he can do a maximum of 15% for 180 days but I don't know if there's if there's any kind of fallback position at this point I guess we're going to find out to where he can come out and say, "I'm going to hit you with 100% tariff." That that may be off the table for him, which does reduce some of the hammer, so to speak, in terms of negotiation. >> Although, if America wanted to do that hammer, presumably there's a pathway for the executive branch to go to the legislative branch and say, "Can I get your approval to do 100%." >> You know, I said this before with you. I, you know, I if I was President Trump when I first come into office, he had everybody behind him at that point. I mean, he had, you know, Congats on on the House, he had plenty of seats in the Senate. And, you know, I would have instead of doing tariffs the way he did it, I would have gone to Congress and said, "We we're going to have tariffs. We need to pass a law to tariff these other countries and set all the tariffs out and do it all legally." And then that way it was law. And and and once you gone through the legislative branch to do that, then the judicial branch would have nothing to rule on, right? >> It's like, "Hey, you you legally passed it under the Constitution. they're valid. And and so I always think that was the mistake that he made in terms of tariffs and and and look, he's a smart guy and and I think everybody kind of knew that eventually this was going to get Supreme Court, probably get overruled. I think he knew that. And again, to your point earlier, he just needed it long enough to get these trade deals put into place. So, we'll see what he it'll it's going to be very interesting to see how he responds after this. >> Okay. Um, and I mean what's desirable about that outcome, like you said, is it um it makes it harder for these things to be undone because they're law, but it also, you know, it lets everybody play in their own sandbox, right? I mean, the power of the purse is supposed to be in in the legislature, right? Um, >> and one thing and the one big worry about all this, Adam, was is that, you know, if the Supreme Court ruled against them, they're going to have to refund all these tariffs, everybody. Uh, they didn't address that. So there's still this question about all the revenues that we've already collected. What has to happen to those? Or or is it kind of like, hey, it was done under, you know, was done, it was done pre-ruling, so you know, >> I'm just going to say what what government anywhere in the world would give a willing refund to other countries for money they gave to them? >> They're not going to. And this is why I guess international countries are going to have to sue the US to get their tariffs back, maybe. >> All right. Well, good luck on that one, folks. I'm not going to hold my >> That's exactly right. I think it's gonna be like they're just gonna go whatever. >> Yeah. Yeah. Um All right. Last political question just because we're on here and I'm just asking you to wildly speculate here. >> Sure. So, um, you know, if the administ, as you and I have talked, and this has been a a topic, uh, frequent topic on the show lately, it seems increasingly clear to me and to all the experts that I interview is that the administration is going to do every single unnatural act it can imagine between now and the midterms to try to get the midterms to to go their way. and in their defense not that different from you know any other previous administration but I think this one is is certainly proved itself to be both creative and and aggressive you know in what it does. Um so for all these things that have been done by executive order which could be undone um if you know another administration is elected in 2028. Um and I think the administration still has a pretty robust playbook that it would like to do uh in its remaining time here. What odds do you give uh you know the administration working with Republican dominated Congress right now to get rid of the filibuster and just try to pass as much as what it's done via executive order into law before the midterms arrive. >> They've been talking about getting rid of the filibuster for 30 years. I think >> I know I know >> and and the reason they don't do it is and and again it sounds like this is so let's take your situation >> right let's get rid of the filibuster and then we're just going to ram all this stuff through over the next >> two three years until this >> they're just worried that it'll be done when the next guy comes in right the other team will ram everything it wants through >> exactly so now when the next so when the so let's say the Democrats took over in 2028 now you've given up the one tool that you have to basically stall that administration. So, I think at the end of the day, the the filibuster doesn't go away because it's a nuclear option. And yes, it sounds good like, oh, let's get rid of the filibuster so we can do everything we want to do right now. But it's that's one of those things that comes back to bite you in the butt in, you know, in the in the next administration. >> Yeah. And I'm talking a bit out of school here. Um, so take this with a grain of salt everybody, but I I believe I have heard that the filibuster itself has kind of morphed over time. Um, and you know, it used to be uh, and I I'm I'm actually ignorant of its of its pure origins, but you know, it used to be the true sort of Mr. Smith goes to Washington type of filibuster where it you had to keep talking as the guy who, you know, brought up the the or initiated the filibuster and it really it was more of a demonstration of a point that you were trying to make and and a thing of, you know, human endurance and at some point, you know, you collapsed, you had to go to bed, whatever, you'd use the bathroom uh and it would be over, right? um where at some point I don't know when it happened, Congress sort of decided you know ah that's hard on us like we don't want to have to and so they have this sort of procedure where you can kind of have this you know rolling filibuster where nobody actually has to stand up and grandstand all the time right um and so I have heard discussions about well maybe we need to bring it back to what it used to be like so that way the filibuster isn't such a permanent chokeold on the legislative process >> yeah it used to be you It used to be really rare that it was to your point you know the Mr. Mr. specific Washington. It used to be a really rare event that had occurred and then you know we over the years we've passed you know 1917 they passed what was called uh rule 22 which is they adopted a rule that allowed twothirds to end the the filibuster that was the closure. >> Okay. Then the 70s we went to the two-track system and then 75 there was the threshold uh the threshold for closure was lowered by to 2/3 to three fifths. So, we keep making it easier, so to speak, for this filibuster to work. And to your point, you know, this is this has just been becoming much more aggressively used to try to stall. And again, th this is a this is a direct result. You go back to the 80s as a good example. If you looked at at Republicans and Democrats at that time, their deviation on policy was not that much. they you they almost overlaid each other to a large degree >> and and it was a more bipartisan spirit. I don't want to I don't want to totally whitewash it, but it was more bipartisan certainly than now >> by by a large degree. I mean, you'd have red and blue dots all over the top of each other. And today, you know, they're sitting on opposite ends of the spectrum. And so because of that division and and and in and policy views, this use of filibusters just becoming >> really in my opinion kind of over in just my opinion, but just really overused. It's like >> even if it's a good policy, one team or the other is filler bustering it just because they don't want the other team to have it, right? You know, it's like we've got a bill here that will cure cancer and somebody's g they're there going to be somebody filibuster against it because they don't want cancer cured, right? just because I don't like the guy that's trying to pass it. And that's a shame that we've gotten to that part because these people in Congress are supposed to be working for our best interest. They work for the the American population. They're supposed to be working for our best interest, which means passing laws and rules and regulations that make our lives better, but they spend more time just infighting with each other just to make sure that their team wins and the other team doesn't. >> Yeah. And you know, I will say like I'm a little bit conflicted in the sense that >> you know, when you when you like legislation, you want to see it pushed through, >> sure, >> and become law, right? Um, and you want actually the government to get stuff done if it's going to do something. >> But those and I I largely include myself in this camp who thinks the government that governs best governs least, you know, uh, filibusters, you know, kind of help with gridlock. And it's sort of like, hey, as long as we just keep their hands off the button, maybe we're okay, right? Well, that's because, you know, what they wind up passing generally has not been good for us. You know, it's it's been, you know, either lobbies are pushing it through or something else. It's generally not been great for the American people. So, you're right. You know, that some of the best phases of our economy over the last 50 years has been when when you got gridlock in Washington and nothing gets done. >> Yeah. The the problem though is it's not nothing gets done, right? It's it's uh the um >> you know, it's everything gets done by executive order, >> right? and then um you know then it just all gets undone by the the next administration and a lot of the stuff that gets done by executive order because it doesn't need to be debated or whatever you know there's oftentimes a lot of lot of gimmies and stuff that are given there >> I I think the bigger problem in the filibuster is just the use of executive orders and and they used to not be used for everything and to your and and this to your point I agree with you is that you know now everybody just comes in and and this started this wasn't Trump this was Biden This was Obama, this was Bush, this was Clinton. Um, you know, rather than going through the congressional process, it's like, okay, we're just going to, it's kind of like ruling by edict, right? I just do an executive order. It's like, okay, here's the law because I said it's the law. It's like, well, wait a second. That's not what we elected you to do. We elected you to go through Congress to pass these laws and and to put these things in place through the constitutional system. And the executive orders, they're useful. I mean, there there are times that probably they need to be used, but I think they've just become to the point to where it's just like it's the it's the easy it's like not having a budget, right? The the easiest process to manage our finances in government now is do continuing resolutions. We just take last year's budget, we add 8% to it, that's this year's budget, and our spending goes through the roof >> instead of going through a budget process. It's become easy, right? And so now executive order, it's so much easier to do an executive order than it is to go through the legislative process, but that defeats the whole purpose of the constitutional system the way it was set up. >> All right. Well, two old men yelling at the government. I don't know anything new about that. >> We need to go to Washington. Let's go to Washington and stand on the front steps. >> Yeah, it would be fun. Maybe we we should have a little uh Mr. Mr. Roberts and Mr. Tiger go to Washington. It'd be kind of fun. Um All right. So, but folks, we will be keeping our eye on what's going on with tariffs and any potential fallouts that we'll have for the economy and for the markets. Um, so, uh, I'll I'll we'll talk about the markets real quick, but before we do, I just want to since you mentioned them, I'll I'll >> just spend a tiny bit of time on some of the data that we just got. >> Um, so you mentioned that GDP slowed in Q4, but that's a really deceptive number, right? So, um I think expectations had been uh initially 2.9% for Q4 near the beginning of the quarter, but they've come in now at less than half that at 1.4%. So, you see the headline number and you go, "Oh my god, you know, the US economy is slowing down. We're going into recession." If you're just looking at the headline, but of course, it's due to the 43-day government shutdown that was in there. So, federal government spending fell 16% um in that quarter. Um so, there was Yep. And uh it also has it it has also to do with imports and exports. There was a there was a big surge in uh imports into the US. And remember a chunk of GDP is the net export uh component. >> Right. It's it's it's plus imports minus exports, right? >> Correct. Or yeah, it's net exports. So it's exports minus imports. And so you had such you had a really big surge in imports in the US and both non-commercial uh precious metals and basically semiconductors. It was technology because everybody's trying to get ahead of of the shortage of supply that's that's in the semiconductor space. So that also drug on on the number as well. >> Well, okay. Yeah. And you're right. Obviously plus exports minus imports because we make our money on the exports. >> Um all right. So, um, uh, uh, you know, Trump obviously did not like this, um, and, you know, sort of trying to hold, uh, Congress accountable for it, saying, "Hey, you know, we could have made a lot more in Q4 if it weren't for you bozos." Um, and he may be right. And right now, uh, the Fed's GDP now, as well as many other economists, are forecasting a 3% GDP, uh, for Q1. Um, obviously the administration, I think, is going to take the over on that because they they're confident tailwinds are are really starting in earnest with the economy right now from their actions. The other thing that Trump uh is saying also depressed Q4 um GDP is just the Fed's lack of willingness to cut rates, right? And folks can debate this one way or the other, but presumably if you're cutting rates, it's going to add some tailwinds to the