Is The Market Topped Out? Or Is It Poised To Bounce From Here? | Lance Roberts

Summary

• Mega-Cap Tech: Alphabet (GOOGL) and Amazon (AMZN) reported strong earnings and rising AI capex, yet saw sell-offs likely driven by margin liquidation rather than weakening fundamentals.
• AI Investment: Companies are aggressively investing in AI infrastructure; despite volatility, long-term growth and PEG-based valuations, especially for Nvidia (NVDA), are presented as supportive.
• Rotation Signal: The guest’s factor model flipped from value to growth, anticipating a near-term Growth vs Value rotation back into beaten-up mega-cap growth names.
• Bitcoin Risk: Extensive discussion of Bitcoin downside and potential contagion across markets; MicroStrategy (MSTR) faces unique balance-sheet and optics risks if forced to sell BTC.
• Reflation Debate: Caution on the reflation narrative as materials/industrials/energy look overbought and disinflation indicators (e.g., Trueflation) are rolling over.
• Credit Markets: Private credit risks highlighted, but current credit spreads remain historically tight; spreads are the key watchdog before taking defensive action.
• Market Mechanics: Recent weakness attributed to margin unwinds and highly correlated assets; active management and risk control emphasized amid elevated leverage and fast factor rotations.
• Precious Metals: Silver’s vertical spike and reversal underscore speculative flows; trapped longs may sell into rallies, creating additional volatility.

Transcript

What it does suggest is that we're likely to see a rotation from value back into some of these beaten up growth names. Now, welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert, welcoming you here at the end of the week for another weekly market recap featuring my good friend, the Mercurial portfolio manager, Lance Roberts. Lance, how you doing? >> Fine. I've not touched Mercury all week. I'm doing better. >> Okay. Well, I don't know if it's cuz Mercury is in retrograde or something like that, but uh the markets have been quite mercurial. We have seen volatility return. This was one of your themes uh of this year, Lance, when you wrote your uh your updated article with this one was about South Park. Um but uh yeah, so true to form uh beginning of the year like last year has started off uh you know, pretty bumpy. Um let's talk about that. Um love to hear what you think is driving it. Um a couple of big themes that are emerging. Um as you and I have said that the or have noted for a good while. Um the markets have been rangebound um for a good long while at this point. And I guess one of the questions I'm going to ask you is at what point do you guys determine that it's consolidation versus topping? Um but one of the big big themes that's arrived arisen recently has been the software trade is really starting to degrade here and uh it seems to be over concerns of um Agentic AI the future of Agentic AI basically removing the moes of a lot of these software as a service companies. Um curious to hear your thoughts on that and also curious to sort of be like if that's true how come nobody saw this coming like that that this probably something if you've been following AI like a lot of the >> Wall Street analysts have you could should have come to that conclusion a while ago why is it mattering now >> right well so is that where you want to start I mean there's 12 questions in there so >> I know there's a soup but they're all related so just put whatever you want and go >> well so first of all let's just talk about you the broad market in general first and then I do want to talk about software as a service because I actually just wrote yesterday in our daily market commentary about software as a service. Um, and which was interesting because Goldman Sachs came out and echoed my sentiment today which I thought was interesting just apparently they're reading my work. Not really, >> but no. [laughter] But I I I think it's I think that I think the comments on software as a service are be, you know, are just a function that people are going to start to come around to this reality. Anyway, we'll talk about that in a second. Um, talk about broad market as a whole. So, this week, first of all, we had some uh rather stellar earnings from the big mega cap stocks. Google, Amazon in particular, just absolutely knocked the cover off the ball on revenue and earnings growth. um they're increasing their capex and the AI because that's where the future growth is. Obviously, that's where everything's headed. So, you know, in a in a vacuum, those were really, really, really good reports. I mean, they're growing. You know, you're you've got a company the size of a Google or an Amazon growing income and revenue at 14 15%, sales at 29%. You know, it when you're when you're a company of that size, it's very very hard to grow revenues and sales that quickly. and and and when you're growing sales that that's something you normally kind of see in a a smaller midcap company that's really just starting out and really kind of getting their win behind their sales. But when you're when you're the size