economy as well. So anyways, um we should look at that until otherwise disproven as a blip as a sort of aarent blip. >> This is this is the same as we saw this is exactly the same as we saw in quarter one of this year when we had that big net net export issue that that >> you mean quarter one of 2025. So last year >> right sorry Q1 of 2025 we had a negative GDP print and then there was a big payback in the next quarter and we had a nice boost. This is going to pay back in January now that the econ the government's reopened. you to your point you're going to see a three three and a half% you know uh print in in uh for the for the first quarter so you'll this will pay itself back in the next quarter so and I think the markets are looking past this for the same reason >> okay um and I just want to talk about PCE for a moment so personal consumption expenditures right and the Fed >> sort of calls this its preferred tool of tracking inflation which is kind of I wonder like if it's the Fed preferred tool then why don't we all talk about the PCE versus the CPI, different story. Um, but it was a little bit warmer um last quarter than than folks expected. I think it came in at 0.4% for the month versus 0.3. So, you know, not not a huge difference. Um, but what's interesting to me and and I'll try to bring up the chart when I hand the baton to you here, Lance, it looks to me like you can make an argument that PCE is has based out and is now starting to come up. Um, and I'm curious to hear your thoughts on that because you and I have talked about, you know, the odds, our personal expectation is that the odds of inflation is going to be continuing to disinflate across 2026, especially because of what's happening in the housing and, you know, with shelter prices. >> Um, but when I look at the the chart of CPE, um, or sorry, of PCE, uh, I'm like, well, you know, I don't know. So, um, curious to hear your thoughts. >> Yeah. No, it's come up a little bit and, you know, it's probably just going to be stable here. Again, this is kind of with inflation in general. You know, we're we're probably just kind of stuck here at these inflationary levels for a while anyway. Um, inflation's come down largely from where we were, you know, under the stimulus driven economy. But look, you've got a lot of tailwinds right now that, you know, all this spending on data centers and everything else that's improving, you know, that's improving activity within the economy. And so when you have stronger economic growth, you should see inflation coming up. This has been my argument about this whole reflation trade, which is, you know, the idea is that we're going to have this really robust economic growth, but no inflation, which allows the Fed to keep cutting rates. But growth and inflation are correlated to each other. You can't have growth in the economy without prices coming up. So, you know, if if we're going to be running three three, let's just say we're going to run 3% GDP growth next year, we're going to be running about 3% PCE, which is about where we are. So, you know, >> and by the way, I'm just pulling up the chart here. So, you can see here that it's come down since, you know, a lot since 2022, but it it kind of hit bottom >> maybe mid year 2024, bounced along the bottom, and now seems to be starting to come up. >> Yeah. Yeah. And if you look at core PC, which is the green line, it's basically been at the same level now for almost a year, a little over a year. So, so again, that's what you should expect because that's that's about where we're growing right now. Now, if the economy starts to slow down materially, which I think is still a decent risk later this year, if you take a look at what's happening with uh gross domestic income, it came in at 1.2%. It was pretty weak. So, gross domestic income really doesn't suggest the economy is just booming on all cylinders. and and you so we'll we'll see how these things work out. But yeah, I mean it it's you know it's you know where inflation is running right now both CPI PCE etc is really kind of where we're trading on on an economic growth front. So you know and that means that interest rates should stay right around this 3 and a half to 4% level where we've been at for you know about the last year. So you know again kind of everything is about where it's supposed to be in terms of economics. What's going to happen next is whether do we get a recovery in the economy and start to really have this reflationary environment everybody's expecting or do does all this kind of expectation of spending not actually come to fruition and then things start to slow down again because you take a look at the savings rates of of consumers which is 70% of the economy those are collapsing. >> Yes. So that hit a multi-year low uh I think just this week whatever the most recent data point is and I know it came out just recently um is yeah that personal savings rate continues to plunge. Now that being said you know David Rosenberg who is you know frequently painted as a perma bear you know he does he does note that that yeah that's not a healthy sign but while it's continuing to go on it is a stimulus to the economy. Yep. >> Yep. >> People are just spending everything they have and going into debt to buy more. So, >> yeah. Yeah. So, it's it's a kind it's sort of like your thing about margin debt, right? Bullish while it's going on, but bad once you've hit the peak. >> Exactly. >> Um I just want to put up here just just for corroboration. Um Lance, you can see this, right? The the um trueflation chart here. So, Truflation, which uses, you know, a completely different methodology, still has a somewhat similar um story that it's telling here, um where you can see that that their PCE price index, you know, appears to have bottomed and it's it's near the bottom still, but it does seem to be sort of bouncing from a bottom here. So, be interesting to see if this trend continues. Of course, we're going to keep a close eye on it because as go inflation expectations, so go bond yields. As bond yields go, so goes almost everything. So, we'll keep a close eye on that. >> Yep. >> Um All right. So, um let's see here. Let's let's get to the markets if we can. Let's let's get the TA out of the way. Um the S&P was interesting. I I was writing this before the u the tariff announcement which of course caused a a surge in the market but um you know the S&P uh still largely seems stuck in neutral and uh again as of this morning I haven't checked it since the tariff announcement volatility was creeping up again the VIX was about 21 I think when I looked at it this morning. So I, you know, I know that you've been trying to watch closely to see if um the support that we broke down through um whether that serves as resistance or whether we can get back up it again. Um I think you might have had a different story about today before the tariff announcement, but when you're looking at the TA here, what are you concluding? >> Well, no, we were talking about this last week is that we're just stuck. Um, you know, we've been in this this kind of sideways trading ranch now since really most of 20, you know, 2026 and really kind of starting mid December uh of 2025. We've just been kind of going sideways and and we just can't get above 7,000. We tra we trade up to 7,000 then we sell off. We go back to 7,000, we sell off. um you know so we just and but the you know the underlying kind of running support trend which is you kind of use that orange line which is the 100 day moving average that continues to hold support we came down to it um you know last week bounced right off of it and today we're back above the 50-day moving average so far now it's early on Friday so this could still play out a little differently by the end of the day but you know markets are rallying a little bit this morning we're trying to challenge the 50 and the 20-day moving average from underneath so that's resistance right Now, now if the markets get above that level, we've got a shot back at 7,000. And then if we can break out of$7,000, then you've got kind of a move higher. The good news about all this is that we've been working off a lot of those previous overbought conditions that we had last year, uh, heading into November. This kind of slog we've been in since really November has worked off a lot of those momentum indicators that were very overbought. We've got relative strength has worked off a bit. were more neutral levels there. So, that's kind of reloading the the bullish support for the market. So, if we get if we can kind of get through this narrative environment that we're in at the moment and start seeing money flows kind of return to the markets, um you know, we should start to see a push higher. >> All right. Um and you can see that here in the longer daily moving averages, >> right? The sideways trading um period that we've been in is giving them the chance to start catching up. Right. >> Right. all these these big divergences that we had previously are now narrowing. So, yes. >> All right. So, um I I know there's a lot of other factors that go into play here, but just sort of technically if we continue to um churn sideways for another couple months and those those um you know, longerterm moving averages really start to catch up. Um, does that make you feel more optimistic that hey, stocks could really vault higher from here once they've got a a stable floor, a much more stable floor to jump off of? >> Well, in order for that to occur, you're going to need money flows to rotate back into growth from kind of these defensive trades they're in now. I wrote an article on Monday, >> and actually, why is that just because the the growth stocks make up such a big part of the the uh indices? like why why why can't the the markets vault higher with value doing well? >> Well, be because of exactly what you just said here. Let me just show this. This is an article I wrote on Monday. Um hold on, let me let me pull this up real quick. >> Um I did a market sector review on Monday talking about the specific issue and and if you take a look at so this was last week's uh market model and you'll notice that so this is as of last Friday. So, that doesn't include this week's action yet, but if you take a look at XLB, it's up 20 XLB's basic materials, it's up 21% for the year. Um, uh, XLE, sorry, XL is up 21%. XLB, which is basic materials, up 17 and a half%. The market was flat year to date. And so, if you take and then X staples were up 15%. Everything else was is doing okay, right? But ex the financials are down five for the year as of last Friday. uh technology was down 3%. Those are your biggest weighted sectors. So even though these small sectors are doing really really great, the market itself can't really go anywhere because the biggest boat anchors aren't really doing anything. And if you take a look at and if you take a look at the market breakdown, the the five sectors that have really been moving the market, sorry, have really been on fire this year. But staples or energy, uh, industrials, materials, um, th all five of those sectors, you put them all together, they're smaller than the technology index by itself. So again, you can have all this lift coming out of those sectors, but you're not going to get the market as a whole to start going until you start getting information and finance and these big sectors of the markets, you know, getting back to getting some of the money flows. >> Okay. So, so we're back here to my analogy. And by the way, Lance, just yeah, bump the charts up if you're going to show us some more charts. >> Oh, sorry. >> Um, >> but we're back to to my analogy of of uh, you know, LeBron James or Steph Curry, you know, pick whichever one you like and and the four skeletons, right? The basketball team that's made up of those five, right? I'll just go with LeBron just to keep it easy. But like, if all the skeletons suddenly increase their shooting percentage by 20%. But LeBron's decreases by five, >> you know, they're still not making any more baskets, right? Or >> or just or take the Chicago Bulls and just put Michael Jordan on the bench, >> right? >> They had some good players still. >> They had some good players. That's that's my point. Materials, energy, industrials, those are good players. They they do great over the long term, >> but you know, you're talking about energy that makes up 3% of the of the index. So yeah, you can have some great players, but you strip out Michael Jordan and yeah, Chicago Bulls are are still a good team, but they probably don't win championships back to back to back to back. Right. >> Right. Yeah, >> that's my point. And so and and and you take a look at where um investors are chasing stocks right now. So this is energy on the far right hand side. So this is Q4 2025 revenue growth. So this is the quarter we just finished. Um energy had a negative growth in revenue. materials grew at about 3%. Consumer uh utilities grew at four, staples grew at five, industrials grew at five, you know, so you've got the sectors that everybody's chasing right now have the slowest rates of revenue growth. And so when you start looking at the valuations that you're paying for these companies, they are not value stocks. And we talked about this last week. I had a I did a Fox Business interview with Charles Payne talking about Walmart. Walmart trades at 40 times earnings on a forward basis. They just had a great report. The report's great. Full disclosure, we own Walmart in our portfolio. Great report, but they grow at about five or 6% a year, but you're trading as a growth stock at 40 times earnings. And so when as an investor, this is where you really need to start thinking about looking at the positions that you own. was like, "Yeah, you know, stocks like Caterpillar are doing fantastic right now, but you go take a look at this is this is basic materials. This is not normal uh for a sector to move like this. And when you're tra This is this is a daily chart. And when you're trading at three standard deviations above long-term means in this overbought, you're going to get a correction." You know, these are the conversations you and I have all the time about stuff. It's like, you know, when you see something doing this, this is a really good time to start thinking about taking some profits, rebalancing your risk. Um, this is Staples, exactly the same chart, going parabolic. These are small sectors of the overall market. Here's financials, though, three standard deviations oversold. Um, what about discretionary, three standard deviations oversold? This is also a very big sector of the S&P 500. Healthc care is about neutral right now. It's doing okay. It's not doing great. It's not really overbought. It's about neutral. Um, uh, here's transportation. Very overbought, very extended. Actually, it started a correction process there already. Here's >> Sorry to interrupt, but this really is the rotation that you and and Michael R were talking about at the beginning of the year, right? >> Exactly. So, last September, we're talking about this rotation from growth to value. Now, that rotation has gotten distorted and now we've got a very bifurcated market. you have four sectors that aren't performing well and five sectors or so that are doing exceptionally well. There's nothing in between, which is the problem. So when money rotates, ultimately it's going to be a very very fast rotation out of those sectors back into into these other sectors that have been beaten up. So again, this is why as investors, you know, this is utilities. Utilities shouldn't do this. >> Wait, wait, wait. Go back to utilities for a second. Oh, real estate's the same way. Look at that. I mean, it's just it's an uncharted territory. It's It's through all the bands. >> Exactly. And so, but take a look here. So, this is relative strength at the bottom. But every time you've had this where it is now, this overbought, that's been the peak of utilities. And it doesn't mean they crash. And then again, this is always the important thing. It doesn't mean they crash, but you've probably gotten all you're going to get out of them for a while. So, take some profits, rebalance your risk, you know, just reduce back to target weights, those type of things. This is going to correct itself. Um, energy is the same way. I mean we go through every single chart. They look exactly the same. >> So So let let me ask you a key question here. >> So all right, you are a capital manager, right? >> Right. You've got billions of dollars of client capital there at RAA that you're you're managing. >> Um and you see a market that is this extremely bifurcated, right, that you don't think will sustain, >> right? Um, do you do you do you get to a point where you say, "Okay, so we're going to overweight tech and underweight value because we're anticipating a capital flow or do you just go through your process of just bringing everything back to target weight when it gets too rich and just let that process help you ride the the rebalancing?" >> Actually, both. So right so about a week ago um before Walmart announced their earnings we actually reduced our positions in Walmart and Verizon which has been on a huge run um uh Altria we took those positions back to target weight just took some profits off the table. Energy stocks the same way and we're kind of looking for opportunities. So, one of the things I just So, if you read today's daily market commentary, uh, that we we put out trading commentary every day on our website at real investment advice.com or on my Substack at Lance Roberts, either one. But I just did a write up today about software as a service stocks and what's in it. So, one thing we're looking at right now and and we have a model that uses uh option strategies in it. And so one thing we're looking at now is is going to sell puts on a couple of software service companies because those have gotten so extremely cheap here that the opportunity to buy those at a very hefty discount is very compelling. But you're going to have to suffer through some potential weakness for a while until that begins to to to get those money flow. But you got to kind of be ahead of the market to allow the market to see that value then come back to it. And so you take a look at companies uh you know here I'll just I'll just bring this up for you real quick. >> Okay. >> And I'll just kind of show you a quick bit of the analysis that we did this morning. >> Okay. While you're pulling it up I'm just going to mention one thing. So I'm going to talk in a bit about the conference that I was just at this week which was sponsored by Capernic Advisors which Dave Ivan runs. and they're they're kind of like a deep value uh investment fund where they they look for companies that are are trading at large discounts to what they think the true value of the company is. >> And you know it's kind of a Buffett type of approach. Um and and he says you know basically we kind of ignore everything else. We ignore the macro. We ignore we just look for companies that our calculation of its worth is much more than what it's trading for. And he said, you know, the tough part about that um that investment strategy is they don't recover right when you buy them. >> That's right. >> So, he's like, you have to be you have to be ready. More likely than not, you're going to keep riding it down further. So, you know, you have to be able to have some fortitude um you know, already built up in advance to white knuckle a continued decline with almost everything you buy initially with this with this strategy. >> Absolutely. And that's why we don't use that strategy specifically. And and it's also the worst reason why we don't use that spec that strategy specifically. One of the biggest fallacies in the financial markets and particularly in the mainstream media and particularly in the folks that are trying to sell you some nonsense. Um is they go well you know active managers underperform you know the markets this year and you know you know 80% of fund managers underperform the markets this year blah blah blah. or they give you these one, three, five, and 10 year track records and say, "See, this manager underperformed in over the last three, five, and ten years." Really, really bad analysis. You should never look at any type of fund strategy you're going to buy based on those metrics. You want to look at those funds based on their average their not their average returns, but their annual rates of return for every single year and looking at their compound growth rate over time. And the reason for that is is specifically to that point is that that strategy that they're using that Buffett style strategy is going to make you money over time, but you're going to underperform for years at a time waiting for that to occur. And so you may underperform markets for two or three years and then that rotation takes place and then you make a lot of freaking money over the next four or five years and then that rotation comes back off again. and they underperform for a while, but over the course of the life of that fund, if you're invested for 10 or 20 years, 30 years, you will have far outpaced the average rate of return of the S&P, which is what you're going to get when you index. And you know, take a look at Warren Buffett. Warren Buffett made people 6 million% return over the life of his fund, but he underperformed for a lot of years in those years. There were a lot of years he underperformed the S&P even though he killed it long term with his strategy. So, you know, it's just funny to me is that, you know, we all look at Warren Buffet and go, "Wow, greatest investor of all time." Hands down, bar none. Nobody better, but then we come out with this stupid analysis like, "Yeah, well, you know, these these active managers underperformed this year, blah, blah, blah. You should go buy an S&P index fund. Great. Go buy the S&P index. Ignore Warren Buffett and I'll see how your returns are in 20 years." >> Right. Right. Right. But, you know, as as uh you know, so to Dave's point was sort of like, you know, they're very selective on who they take in as a client because the client has to have that mindset and that expectation. >> So, to Ted Oakley's point, the average investor is like, "Yeah, I'm a long-term investor." And he's like, "Yeah, they're that way until the first losses occur." >> No, that's why and that's why we can't use that. Look, if if I could if I could invest if I could invest for my clients the way that I invest my own money, then it would be awesome. But the problem is is that our client our clients and this is everybody's clients. Everybody's fixated on CNBC and they're fixated on, you know, market headlines, whatever it is, and they're like, why do we own, you know, why do we own Verizon? This was last year. Um, good example. Why do we own Proctor and Gamble? This is like in October of last year. You know, Proctor and Gambles is losing money. It keeps going down in price. Why do we own this thing? Because when this market turns, you're going to be glad you had it. Proctor and Gamble's been off to the races, right? So, you know, people want, you know, they're they they people come to us all the time. They're like, "Oh, I'm a very conservative investor. I don't want to lose any money." And then as soon as the market takes off, they're why we why aren't we beating the market? >> Yeah. It's like, >> why why aren't we in Nvidia? Yeah. Come on. >> Exactly. and and and so we that's why our models, if you look at our models, they're a blend of of value and growth, momentum and and fundamentals. So, we're blending all that in. So, we can create market performance near-term, but then look for these areas and again software as a service. Oh, sorry, I got I got sidetracked. Sorry. Uh the we wrote this piece. So, in today's daily market commentary is talking about this case for against 4% inflation. Um, but in our market trading update, I talked specifically about software as a service and I I've been digging through kind of the the various companies and then the thesis is that AI is going to replace all these companies that are software as a service and >> we talked a little bit about this last week. Yeah. >> And that's going to happen. There are going to be some companies that absolutely go away. But when you start digging down into some of these companies like Salesforce, docuign, you know, when was the last time that you went to somebody's office and signed a document, >> right? >> Right. And you think about now, now Adam, you'll remember this more than our younger listeners, but when docuign first came around, banks would not touch electronic documents. It took years for the financial industry and particularly the investment industry, companies like Fidelity and Schwab to adopt Docuine to allow electronic signatures because they were worried about fraud and theft and all kinds of other stuff. It took a long time. So, think about this for a moment. You and I are going to go out. We're going to use AI and we're going to create the next iteration of Docu Sign. How long do you think it's going to take the financial industry? Just the financial industry by itself. Let's not talk about real estate or anything else, but just the financial industry to ditch Docusine, who they have an extremely long track record with has been through multiple rounds of testing and attacks and all these kind of things that it survived and they're just going to ditch that and go to this new AI version that's untested, right? Doesn't make a whole lot of sense. And this is why some of these companies have a really big moat. Um, you know, Service Now is another one, Adobe. These were the four that I've kind of been honing in on lately. And two of my favorites right now, I think really are Salesforce and and Adobe in particular because of their platform. They're very deeply integrated. And if you take a look at the fundamentals, so here's CRM, it trades at 14 times forward PE, right? So Walmart's at 40. I used Walmart's comparison, right? Walmart trades at Sorry, I said 41. This was after earnings was 39 forward PE after earnings on Friday. Has a PEG ratio of 319. CRM trades at a 14 forward PE with a PEG ratio of 1. EPS expected to grow at 13% over the next 5 years with an operating margin of 22%. Adobe trades at 10 times forward PE with a PEG ratio of 089. EPS expected to grow at 11% over the next 5 years with an operating margin of 37%. You're telling me that these are not value companies and that that AI is going to replace these deeply integrated companies. So my point is is that from a value perspective, there are a lot of value stocks that are not considered a value stock. Let me give you another good example of this. If I if I pull the S&P 500 index, what get give me two or three of the top largest holdings in the S&P 500 growth index, >> you'd say Nvidia, Google, Apple, Microsoft, right? >> Yeah. >> Yeah, you'd be absolutely right. >> You know what the top two holdings of the of the Eyesshares value index is? No. >> Apple and Google. >> Yeah. So, so you know this is so this is the problem we have in this market right now is this is that we've confuddled is that actually I don't know if that's a word or not but we've confuddled um you know this value and growth and we're just now sticking stocks into value modes and growth modes just kind of at willy-nilly and we're not truly looking at the under underlying you know fundamentals of these companies and so this is where as investors your opportunity really is is available to you to start picking through the rubble. Some of these stocks are down in the software as service stock. Some of these companies are down 40, 50, 60%. They've been absolutely decimated. So, you start looking at what's their actual model. What kind And look, I'm we just talked about two, I'm not making a recommendation. I'm not telling you to go buy these stocks. I'm just using as examples for this sector because you're seeing some really big discounts in these areas of companies that have very strong fundamental structures, very strong growth rates and a very wide moat as compared to you have to think about yes I can go create a software through AI but can I immediately trust that in my business? Can I ditch right >> all the stuff that's been going on these other companies in terms of development and testing and everything else? Can I just implement that immediately? And I just don't think that's I don't think that's a realistic expectation. >> Okay. So, I'm going to talk about that more in a second, but just real quick to my original question. So, your