of a Google or a Microsoft or or an Amazon and you're growing those revenues at that rate, that's pretty outstanding. And if you take a look and we've talked about price to earnings growth in these companies, you take a look at, you know, a lot of these companies like an Nvidia as an example, they're trading at 0.5 on a price to earnings growth basis. I could cut their earnings growth in half and they're only trading at a one times peg. That's that's that's a good value basis for that. So, you know, it was interesting that they had these really great reports, but these stocks were heavily sold off on that news this week and a lot of that though really had nothing to do well that while the headlines were, oh, we're concerned about their capex spending. We all knew the capex spending was going to be there. We that was not news. That was just the rationalization for the sell-off. the the sell-off was really just margin liquidation. You know, we've seen a very big drop in in cryptocurrencies. We've seen a big drop in metals this week. And so, all those margin calls are getting kicked in. Well, if I've got to cover margin, I've got to sell assets uh to meet those margin requirements. And the more that I have to sell in my margin requirements, I have to now sell more because now I have less collateral to meet my margin. And it's kind of a self-feeding kind of cycle. And so that's why you saw a lot of that selling pressure this week. I think we might be getting kind of close to the end of it at least for now. Um we might get a bounce. We get a decent so here it is Friday morning. We're getting a decent bounce out of the markets this morning. Uh in the same stocks that were getting sold off like Nvidia's up like five or six% today. Um so we're getting kind of a bounce in some of those same stocks which really kind of goes to that idea that that was likely margin covering. Um because again we've talked about here with you and I that talked about the rapid increase in margin the leverage in the markets uh you know the levered ETFs and all asset classes everybody were chasing these things. So when you get that price reversion you know the great thing about margin is it it drives prices higher but that knife cuts both ways >> right as we said it's bullish when it's increasing margin debt but but bad when it's not. So, so I do want to talk in a second about um >> what's going on with Bitcoin because you know Michael Bur Bur came out, stuck his neck out and said, "Hey, there's this, you know, like Bitcoin vortex. It's it's going to pull everything down with it." I want to talk to you about that in a moment. But but just to your point about margin calls, okay, you know, I can get that. [clears throat] But we did see after the earnings of those companies you mentioned, they get immediately whacked, right? So it is so part of that's a reaction to the guidance that the companies were offering. It wasn't just margin call pressure. >> It it I would Yes, that that's that's a fair statement and again if I'm look if I'm looking So but think about this way. I'm getting a margin call and I've got to liquidate assets. So, so and again, we're not talking about retail investors because they don't have any really kind of movement capabilities, but we're talking about large managers that are getting hedge kind of these these calls that are coming in. So, when these things come, I've got to look across the spectrum and I'm looking for assets to sell to meet that margin requirement. So, as soon as somebody comes out, reports something even slightly negative, that's the asset I sell. And when that price drops, it triggers everybody else to sell the same thing because it's all this is all algorithms working behind the scenes. So yes, the headlines were important, but if you dig below the headlines, they don't really make a lot of sense because these companies are just growing earnings leaps and bounds. Okay. But I >> So what were they reacting to? Was it the size of the capex or what? >> A bit of that. But again, that's not new news. We we are, you know, the whole big concern has been they're going to cut capex, not increase it, [laughter] right? And and so when you take a look at Amazon and Google, you know, Amazon's going to 200 billion in capex this year. that's, you know, they're making a huge bet into the future of AI. And I'm not and I'm not dis I'm not arguing with people that that don't like the capex structure, but this is in a way this is good. You know, these companies are investing in themselves. That's what we want companies like Amazon and Google and Microsoft to do. We want them to invest in themselves, >> which is what they're, you know, we complain about the buybacks all the time. It's like, oh, they're they're spending all this money to buy buybacks. Oh, that's great. That's a return of capital to shareholders. That's complete BS. But, you know, we're okay with that, but we're not okay with companies spending money to invest in their future. It just makes no sense. But, you know, that's where we are in the markets today. >> All right. Um, and let me let me pull on that for a