answer was in addition to your your standard of practice of just hey, as as a company gets uh grows above target weight, I trim it back. Um so, you're you're you're um both harvesting your gains and you're lowering your risk in case a you know, a company or sector is now overvalued and corrects. It's not too big of a part of your portfolio, >> right? But you also said in moments like this you are if I heard you right increasing your exposure. Yeah. >> Yeah. Yeah. So so we're actually look so sorry. Yeah. This is all part of the same conversation. So part of it is just rebalancing risk in the current model and then looking for opportunities and so we're we're aggressively looking for opportunities in the software as a service space. We'll probably add one or two exposures um in in the coming weeks. I don't know. by adding one or two exposures. Is that like it normally would be a 3% weight in the portfolio, but we're going to give it four? >> Well, no. We we'll probably start out normally whenever we start a position, it's always at 1%. And we go because >> we don't own many of these companies then. Right now, >> we don't own any software as a service. We own service. We own service now last year and we sold it um on because of some of these concerns that were were showing up early. So, we we got out of the position. Um, and so now though those have been so beaten up that you know now the the the the offer or the the the kind of the entry point is becoming very very compelling. And so we'll probably add one or two of these companies back. We'll start at 1%. And that way if the price to to the fund manager you were talking about a second ago, I hope the price goes a little bit lower and I can add another 1% and I can build my way into it as the stock price bottoms and then when it turns up then I can aggressively add, you know, another percent or another 2% get these things up to three or 4% in the portfolio as they recover and and actually have a beneficial impact to the overall portfolio. >> Okay, that's exactly the answer I was digging for. So thank you. Um, yeah. So, to your point about, um, we talked about this last week, right, where you cited the guys at the All-In podcast who were like, "Look, AI is great and it's going to be super disruptive, but like right now, what are you going to trust?" And not only the embedded nature of it, but also just like, you know, Oracle software, which has millions of lines of code that's been written over the years to address every single use case that could have happened. it's been QA hammered on, you know, for for decades. Um, you know, it's kind of bulletproof software that or something that some new AI just spit out, you know, last week, right? You know, is your enterprise going to immediately switch over to that? No, it's going to take it's going to take a long time. Um and I remember when I first started at Yahoo, um my my earliest job was running marketing for Yahoo Finance, but after that I then um worked with the sales team um to uh you know basically provide uh the data and the rationale that they would then go out and sell in their sales pitches for this. This is why you want to buy ads on Yahoo. And this was you know early 2000s, right? So like companies were still new to the internet and they weren't, you know, they weren't spending much of their ad budgets on the internet yet. Now everybody working the internet could totally see the future and they would be like, why would you ever put, you know, an ad in a newspaper uh today when you can put it on the internet and you have all this targeting benefit and it's a lot cheaper and it's you can you can go direct to a click to a conversion and all that stuff, right? But the industry was just so used to the way that things were done. It was still so new and kind of overwhelming to them that what what the Salesforce heard a lot was like, "Yeah, I kind of get what you're telling me, but like look, I got to be honest. Like no one's ever going to get fired for putting an ad in the business section of the New York Times, >> right? Like that's what the mentality was back then." So you were fighting that and eventually online media won out and it's now, you know, way more than what's in print media, but it took a long time for that to happen. So I think you're sort of saying the same thing, Lance, which is we're still in that process and we're probably not even halfway yet in terms I'm sure we're not even halfway yet in terms of AI replacing software as a service. So these things are just cheap right now. Yeah, maybe Oracle gets killed, you know, 10, 15 years down the road by AI, but it's probably not going to in the next year or two and it's gotten so cheap now the market's probably going to realize that and you're going to ride a really nice recovery here. >> Exactly. Well, and but that but you know, again, we've said this before on I think we talked about this last week. What fascinates me is that as investors, we chase whatever is going up. And so again, when you take a look at like I was showing you those those charts of the sectors, right? Everybody's buying basic materials and industrials and those things have gone just virtually parabolic, you know, over the last, you know, couple of months. And it's like that's what I got to buy. So sell sell tech, buy this. But as investors, we should be doing just the opposite. We should be selling high to buy low. But we don't do that. And that's why these things typ this is why investors typically don't do well over time because in order to buy low to to to your previous conversation, you've got to be willing to kind of suffer at being low for a while and being out of favor and not performing, but you know, sticking to your gun, saying, "Look, these fundamentals are going to matter at some point." Uh a good example we were talking about Walmart which has just gone crazy lately trades at a near 40 times PE. Amazon has just now outgrown Walmart as of this year. Actually this last quarter Walmart now trails Amazon in terms of total revenue. So Amazon now outpaces Walmart in in revenue and Amazon trades at half the valuation of Walmart. So, why would you not buy Amazon? >> Is Walmart really 2x the market cap of Amazon right now? >> Valuation wise, yeah, Amazon trades at a Ford PE of 22 and and so I mean it's like roughly half. I mean, Walmart's at 40. So, >> well, PE but or total market cap size. >> No, no, no. PE basis. >> Oh, PE. Okay. >> Valuation basis. >> Sorry. That Yeah, >> Walmart's market cap is they just crossed a trillion. I think they're 971 billion. >> Okay. But Amazon's already a trillion dollar company, right? Maybe multi-illion. >> Their market cap is 2.2 trillion. >> Yeah. So multi- trillion. Okay. All right. Um >> but but just back to the fundamental stories, right? Amazon's very oversold. >> Trades at a discount on a fundamental basis versus Walmart. But we don't want Amazon because it's quote unquote a tech stock, but we want to buy Walmart that's overpriced. >> Right. Well, to to your point, it's it's bigger, higher profit margins, yet trading at half the PE. That that hard to square that circle. >> Exactly. >> Um and just and the purchasing trends are continuing to go online versus to retail brick and mortar. Yeah. >> Well, and that's why Walmart did so well, right? You know, they're they're making this big online push and they're doing great with it. It's it's been a huge beneficiary of their company. They're doing fantastic. By the way, none of this is recommendations to go buy anything, right? not saying go buy anything, but all we're doing is laying out examples of this kind of bifurcation in the markets and as investors we should be looking at. >> Yep. Yep. Exactly. Not personal financial advice. And folks, if you want to get personal financial advice, talk to an adviser and I'll tell you how you can do that at the end of this uh video uh with the financial advisors that Money endorses like Lance and his firm. Um, all right. Uh, last point on this and I I just got to ask it because I've wondered this forever. You talked about DocYsine. >> Uhhuh. >> My mind just has a hard time. I I I don't know a lot about the company specifically. I mean obviously I've used the docyign service, right? >> Right. >> Um which by the way a lot of other companies have out there. Google has its own version of this. Google workspace has its own version of it. >> How is docuign just not a feature? How is it an actual company, right? Like it it just seems to me that like yeah it's a feature that Google or somebody else could offer, right? It it it what what makes Docusine a sustainable company on this thing that pretty much anybody with enough tech expertise could roll out their own computing version of. >> Again, look, and this is what I was saying earlier is that some of these companies are going to go away because I can roll out something very similar to it. But my point about Docuine and Docign's not one of my favorites. Docuine. If I was going to buy software as a service companies, docuine probably wouldn't be the one because uh >> I I just asked because you have the other companies where I'm like, "All right, they do a ton of things." But docuign's a onetrick pony as far as I understand it. >> But that was my but that was my point about Docu Sign though is that it's been around and it's now gotten the quote unquote stamp of approval to be used for financial transactions. And that's a huge thing because financial transactions are so subject to fraud, anti-moneyaundering, all those type of things >> to get if I was if you and I were going to go create, you know, Adam sign and that was going to be the next thing that we were going to create the thoughtful money signature document structure >> to go get that approved by financial regulatory authorities would take us years and millions. >> For sure. Yeah. To win the trust and all that stuff, right? >> Yeah. Yeah. And so it's just a function that the reason that Docusine is so well cemented is because a they were basically first for the most part and they and they got themselves integrated into the financial architecture of the economy and that's a hugely important thing and that gives them a very broad moat. Um so so again again not recommending docuign at all. I think their growth rates are too slow for earnings and and some other stuff. I think fundamentally there's other there's better companies but just from your question standpoint is that when you create that structural mode particularly with finance which is such a huge part of our overall economy for conducting transactions that's going to be a very tough thing for somebody to to to break into and come up with a competing product. >> So I I I get I just again maybe I'm thinking of it wrong and maybe they do a whole bunch of other things I don't know about but to me I look at as sort of like a cash cow type of thing right just just to milk cuz what's your product innovation going to be? We make your signature look a little cooler, right? I mean, just >> again, I don't like Docu Sign as much as the other ones, but >> No, I just I just had to ask because I saw >> No, no. I I think it I think it's very valid. And, you know, again, you know, for for, you know, I look, I've been in the financial, you know, kind of the investment banking advisory business now for over 30 years. And it wasn't really until well after the dot crisis. I can't I can't remember the exact moment where all of a sudden I could open accounts for clients with Docu Sign, but that was a huge moment because everything else was by mail. We were, you know, our FedEx bills used to be huge. FedExing documents to clients at back. >> Oh, yeah. Huge efficiency game changer. But in my mind, kind of like a tariff, like it's a one-off. Okay, you know, things got a lot better, but what are they going to do for me tomorrow that's new, right? the cooler signatures would be better, but >> yeah, maybe it's in glitter pen. I I I don't know, right? Um okay. Um so we got we got some more wood to chop here. So um I am making my way, Lance, uh to your 10 uh immutable laws of building wealth. >> Okay. >> Um before we get there though, a couple couple other topics. Um one, um just want to see if you have anything to say about what we're seeing going on with Blue Owl. um because that's starting to to sort sort of like we saw you know the AI trade was bulletproof and then maybe beginning end of third quarter last year you know we just started seeing more and more skeptical headlines and now you know the stocks have been languishing as we've been talking about I think we're starting to see the same thing in private credit where there's there's now enough smoke there that people are saying all right you know maybe there are some reasons to be concerned about private credit. We haven't seen anything terribly catastrophic in a while, right? We saw whatricolor and a few other things a quarter or two ago, but Blue Ale is a big player and they just kind of freaked out the they've had they've had some stumbles, but but of late they just freaked out the markets by freezing redemption in one of their major um BDC funds. Um, and you know, they're spinning this as no, this is all good and you know, we're making everybody whole and we're doing this so that we can do a better job of distributing profits in the future. What whatever they're however they're trying to spin this as a non- negative. But I think the rest of the market is like, hey, anytime you gatekeep your investors ability to take distributions, that makes us think you got a bigger problem going on. So, what are your thoughts there? Well, no. The look, so there there's multiple layers to this and I think there's some very good lessons in this as well. And also, this is something that we've talked about before is why you should not put private equity, private credit in 401k plans. Um, but just because they just because they >> Wait, sorry, just explain why because I'm not even remembering why. >> Oh, so you know, there's this big so there's a big push by Wall Street to get private equity, private credit put into 401k plans, >> right? Okay. Oh, sorry. our thing about Yeah. They're just going to dump all their junk on the retail investors. Okay. Exactly the case. >> Yeah. I thought you were making a tax deferred argument, which I wasn't thinking of. You're just talking about a quality of of asset. Yeah. >> Right. You have ill liquidity issues. You've got all the kind of stuff. But here here's the big thing. So last Monday that blue private credit fund was marked at just I don't know the exact number, but let's call it 100 cents on the value. So you get a statement at the end of the quarter and says you're 100 cents on the value of your investments. doing great and then they have to go and and sell a bunch of stuff off. They sold at a discounted price. All of a sudden, your value drops. Now, that value was already there even though your last statement said you're at 100 cents on the dollar. So, there's a lot of illiquidity in these funds and there's a lot of there's a real lack of transparency into what's happening. >> They don't have to mark tomarket until there's a market event like selling. Right. >> Exactly. Exactly. So, this is why just lessons to be learned about before you go venture off into private credit, private equity, make sure you understand what you're getting yourself into because the returns on these aren't nearly as good as everybody touts. You hear about the private equity funds that do really well. Those are the ones that make headlines um because they they were the one fund that held, you know, SpaceX in it when it went public or whatever. So, you hear about those guys, >> but by and large, a vast majority of the private equity investments either wind up barely returning your principal or you're losing money on them. And that's that's more often about 64% of them actually wind up losing money over time. So, be careful what you're investing. But just because they gated the redemptions doesn't necessarily mean the funds in trouble. It just may mean that they need to hold these prospective investments for a while without having to sell them. this there's there's something going on internally. Um there's there's Wall Street concerns over this which is depressing prices and if they're forced to liquidate because somebody so Adam's an investor in the fund Adam says I want out if they have to redeem Adam well now I'm forced to sell these these assets which have which may be very good assets they're just being distressed because of market perception I'm forced to sell those at a lower value and impairs the value of the fund for everybody so they can >> but but once you tell me that I can't redeem everybody else in the fund sees sees that and freaks the freak out. Yeah, >> they do freak out. But and some and look, I'm not making this I'm not saying this is the case with blue. I'm just saying this is how this works. >> But for it's kind of for your own good. I'm going to redeem these these I'm going to freeze redemptions until we get through this period. Valuations will come back up. Then I'll redeem you out. >> Right. And sorry to interrupt, but again, we're back to Jimmy Buffett. It's the same argument he was making and it's a wonderful life of like, hey everybody, your money is in Larry's house and Sally's auto loan. Like if you all demand it now in a run in the bank, then we crater and nobody gets anything. So please don't, you know, keep your money here, we'll get the money coming back in from the it'll all be good in the long run, right? >> Yeah. Yeah. So sometimes, so my point is is sometimes these these suspension of redemptions are for your own good. Your own good. Sometimes it's because they literally can't afford to redeem and and the problem for the investor is trying to figure out which one of the two they are. >> Yeah. Well, and and and trying to figure it out in an unregulated industry where there's nowhere to go for information. >> There's no transparent. This is this is why I highly discourage people from getting into these investments unless they really know how to do their research. They've got access to the managers, those type of things, because there is not a lot of transparency in these funds. there's not a lot of liquidity and you can really and and look I I've known people have taken like their entire retirement funds and gone into you know a private investment and it went belly up on them and you you just don't want to take that kind of risk and this is also why you know I'm I'm very much against people that that are not of accredited investor status. So look that accredited investor status just simply says you got a million dollars. The thesis behind a credit investor is that if you've made a million dollars in your life, you're probably smart enough to do your own research. So, >> oh that and you can afford a loss where if somebody only has 10,000 and that's their total net worth, they're done. >> Well, if a million is my only is is all my net worth and I lose it all, I'm in the same boat, right? But the thesis is is that I'm smart enough that I that I should know what I'm doing, right? Make good decisions. That's not true by any stretch of the imagination. I some of the dumbest investors I know have millions of dollars because of of of you know they sold a business or whatever but they make terrible investment decision >> or worse they inherited it and I have a funny story that I'll tell about that this yeah video if I can this time >> you know so you know but I do think that these things should be limited to people that have the wherewithal to lose a big chunk of money without destroying their retirements and you know this is why you should keep retail investors out of them you should keep you know um these out of 401k plans because they're they're more they're of much more danger to those working individuals and retail individuals than just about anything else we have in the markets. >> Yeah. Um so first off folks again we don't know we don't know what's going on with Blue O you know beyond just what you read in the headlines. So we're not saying rush out and sell it either. Uh we're not giving you >> we're not giving any personal financial advice because they won't let you. >> You can't go out and sell it. I mean, there are other ways to invest in Blue Owl that aren't gated, but but yes. Um, but um uh two things. One, Blue O's kind of been on my worry list for a good while. Um, in no small part because they have been buying um buy now pay later books of business from from a lot of the lenders out there that that do buy now pay later. And I just personally uh think that that is is is is a very predictable um catastrophe at some point in the future as we find out these pay now pay later buy now pay later loans get repaid much less than the current models suggest. Um but to your point in general just about private credit I think it's similar to private equity Lance where there are some phenomenal um private equity private investments that are out there. Um I think better than what you get in the public markets and SpaceX is going to be a great example of that I think. Um but there are few of those phenomenal opportunities and those go im the the phenomenal opportunities get snapped up immediately by the top players the you know the the the KKRs the citad I mean just the the top players in in in the world and so pretty much all the other deals which have been passed on by the the top tier or maybe even the second tier um players um you There's there there's basically an awful lot of uninspiring private investments out there. And the point you're making, Lance, which is, you know, when there's a movement to say, oh, let's democratize investing in private equity or private credit, it's very hard for those of us in the know not to see that as, okay, there's a lot of junk floating out here. How do we get it off our books and put it on to somebody else? Right. So, I I know that's kind of the main warning that you were you were raising there about, you know, be very careful about buying this stuff, especially if it's being pushed on you in your retirement fund. And I would I would echo that. >> Just just real quick, if if anybody's listening to this conversation, you want to know understand more about private equity. If you go to realinvestmentadvice.com and click on the search bar at the upper right, just type in private equity, you'll come up with this article, private equity, why am I so lucky? And we actually go through how private equity works and why, you know, the risk to private equity. And the question that you should ask yourself with private equity is why am I so lucky? And and why are you coming to offer me this, you know? >> Why am I so lucky to get this amazing deal you're offering me? Yeah. >> Exactly. Because because to your point, Adam, I actually put this uh sorry, this table in here, which this is this is a table of the largest PE companies in the world. And the these these are the guys that are getting the SpaceXes of of the of the >> Do me a favor. Just bump that up while you're talking. >> Sorry. >> Just bump it up a little bit while you're talking. >> Yeah. So this this is just a table of some of the large this is the global private equity kind of list. These are the largest ones. Apollo, KKR, CBC, Ardian, Blackstone, you know these these guys. Um you know, but these are the largest ones. So they're the ones getting all the good deals. So when some guy shows up when your financial adviser shows up at your doorstep and says, "Oh, I got this private equity deal. you should invest in is like, well, how did you get this deal? Right? And what you'll find out in a lot of cases is that you're like second or third tier on the list of uh you're you're investing in a private equity deal that's invested in a private equity deal that's invested in a private equity deal. Those aren't going to work out well for you. >> Yeah. Yeah. This is one of those investments that you shouldn't the average investor shouldn't jump into uh with no background. Like, you know, if you're getting into this, try to invest with somebody who's done a lot of these investments and ride their coattails long enough until you finally feel like you've got an understanding on how to value this and all that type of stuff. Absolutely. Yeah. And so, the last thing I'll just say on this is as as I think as concerned as you and I are about kind of this getting pushed on um retirement funds, I don't really know where we are on that right now. Maybe you know better than I, but um but it has certainly been going on for a long time in pensions. >> Yeah. >> Right. And so I mean I think the real fear and I've talked about this at length with both Stephanie Pomboy but also with um Ed Cidle who's who's one of the you know sort of award or record-winning whistleblower awards for pointing out pension fraud. That's kind of his full-time job. Um, you know, you have these these pensions, um, which are basically a retirement fund for, you know, the the people that, uh, the pensions benefit. And we know that there is a lot of this private stuff in there that is highly liquid was sold to pension board members who really don't understand anything about this and is just sitting there on the books you know waiting to be marked to market at someday in a way that will from what I hear probably likely uh you know shock to the downside a lot of the folks running the pensions. Yeah. >> Exactly. >> All right. Um All right. Uh very quickly before we get to your your 10 immutable laws which I'm I'm going to make today's it's not going to be the it's going to be a positive rant. Um but I just want to give a quick recap of the um some of the takeaways from the um super terrific happy day conference that I was at in Florida this week. Um so um Stephanie Pomboy and Grant Williams, this is the second year they've done it. Um, folks may know that they have their own occasional podcast which they call the Super Terrific Happy Hour, and that's stolen from Seinfeld because they're both such Seinfeld geeks. Um, so of course that's why it's the Super Terrier Happy Day. It's actually a two-day event. Um, but um, one great uh, faculty there, Lance. Um it was those two plus um Mike Green and Luke Groman and Tom Hanig, the former FOMC uh member who used to be the CEO of the uh St. Kansas City Fed. Um we had the technologist Tom Mlelen there. Um Dave Iban as well and his firm Capernick was sponsoring it. Um there was also a guy there. Oh, we had we had Pippa Melgrren. Um she's a lot of fun. um and uh a guy named Andrew McDermott there who um is among other things a Japan specialist and had a lot of really interesting things to say about Japan. But I just wanted to share a couple quick um takeaways. One um Tom Hanig uh you know he knows a lot of the um the people on the inside in the government and and certainly at the Fed knows Kevin Worsh personally by the way fairly optimistic about Kevin Worsh. Mike Green, by the way, not at all. So, it's really interesting uh differences of opinion there. But we were talking about the administration's likelihood of kind of throwing the kitchen sink sink and then some at the economy this year to try to get um you know, better results at the midterm elections and Hanik, you know, so I was asking folks, so who who here was willing to take the over on GDP growth for this year? And pretty much everybody raised their hand, including Tom Hanik. Uh but he clarified and he said hey look um you know I'm I'm not certain that a golden age is coming in the way that the administration is selling it to us and he said I'm worried that a lot of what they're going to do this year is going to lead to higher inflation and some other unintended consequences down the road. So he kind of said I'm sort of expecting like a golden year um but not necessarily a golden age coming out of here. And I think um can't remember who said it maybe it was Stephanie. She said, "Okay, so if you're going to buy puts, maybe maybe buy them after the election then, right? If you're negative about the economy, you know, don't stand in front of the the uh um juggernaut of of whatever they're going to do between now and November. Um but, you know, if you're if you're if you're skeptical, you know, Haning is saying that, yeah, I don't think 2027 I think it's going to it's going to it's going to create a bunch of unintended consequences that are going to materialize in 2027." And to be honest, Lance, I don't know. Maybe that is the the current plan of the administration, just like with tariffs. You know