minute. Um, so, so first off, Lance, what the vibe I'm getting from you is selloff probably near near the end and this may actually be a good time to, you know, start entering or taking positions again in these companies. um one because they might get a short-term bounce, two because they're investing in themselves and down the road, you know, this should result in in um better profits for them. Um let me just ask sort of a rant question. Um what you said makes sense to me, right? You know, these guys are playing for all the marbles, if you will. You know, we want to win the AI future, right? So we want to be the few companies standing that are really owning and benefiting from AI, right? And to do that you have to be a big company, right? You highly unlikely the days of a couple of college dropouts creating a new AI company in their garage and then owning the world probably not possible in this AI race just just because of the scope of the the scale and the resources you need for AI, right? >> Be a little careful with that. I mean, Sam Alman, the guys that run Anthropic, these these companies came out of nowhere. >> Yeah. But they didn't come out of like two guys in a garage. These these were guys that were wellconed in the industry who raised a ton of capital, right? I mean, you can't start this by borrowing 5,000 bucks from your grandma, right? >> Yeah. I'm probably not going to build the next Nvidia chip in my garage. >> Yeah, exactly. >> That's a fair statement. Yes. >> Yeah. So, where I'm going with this is, you know, we've we've ranted at times of um just the increasing moat uh in the the general retail space where, you know, small businesses are just getting starved by the costs and the Walmarts and stuff of the world, right? Um that you know, Walmart moves into a new town and basically all the local businesses dry up and Walmart gets all the business, right? I mean, [laughter] I'm I'm glad as an American that most of these big hyperscalers or US companies and whatnot and and if they win, hopefully America's prospects, you know, will will rise, continue to rise. >> But I do worry that like, you know, are we moving to a world where it's going to be like five brands and almost nothing else, you know, if we take this out 20 years? >> Yeah. I mean, kind of. you know, does does does Alphabet eventually rebrand as Brondo? And you know, that's that's the world we live in. >> Well, I mean, look, I you know, two things. And look, we're this is going to get us into a whole another rant for someday, but you know, we need to revisit monopoly laws. Um, you know, monopoly laws were there for a reason. the antitrust laws um were there for a reason to keep companies from engaging in activities that kept small, you know, they kept two guys in a garage from becoming the next Microsoft, right? And we and and and yes, you know, and now the antitrust laws look at as well, you know, Google has competitors, right? There's there's Bing, there's, you know, um Opera, there's other there's other, you know, other other internet companies. And but I think we s have to revisit this at some point because these companies are now so large that it is to your point and I don't disagree with you. It's impossible for new competition and new innovation to really kind of come to market because they control so much of every market share. And I don't know how you effectively address that issue while keeping capitalism intact, you know, because you don't want to move towards more, you know, you don't want to move to a government where government's controlling business, right? You want businesses to to grow and aspire on their own. But but I I do agree with you that it is going that at the rate we're going the kind of you know the size and and shape of these companies like Walmart and it's not just Google and Microsoft right it's Walmart it's Costco it's you know these companies are so massive that they control and control such a big market share it really does kind of minimize the ability for smaller people to compete. >> Yeah. Um, so again, we can we can maybe rant about this uh in more detail in the future, but I do worry, you know, the the the sort of investor side and like I said, pro America side of my head is like, oh, this is great that these companies are, you know, continuing to lay the groundwork for their continued future dominance, >> right? >> But then the other part of my brain is like, is that a world I really want to live in, you know, in 10 or 20 years? >> Well, fortunately, we won't be around, but that'll be fine. Yeah, I know. But, uh, well, before we turned on the camera here, we were talking about our kids, but anyways. All right. Um, okay. So, let's, uh, I know I kind of sent you a little bit off on a tangent there. Um, do you want to get to Michael Bur's Bitcoin vortex and how that's impacting everything, too, or anything else you want to say on just software before we go there? >> Yeah, I mean, we can talk about that. I mean, you know, it it's, you know, again, when you have, you know, we just saw retail investors. It's funny cuz I was watching X uh over the last couple of days and you know I'm seeing all these people posting on X where like one kid yesterday showed a picture of his account where he's down $1.9 million in his account and he's like well it says I'm broke now. Um, and yeah, I go and I'm thinking to myself, like you just blew $1.9 million just speculating in the markets, >> but there is so many there is so much leverage in this market and and all it took and this is we've written about margin debt. We've written about leverage, the dangers of it numerous times, >> talked about it here on the review, >> is that it's all fine when it's going up, but when something eventually breaks and and it starts kind of cycling through the markets, this is this is what happens. And because once you start getting margin calls in one asset, it leads to selling in other assets that now then those assets get margin calls which leads to selling in further assets which get margin calls. And hopefully we're again if we're if we're through kind of this initial bout of selling if assets can kind of stabilize here fingers crossed then you know things may stabilize here over the next couple of weeks and and we may start to see some repair in the markets and things kind of start to return to some normaly you know see see Bitcoin rise here a bit see metals recover here a little bit um but there are a lot of trapped longs in these assets there a lot of people that were buying precious metals at much higher prices and they're now trapped in their positions. So when they when they get a decent rally, they're going to be liquidating. So you're going to have further selling pressure. Well, if you get another round of selling pressure that triggers more margin calls, this is the risk of margin debt is that it can start to feed on itself. And this is how you can get 10 15% corrections in markets, you know, kind of very rapidly. And if that selling continues, it it becomes more problematic. So, you know, fingers crossed. Hopefully, this was just a short-term little blip. Things will kind of settle down here. Uh, investors will be able to put some capital back to work here at lower prices, but we'll have to see what happens from here. >> All right. So, a couple things on that one. I mean, [snorts] yes, there's that risk, and we'll maybe talk more about it in a moment, but I mean, let's be real, you know, let's look at the S&P. Where is it? 6,900. I [laughter] mean, it's it's only a hundred off its all-time high. I mean, it's not like, you know, the S&P is in any great danger at the moment here. Um, I'd be much more worried, say, like about Bitcoin. I'm I'm a little less worried about the metals, Lance. Um, and that's because, um, for two reasons. Um, silver went bananas, as as we talked about, but it went bananas really quickly. So, I I don't think there were that many people who bought above 100. there just wasn't a lot of time for a lot of volume to get accumulated above 100 because it it was a couple of days really or a week or so between 100 and the 120 top before it it it came down a lot. So I I I'm I could be wrong but but I I I imagine that the average uh buyin price for most of the people in the in the precious metals is either here around 75 or lower. Um so I'm not not too worried about that. Um, gold seems to be pretty stable. >> History history a chart price of history of silver would disagree with you on that. >> Oh, totally absolutely to totally absolutely. Yeah. Um, but but just trying to calculate the amount of of positions that were 100 above versus the ones below, I I think it's a small fraction of of of uh what what's owned at 75 or lower. >> Awesome. >> Now, Bitcoin bigger deal, you know, it's it's it's uh you know, where it's it's about 69,000 right here. We're talking about um it got down to close to 60, which really is about half of of 50% less of of where the Bitcoin high was. And Bitcoin spent more time above 100,000. So, I think there you've got a lot of more potential trapped longs. Um I I don't follow Bitcoin that closely, Lance, so hopefully you know more than I do. But um uh we've had the emergence of a lot of kind of Bitcoin treasury companies and of course the the big one uh poster child for all that is Strategy, Michael Sailor's firm, and and they were down at some point yesterday, I think like almost 80% from their all-time high. And I think one of the big risks about that uh and I don't I don't pretend to fully understand how strategy as a firm is structured um but is that if if it got to a point where strategy had to start selling Bitcoin um particularly because it it has like preferred shares that it's put out there. So it actually has to be paying investors no matter what the price of Bitcoin does. That could be really notable for two reasons. Um, one, um, it would just be additional selling pressure, uh, because Strategy owns an awful lot of Bitcoin. But two, optically, it would be very potentially concerning for the market that the absolute biggest Uber bull in Bitcoin was selling, even if he was being forced to, you know, market putting a gun to his head. That would be very optically concerning. So, um, >> how