what? Yeah, some of this stuff is going to create some headaches for us, but as long as those headaches come after the midterms and the midterms go the way that we want, we're willing to pay that price. >> That's right. And and you know, a lot of this is going to depend on, you know, how these things ultimately turn out. But as an example, like this morning I was just posting a chart that if you take a look at ter the tax re So one of the big things for the market this year is like we're going to get this big boost of tax refunds. >> 150 billion or so is going out in the next two months, right? >> Yeah. Well, tax refunds are actually for for individuals are running at a slower pace than they were or a less pace than they were last year. In other words, the refunds are less than they were last year. Businesses are seeing the biggest surge in tax refunds. Now, that's fine, except businesses don't spend tax refunds. They just basically get the refund in and they spend it on operations and, >> you know, pay report higher profit margins. >> Yeah. Yeah. Yeah. Uh but it just they're not going out to buy a whole bunch of new stuff because they got a tax refund. You send a tax refund to, you know, to you know, my wife, she's out buying a new couch, right? So, you know, so that has an immediate impact on the economy. So, one of the things that we may see is these tax refunds. Yes, we may be sending out more, but if it winds up being a bulk of that is business related refunds because of deregulation, whatever, and not so much hitting the households, maybe we don't see that economic bump. It's just something worth paying attention to. >> I got to look at the numbers on that because the way I've heard the administration put it is it's definitely going to be the largest middle class um tax refund that we've ever seen. >> Well, and look, it's not April yet either, right? So, a lot of people haven't filed tax yet. This is just the run rate right now. >> Yeah. But, but I'm surprised that the run rate is lower than last year given everything that's been done. But, but yeah, so folks, I will look into that and we'll make sure we we get the numbers and we look at it going forward because if if Lance is right, if it actually is disappoint even if it's the same, I think that would be a pretty big disappointment. So, um uh we'll keep an eye on that one. So, one of the other things that was mentioned, I mentioned this guy, um, >> Andrew McDermott, who I hadn't heard of before, and but a very thoughtful guy, and I just want to note this and give the audience a chance to weigh in here. So, um, his presentation was on Japan, and we've been hearing about, you know, all of Japan's wos. I mean certainly we've been hearing about the the bug in the windshield you know um >> for 20 years >> label on Japan but but I mean over the past couple quarters we've been hearing that Japan has been having lots and lots of troubles um and uh you know they now have an issue with inflation and their um bond yields have been going up and their currency has been getting crushed versus the dollar um and there have been a lot of people saying like hey look you know the the end of the line isn't far away for Japan here. Um, Andrew is is taking the other side of that and he's saying, "Hey, look, Japan actually is in much better shape and even much better just sort of economic health than the world appreciates right now." Um, and he goes through a pretty compelling explanation why. Um, and he thinks that Japan is a pretty good place to invest right now. And it's actually their market's been performing quite well of late. So, um, folks, if you would be interested in hearing that side of the story, let me know in the comment section below, and I'll bring Andrew on for an interview. And relatedly, after the conference, um, Luke Groman, who I got to spend some good quality time with, um, totally unprompted, sent me an email introducing me to a China specialist, um, a guy named Peter Alexander that he said, um, you know, Peter's my guy when it comes to understanding what's going on in China. and and and Luke's overall framework is heavily influenced by what China is doing. And um so that was a big um you know heavy praise from Luke. But then Luke said you know this is a guy he's one of the smartest guys I know. Every time I talk to him I walk away feeling smarter. And Luke's a pretty smart guy. So um again that was you know high praise coming from Luke. So, if you'd like me to have Peter come on as well and talk about China, let me know that too in the comments below. And whichever country gets the higher number of votes for China or Japan, I'll bring that expert on first. Um, but Lance, just curious, you have anything any any uh general uh reaction to to the Japan part? >> No, no, no. That you know, Japan's been the bug in the windshield for 30 years. I remember this was right after the turn of the century. You know, that that term kind of came to fruition. was like Japan's in search of a w bug a bug in search of a windshield. John Malden actually I think was one of the first guys to start you know kind of beating that drum and you know here we are 26 years later they're still chugging along >> and you know it's it's interesting is is that you know every year or every couple years you know something happens in Japan's like oh this is it Japan's they're done it's over with and then they just kind of keep on going along and you know it's interesting um you know we have a lot of people fretting over the US is like oh you know US economy is in demise and you know everything every everybody's running away from the US which there's no evidence of that whatsoever and we're at 120% of debt to GDP where g you know and we have you know a growing economy we've got resources we have you know all these things that are going on in the US that Japan doesn't have and they're at 230% of debt's GDP and and they're still here and so you know this has been always my point about be careful with narratives when you read these narratives in the in you know kind of in the media that this is going to happen and that's going happen because of debts or deficits. They can take decades to actually have an impact. And again, Japan's a look, Japan's on a path of destruction at some point, but it could be another 30 years at this point. And so, if you're if you're trying to bet against that today, it's like, oh, I'm not going to invest in the stock market because the US economy is about to blow up because of the debt. There's no evidence of that whatsoever. >> Yeah. And and and I don't remember all of his points, folks. So, if you're interested, you're really going to have to hear from him. But but it was a combination of things like um you know instead of hollowing out its manufacturing Japan really doubled down into the critical elements >> uh the critical sectors um everything from ship building to you know high level componentry um and you nuclear energy and um it it now is a massive supplier to the rest of the world including the US of essential components um for example, you know, he's like, look, you know, they're >> Nvidia can't sell a chip without some of these these Japanese sourced components. Um, so they they actually do have a really essential um economy, not just to Japan, but to the rest of the world. Um, secondly, they have a crap ton of debt, but they owe a lot of it to themselves, which is very different than owing it a lot a lot of it to others. um and you're in control of that debt, which you aren't, you know, if you're if you you know, right now everyone's freaked out about the rest of the world selling treasuries and whatnot. Japan has a lot less exposure on that point. Um but also um a lot of the US's assets um is is debt that it holds of others where a lot of Japan's assets are actually productive uh enterprises around the world. A lot of it in America, but but but around the world. So again, he he he dials through this in a way where once you kind of hear it, you're like, that's actually a little bit different than the story that I've been hearing about Japan. Um, and again, you know, in in the near term, the proof has been in the pudding that that, you know, a lot of these Japanese companies have actually performed really well stock price-wise recently, and he continues to think that they will. Um, also, and again, I only have a vague memory of all this, but when you talk sort of about Japan's position in Asia right now, and sort of both a trading, but also a military block, um, yeah, I think it plays a much more important role than I think most Americans think at this point in time. you know, we think about the US, we think about China, but Japan is playing a much more kind of active and essential role uh to the the world uh the world's both um military and trade security there than I think is is widely appreciated. So anyways, uh we'll move on from that. >> Right. Just and like your your comment about you know there's a lot of these headline concerns is like the rest of the world is dumping US treasuries. Actually the rest of the world is actually accumulating treasuries and you know so you know foreign holdings US treasuries at alltime highs and you know the big one the one thing everybody refers to as China's like oh look at China they're dumping their treasuries they're not actually their holdings of treasuries are about 1.1 trillion they're at the same level they were in 2014 because you have to include the holdings that they have in Belgium and Luxom Luxembourg where they buy their treasuries to offset their currency. >> Yep. I know there's a little bit of a debate going on on X right now between you and Luke on that, but I don't want to get into, but your point is well taken. Um, all right. Let me let me wrap things up here. Let me um Oh, one quick thing on the um on the uh conference before before we wrap up. >> So, the thing that had surprised me the most about the conference and it was really well done was macro people are really tall. So, Lance, you know, I'm you you've met me, right? I'm I'm I'm just about 6'2 and I was sort of almost like the starter height for the conference. So, I go in there, I meet Luke Roman, who who on camera has a has a he looks like he's a massive guy. He and I are about the same size heightwise. Um and Grant Williams, I think maybe I'm a little bit taller than Grant. Um but then, um you know, Mike Green walks in the door. Uh Mike's 6'3 at least. Um Tom H. Omen, at least my height, if not taller, and he's in his 70s. Um, uh, Tom Mlen, yeah, probably pushing 6'4. Uh, and then, um, Dave Iben, he's sort of like Connie, uh, at your place, Lance. I mean, he's he's easy 6'5 at least. Um, so, and even Pippa is, uh, I'm going to say she's at least 5'10"ish or so. I mean, she's she's got a really big personality, but she's she's she's also, you know, uh she's got some height. Um so, it's funny. The only person who was I would call petite is Stephanie Pomboy. Um and I she probably clocks in, I don't know, probably around 54ish or so. So, she is very petite. Um but she l she is very fit and uh she can kick your face off. Um I learned that she was a black belt in taekwond do uh in her college years. So, so even though she might be the least tall, she's probably the one you want to mess with the least as well. >> I'll take her down. >> I'd like to see that match up. Um, all right. So, uh, let's let's quickly get to trades, Lance, and then we'll end with your top, uh, immutable laws for building wealth. >> Yeah, no trades this week. Um, again, we're kind of gearing up some trades potentially for the next um, you know, kind of the next week or so. Um, again, we'll probably do a little bit of digging into the, um, kind of the software as a service space. Again, just looking for some opportunities, but right now the portfolios are sitting near all-time highs. Um, so there's, you know, portfolios been very stable. Bonds have been doing very, very well this year, um, so far. So, you know, they they've had a nice run this year, which has been helping support the the 6040 allocation. So, again, there's not been a whole lot to do. Volatility's been low. Um, it's just been this rotation. Um, you know, we we're kind of banked between this value growth structure. So, it's been interesting to watch just money kind of flow out of one sector of the portfolio and go into the other. So, portfolio hasn't done a whole lot because it's just sitting there kind of churning at the moment. But I do think we're going to get into a better position here where performance will pick up in the next month or so. >> Okay. And I'm trying to pull it up live while we talk. I guess I got it right here. Yeah. 10-year bond is now below 4.1%. Um so, you know, it'll be interesting. Um because it, you know, it's been rangebound, I think, for a lot longer than folks have thought it would be. Um do you have any particular sense right now whether you think it's it's just going to stay within the range or you think we might actually punch below four and stay there? Uh it'll it'll depend. I mean right now we should probably hang out around this four this four percentage level. Maybe 39, maybe 41 somewhere. The bonds are a little bit overbought here in their term. So I wouldn't be surprised to see you know yields come back up to 4.1 4.1 and a half maybe 4.2 um in the next week or so. But um we're just kind of stuck here at the moment. We're going to need uh inflation to fall. Um so if we see CPI if we take a look at trueflation which has been kind of rolling over pretty sharply if we see that feed over into CPI and we see CPI come in >> we are seeing a feed in the CPI so I think unless them unless something changes the momentum we are still trending downwards. Yeah. >> Yeah. And this bump in PCE I think is is marginally kind of transitory and that you're going to see PCE come back down again as well over the next maybe couple of of of quarters >> which will be interesting just because I put up a chart of it looking like it's basing and heading higher. So that that to me is kind of the interesting thing to watch closely here. Yeah. >> Yeah. And so but if if things kind of remain status quo, we should be stuck here. But we're going to need we're going to need a slowing of economic growth. We need economic growth to slow down and we need inflation to come down a bit more. And then that would pull yields well below the 4% mark, maybe down towards three and a half. So, but if right now, I wouldn't expect a whole lot. >> Okay. All right. Well, look, let's get to the 10 immutable laws and uh then I'll start wrapping things up, >> right? Yeah. Um, so I really wrote this article um for my kids more than anything else because they we've been having this this conversation more and more kind of in our own household with my kids about trying to get them to the point of now they're understanding about you know what it takes actually build wealth and I think the one thing that we've done a very poor job of uh particularly in the financial advisory community and the media is focusing everybody towards just investing Oh, you just got to get your money into the markets. And that's great, but you got to have money to get into the markets. And there's a lot of other stuff that goes on behind the scenes to build wealth that's sustainable long term than just investing in the markets because as we've seen before, we we've we've already gone through two cycles already where young investors have put a bunch of money in the market, they made a bunch of money, and they lost it all. Um, you know, right now they're back in the market making money again, and when the next crash comes, they're going to lose it all. and and that's not the way to build wealth. Speculating in the markets is not the way to build wealth over time. Investing prudently is the way to make sure that your savings and things that you're doing grow wealth over time. It's your wealth compounds over the longer term time frame. So, I wrote this article and then I converted it into an ebook which if you go to our website realinvestmentadvice.com click on the resources tab there's a a uh under the resources there's an ebook library and this is the first first book in the library. this 10 laws of money and wealth and I just kind of go through some of the basics uh about it, you know, and you and I have this conversation a lot about this chart, which is, you know, the rich have all the money and the bottom 50% don't have any money. And the reason the bottom 50% don't have any money is because they have the worst financial habits and they don't do what's necessary to grow wealth over time. They have they have poor spending habits. say have poor savings habits, you know, and and really, no matter what your income level is, you can work yourself into a position to save money. It may not be easy. And I'm not I'm not saying any and this is what I explained to my kids, none of this is easy. None of this is going to be a cakewalk. You're not just going to wake up tomorrow and start, you know, saving money and it's going to be easy. You've got to sacrifice from somewhere. You can't have, you know, everything you want and still save money. It doesn't doesn't work that way. And so what this >> and L you're going to walk us through this, but would it be fair to say that kind of like getting fit? >> It's simple. It's just not easy. No. >> Right. I mean, like it's not it's not rocket science. It's not calculus. There's there's, you know, probably 10 immutable laws of fitness, right? >> And if you stick to them, you know, the hard part is the persistence and the discipline, but the actual intelligent part of it is pretty simple, >> right? And so so and again so like I started out with I said look and one of the you know when my when I was growing up you know my father had all these great sayings you know we had to walk up you know I had to walk uphill both ways to school every day and >> in the snow y >> in the snow and yeah you know go to double feature for a nickel and have change left over. Uh but but one of his favorites was his money. You know, where does he think this money comes from? It doesn't grow on trees. And he's right. And you know, that's why if you know, one of the big problems that we have as individuals is we get our paycheck and you know, we get this paycheck electronically. It just goes into our bank account and then we just start spending money and we don't really track where any of it goes. And so a really good way, and I've got my I'm starting my kids on this, is to take your paycheck, go cash it, right? go just take the cash out of the bank and then go put it in the envelopes. I need, you know, $500 for my rent this month or whatever it is. Go put cash in that envelope and then when you pay your rent, go buy a money order and look, it's it's a pain in the ass. Okay. That's the whole point of this. It's not supposed to be easy, >> right? >> And what it and you're seeing the money go, right? >> Exactly. And because you see where this money goes. And once you can start understanding where you're spending all your money, then you can start to understand better about what your wants are and what your needs are. And our wants always exceed our needs. Where, you know, we're like, "Oh, I need a new car." Well, do you really? Right. I need the latest iPhone. Do you really? Um, those are those are wants versus needs. You know, what are needs? Those are food, shelter, utilities, and taxes. You got to pay those. You know, if you don't pay don't pay for your house, you're you're living on the street. You got to pay for utilities, don't have any electricity. Those are your needs. Everything else is is a want. And that's where you have to start working towards thinking about your budget, which is your life is worth 70 to 80%. And so, you know, the kind of this p this pie chart is is 50% goes to primary needs. 20 to 30% depending on where you are right now, that's your wants. So that's going out to eat, that's entertainment, that's you look, I want you you you need to have fun in your life, but those are your wants. So that's clothes, that's that's your other stuff. And then the 20 to 30% that's left over, that goes into savings and investments. And that 20 to 30% comes out first. So as soon as you get paid, that automatically gets drafted over into your savings or investment account. That way, you don't have to worry about budgeting. You know, one of the biggest hang-ups people have is learning how to budget and then trying to stick to a budget. But if you just take the savings out first, then you don't have to worry about the budget. You just spend everything in your account. And then at the at the end of the month, you've got zero. It's okay. Your next paycheck comes in. The whole process starts over again. Um, >> so just want to interrupt on that because I was going to ask you if you if you had that in here, and you do, which I'm so glad to see. Um, I heard this, you know, pretty early in life. And of course, the first question you have is, well, what how am I going to pay my bills if I if I, you know, if the first thing I do is take money out of the bank and and put it in the the long-term savings fund. Right. >> Right. >> And this goes to a point I think you've made a zillion times on this channel, which is that humans are incredibly creative, right? It's like you will find out a way, right? and and honestly kind of without that that pressure of like you only have 50% left to with which to pay your bills, you're going to really figure out like, okay, well, of all these bills, do I really need all of them, right? Can I maybe I should cut some of these, you know, subscription services I have or whatever, right? Um, or hey, rather than buy the super expensive, you know, steak or coffee or whatever, you know, I'm going to go find a quality value play in there and I'm going to be able you you just start finding ways to make it happen or or hey, rather than go out and take my girlfriend out for a $200 fancy meal, we're going to go out and have a picnic instead and we're probably going to make a better memory and spend, you know, a 20th of the cost, Right. No, that's right. And you know, this is and again, look, as as we go through this, there's going to be some stuff in here that I'm going to say and you're like, "Oh my gosh, there's no way I can do that." That's okay. It doesn't mean, you know, that you have to do all these things. But the point is is to have your attention drawn to some of these things so that you go, "Okay, well, I have to I think I have to do this, but is that a need or a want?" >> Right? You start making these decision. You have to make these decisions for yourself. These are just some some some ideas. um you know the poor debtors and like I tell my kids all the time is like do not for any there is no reason to get into a credit to have a credit card period end of story. You don't need credit cards to build a credit that's a huge lie from the financial institutions. You don't need credit cards for any for points or miles or any of that other nonsense. Those are traps that they get you into that wind up eating into your future wealth. So just stay out of credit card debt. Period. End of story. Uh, but I go through 15 signs. If you've got credit cards and you're doing any of these things like juggling credit cards to to, you know, make payments and those type of things, you've got too much credit card debt. So, we go through a solution. Um, this is a this is a Dave Ramsey solution. It's a great idea and it's a snowball solution. And we go through the snowball solution, which is basically just line your credit card bills up. You start with the smallest one. You pay the minimums on all your credit cards, but the smallest one you pay five times the minimum. When that one's paid off, you roll all that money up and including the minimum payment you're already making into the next bill. Pay that one off. Roll all that money up into the next plus the minimum. Keep going and you'll very aggressively pay off your credit card debt very quickly. So, we kind of lay that out for you. >> Um, you know, >> hey, I'm sorry hate to interrupt, but these are important. So, when it comes to something say like an auto loan, >> right? like kind of hey I can't if I can't get to work I can't make money right so right >> there may be times where you think you you may think I need to take out a loan what's your general thoughts on that ver versus save up for it and then buy it whole >> well so so that so first of all when we're talking about credit card debt we're specifically talking about credit card debts Mastercard Visa American Express >> yeah you're going >> this is largely unproductive debt you've paid it you're just saddled with it from then on >> exactly and the stuff that you were buying that you didn't really need, right? You were buying wants, not needs, >> right? >> Um, but you know, you're look, when you're young in life, you're going to have a car note and you're going to have a a rent payment or a mortgage payment, one of the two. It just there's just no way around it. You just you don't make enough income, you don't have enough savings yet to pay cash for a car. you know, once you get older and really after your first first car, after you buy that first car, you should be saving up for your next car and then eventually just pay cash for cars as you go and and and not having auto loans. But again, when you know the the justifications come like, well, I get 0% financing on a car. Okay, fine. Have an auto loan. Pay pay your monthly payments. Um, you know, but just stay out of credit card debt. And that's where you get most most problems. And then and then buy cars. And and you know when we talk about buying a car, you know, don't buy new cars. You buy a new car, you drive off the lot, you lose 20% of your value immediately just in depreciation because it's now as soon as you drive off the lot, it's now a used car. So immediately you take a clip on it. And again, we're not talking about collectibles. So you wise asses out there going, "Yeah, but a 1969 Barracuda." Yeah, we're not talking about that. >> Yeah. And who's buying that starting out in life? Come on now. >> Exactly. So we're talking about normal people buying normal cars. Those get depreciated. All you need a car to do. And this look I have this conversation with my son all the time because he's you know he thinks he you know he he loves cars and he's like I got to have this real I got to have a vet or whatever. I'm like no you need a car to get you from your house to work and from work back to your house. That's it. You don't need a fancy car. You just and this is why you know I drive used cars. My wife drives used cars. They're just to get us to where we're going and but we get all trapped up in this lifestyle thing of, you know, I look on Instagram and social media and all this and everybody else has these nice cars. Who cares? Get you from point A to point B and back home. That's all you need. Don't strap yourself into a bunch of debt, you know, buying a 60 $70,000 car with a 600 or an $800 or $1,000 car payment. It amazes me. I see people getting seven and eightyear car loans for like a thousand dollars a month and I'm like, what are you doing? That's a house note. >> Yeah. They're just not thinking. And look, I'm interrupting you here, but what the my last point on this is it's probably in here too, but like I think a superpower to develop early, to aspire to develop early in life is to resist the call, the siren call of keeping up with the Joneses. And if you read the book, The Millionaire Next Door, that's how they all became millionaires. >> That's right. And there's I've got a whole section on the millionaire next door here because that's such a valuable point that you just made. >> Um moral and physical hazards don't apply. You know, it's it's interesting. You know, people will do pretty much anything for money. And you know, I I quote Fear Factor where sure Joe, I'll eat those South American hissing cockroaches for 50 grand, you know, because people will do all kinds of crazy stuff. But, you know, in America, we've been raised to be financially lazy and we're unwilling to do what's necessary. And and so, one of the things that, you know, people do or they make financially stupid mistakes. They do things like borrow from their 401k plan. Terrible idea. And I won't go through it all. It's in the there's reasons why you don't do it. I go through it here. Um, you don't stretch to buy a house, more house than you can afford. You know, these are the things that we these are mistakes that we make on early in life that have very long-term ramifications to our financial well-being. And the more that we do things that are financially stupid early in life, we pay a much bigger penalty for that later in life than we would just sacrificing to begin with and and staying within our means. And and again, this is where, you know, we we get trapped up into a lot of these things about spending money. And, you know, we we have, you know, oh, I need to go out. I need to take these trips. I need to do this. I need to do that. That's great. But that's how we wind up with this huge spending gap. And, you know, incomes in America today don't keep up with lend living standards. There's very little argument about that. And that's why more and more people are going further and further into debt. And that gap between real disposable incomes and the cost of living is the largest on record, which is why the average person is going further and further into credit card debt. In fact, most in most Americans are pulling on between four and $6,000 a year in additional credit card debt every single year. So, there's just compounding their debt over time and that keeps them poor. Um, but there's so many things that we can do for free. You know, play board games at home, play sports, you know, whatever it is. start thinking about things that you can do and this is Adam you talk about this a lot is that you know our wealth doesn't come from just money it also comes from the quality of life our social our social attachments those type of things spend time with friends you know playing games going to the park take a walk whatever spend some time with your friends rather than spending the money to go out to nice restaurants or whatever it is those are fun but those impact our ability to save money >> couldn't agree more >> yeah and that's why I say you know one of the best things to do is laugh at your neighbors overspending, you know, be petty. It's fine, you know, but it's it's definitely helpful. Um, but you know, and we kind of go through the debt structures and consumer debt, but you know, it's it's, you know, it's okay. You know, understand that mo I can't tell you how many people I meet with as clients and they come in, they've got their net worth is millions of dollars, you know, they have hu they've got multi-million dollar house, they drive Ferraris, they have all this other stuff, and they have absolutely no money. If they miss one paycheck, they're bankrupt, right? So, just because somebody lives a very extravagant lifestyle like you see on TikTok or Instagram or whatever, doesn't mean they have any money, >> right? >> It just means >> and my wife's a therapist and she sees a lot of those people and you know what they're doing? They're stressing because the neighbor next to them has more. >> Yeah. Yeah. Learn to be happy with what's enough. Um that's that's kind of this line. I know money can't buy happiness, but it does buy a lot of whatever comes in second. So, it's important to say it. But financial stability doesn't solve every problem, but it solves the the ones that eat up all your mental bandwidth. And so, if you can can get your financial situation under control. That's a worry that's you know, the biggest worries that young people have is trying to make ends meet then and they're stressing out on how to do these things. But once you start, you know, you know, start this process of, you know, not overspending, starting to save money, and you kind of see that savings balance, you know, rise in in your accounts, that takes a huge amount of stress out because you're paying your bills, you're making ends meet, you're saving some money. Now, you just have to worry about the other stuff in life. You know, relationships and, you know, those type of things. That's much easier than stressing out over money. Uh, there's no such thing as five easy payments. Debt in all shapes and forms are bad. Just stay away from it. Um, you know, number eight. So, widen your pockets better than wide than your pants in a wide go what we was just talking about a second ago is, you know, this is where this is where you're going to start getting into some challenges, but these are things to think about. You know, we my wife and I made the decision. So, we lived in Houston at the time and Houston public schools are terrible. So, if we're going to live in Houston, I was going to be forced to send my kids to private school, but that's a huge expense. So we moved to Katy which is a suburb outside of Houston where this the public school system is very good. And so we moved out there to send our kids to public school where they could get a good education but not have to pay the cost of private school. So, these are the decisions that you have to start making for yourself is like, okay, if I'm going to have children, I've got to think about schooling and and Texas just passed school choice, which is really, really good because now it allows people to take their money that they their school taxes and divert those into other choices like charter schools or or or private schools. So, people have a choice now in Texas about where to send send their kids for schooling, which helps a lot. Um, but you know, also think about, you know, reducing your housing cost. Do you really need that pool in the backyard? You know, it's like, yeah, maybe. Do you really need an extra two bedrooms that aren't being used at all? You know, start thinking about, you know, your housing cost. Drop your car gas and maintenance payments. You know, start thinking about, you know, transitioning out of whatever car you have to something that's more efficient that you can get at a cheap cheaper price. Get a second job. You know, if you if you're having trouble making ends meet for a while, go work a second job. get those bills caught up on. And the these aren't, again, these aren't revolutionary or new, but these are just things to, you know, think about. You know, one of the biggest, you know, expenses that we have as individuals are our vices. You know, you think about people if you smoke, how much money you spend on smoking or drinking alcohol, etc. How much money does does that vice that you have cost you every year where you could convert that into savings? And, you know, have garage sales. You know, I can't tell you how much stuff that my wife and I have sold just trying to get rid of excess junk in our house. >> Right. And how much better do you feel once you've got less clutter in your life? I'm >> I'm just going to note this for a future discussion, Lance. Sure. Um if there's interest enough in the in the um comments, which I hope there is. We should do one on developing multiple streams of income. Um that that is such an unbelievable enabler. Um a and it's such a um protection against unexpected bad things happening in your life. There's a huge difference between losing all of your income and half your income. >> Yep. >> Right. Or even even 75% of your income. Having some still coming in is a is a gamecher versus having nothing. >> Absolutely. No, we can definitely talk about that because I've I've spent the last 20 years just developing multiple streams of income just for that reason. So yeah, it's it's it's it's a game changer when you do that. Uh here's to your point. The last page uh really gets into the millionaire next door. So uh if you haven't read the book, I highly suggest you go buy the book and give it to all your kids. And what Dr. Stanley talks about is how the these millionaires that have between two and $5 million, you probably won't even know that they have that kind of wealth because they're they live in a very median home. the the median home value that was in his analysis was um had an estate of of people had an estate value of three and a half million or more. Their average home value is about $469,000. So that in modest homes they their personal uh home accounted for less than 10% of the total net worth. They're, you know, taking a look at the kind of the general millionaire data, 90% of the millionaires live in homes valued at 1 million or less. 28.3 lived in homes valued at $300,000 or less. and they're and they had investment in real estate. These individuals typically invested more in in to your point, Adam, what we were just talking about, they invested in income producing real estate rather than their own personal home because the house you live in is an is an expense. It's not an investment. So, they lived in a very modest house and then invested capital into real estate. >> But, you know, this is but the bottom line is is that in order to build wealth, you have to spend less than you earn. And that's the whole premise behind building wealth is that and if you're spending everything you make and going in debt, you're never going to be wealthy. You're in the trap. And the only way to get out of that trap is to start doing things to get you there. So, you know, and the important lesson here is look, sacrifice is not a punishment. It's a strategy. So, you know, if you skip the new car now, you can save money. If you when you save money, you can invest in assets that grow your wealth. If you invest consistently, your money works for you over time. compounded growth does the heavy lifting, but your savings turbocharge that growth. And so that's how that's how you can build wealth. And again, we have, you know, I've said this before, Adam, you know, we we talk about these, you know, the younger generation is they they it feels unfair. The systems working against them, um, you know, etc. And it's so unfair. But the reality is is that anybody can build wealth, but you've got to be willing to do the steps. And it's not easy. It's not fun, but and and it's not a punishment. It's just a strategy you have to choose to adopt to get there. >> Totally agree. But it is not unattainable, right? And that's back to the simple part, right? It's like anybody can do this. You just have to have the commitment, the discipline, the wherewithal, and the resilience to, you know, there's going to be setbacks and stuff like that, but just have the grit and grind your way through it, and you will get to that better state. >> Yeah, that's right. >> All right. Um, so glad you did that, Lance. Um, Lance, send me the link to that and I will put the link um in the description below this video as well. So, folks, you can either go to the RA website and find it there or you can click on the link that'll be in the description below this video. >> Um, all right. Uh, so just in in wrapping up here, um, and I'll be real quick because we've almost gone two hours here, Lance. Um, so, uh, I am going to be taking a page from Lance's book, um, and investing in, uh, some social capital next week. So, my brothers are flying out here. We've just gotten a ton of snow dumped on us out here in Reno. So, we're going to do some world class skiing at some of the the Tahoe Mountains uh next week. Should be great. Uh should be a lot of fun. But I am going to try to I haven't done this in a couple years to be honest. I'm going to try to really not touch the computer uh while they're out here next week. Um now, the good news for you is um I am uh pre-recording some great discussions. has actually got a fantastic lineup for the for next week while I'll be out there um having fun. Um we're going to have Brent Johnson. Uh he's just come out with a follow-up report to his initial stable coins report. So that should be super interesting. We're going to have Lynn Alden and we're going to have Melody Wright and then I think next uh following weekend we're going to have Darius Dale. So super strong lineup. Um, I've got to note that all of those people I just mentioned will be at uh the thoughtful money spring online conference which is coming up in just a month. Um, Lynn is the latest one to be announced to the faculty. So, um, unbelievable faculty there folks. I won't run through it now in the interest of time, but you can find it all uh at uh thoughtfulmoney.com/conference as well as buy your ticket there. And if you buy your ticket there now, you'll still lock in the lowest early bird price. I want everybody to get that low price if they can. And a reminder that if you are a premium subscriber to our Substack, I have sent you a code in your email inbox, which you can use to get an additional $50 off of that uh low early bird price. Um, if you think the uh 11th immutable law of building wealth should have been continuing to watch Lance Roberts on this channel week in and week out from here, please let them know that by hitting the like button and clicking on the subscribe button below as well as that little bell icon right next to it. And if you'd like to get some help from a professional financial adviser uh for navigating what's going on in the markets and what may lie ahead for us in 2026, especially if it mirrors some of the things that Lance and I talked about here as probabilities. Again, I highly recommend you get that advice from a good professional adviser, but certainly one that takes into account all the macro issues that we talk about on this channel and that Lance and I have talked about here today. You've got a good one doing that, great. Don't mess with success. But if you don't have one, you'd like a second opinion from one who meets that criteria, consider scheduling a uh discussion with the firms uh that Thoughtful Money endorses. These are the companies you see on this channel with me week in and week out. Perhaps you'd even like to talk to Lance and the team there at RAIA. So to set up one of those conversations, just fill out the very short form at thoughtfulmoney.com. Uh only takes you a couple seconds and the firms will be in touch with you immediately after you do that. Well, that's my friend, another great week. I think we're coming in just a minute or two under two hours here. Thanks so much for a good one this week. >> No, no, thank you. Appreciate it very much. Do you want PDF version or uh regular uh website link version for >> uh whatever whatever link will get people I mean if you've got a link directly to the PDF, let's do that. >> Okay, I'll send to you right now. >> All right. Uh thanks so much, buddy. Um everybody else, hope you guys have a great week next week and thanks so much for watching.