concerned are you about what's going on with Bitcoin, both for the price of Bitcoin, but to Sailor's point, of it being this contagion factor that would then spread to other markets? >> Yeah. No, I look, you know, I find two, there's a lot of things very fascinating about Bitcoin. One, remember that Bitcoin was supposed to be the anti- fiat currency trade, right? >> Yeah. >> So, great, you're you're long Bitcoin. The dollar is basically trading near 100. is down, you know, 11% from its alltime from its not all-time high, but it's its recent high a couple of years ago. It's down 11. Bitcoin's down 50. So, you know, the whole the whole debasement trade, all that was complete nonsense, >> right? Especially starting to when gold and silver were were exploding because of debasement, Bitcoin was actually losing value. Yeah, >> exactly. And then then that whole debasement trade fell apart for metals because those are just narratives. We've talked about that before is that when you get speculative trading in any asset price, it's the speculation that drives the price. So the >> all I was saying there was when everyone cared about the basement, Bitcoin wasn't reacting the way everybody thought it would. >> Right. Right. Right. And and again, but that's the falsity of these narratives and that applies to all assets. So, you know, again, you know, set the narratives aside. They don't matter. Manage your risk, manage your portfolio, manage your allocations. That's that's how you survive the long game. But, you know, it's interesting. Michael Sailor says that he will never sell Bitcoin. Bitcoin going to zero and he's not going to sell it, which I think is stupid. But, you know, you know, I'm gonna write I would never write an asset down to zero just on a on a theme. But, um, you know, I think his shareholders are the people owning the preferred debt and the the people owning the shares and all that. I think ultimately he's going to have to, you know, he he may I could be wrong, but I think ultimately he's going to be held to account by his shareholders at some point. There's if if the price keeps declining. Now, if the price rallies right back up to 100,000, which you know, if you take a look at a lot of the ha the previous having charts and all this, this is the ones kind of running around right now, it's like, oh, every time we have these havingss in the market, then Bitcoin and it goes to alltime highs. >> Yep. >> Then he's fine. Um, he'll be fine. Micro Strategy will be fine, all that. Um, I don't really understand his long game, but you know, it's, you know, he was a software company, now he just owns Bitcoin. So, okay, great. you know there there's a little bit of a difference if for instance if if I own Salana if I'm going to be a treasury company and I own Salana I can stake that and I can stake that currency and I can I get revenue participation on the transactions of that I can't do that with Bitcoin so great I've got Bitcoin on my balance sheet and then I'm just now looking at this from a business perspective great Bitcoin >> it generates no income or revenue right so what's the point of me owning it you know the point of me own if if this was my company, I would be trying to buy Bitcoin here somewhere and then when it got to 100,000, I would be selling it, taking in those gains, distributing those to my, you know, my shareholders and then wash, rinse, and repeat that cycle over time. I don't really understand his philosophy of just sitting on it. Well, you I'm sure you're going to hear from people in the comments who probably are closer to his philosophy. And there there it's a philosophy or or it's a it's a uh a an expectation that this thing is going to be worth a million bucks a coin or whatever, right? Yeah. >> And and maybe that's the case, but he says he's never going to sell it. So even if it gets to a million and he doesn't sell it, what good have I done my shareholders? Right. So I mean that's that's that's the only problem I have. I mean, I understand what he's doing. I I get what he's doing, right? Because this is the whole treasury company thing. I get it. >> You're saying if there's no exit strategy, why why would you ever invest in a private fund if it said we're never going to, you know, have an exit? [laughter] >> Right. Yeah. I'm never Yeah. Never going to give you your money back. Okay. >> But but I guess in this case though, because it's a publicly traded company, you can have an exit whenever you want as a shareholder, right? >> Yeah. Right. So, you know, that's that's the other side. Anyway, it's that's a debate for another day. um you know but yeah I mean you know I look there's certainly things going on within the markets and and you know the the the bigger point of all this is is we have talked about this previously this is why we talk about you know forgetting narratives taking profits rebalancing risk because these things happen and when you have highly volatile assets and they're all correlated they can all become uncorrelated very quickly at the same time which is what's been happening as of late. So there's really been no I saw an interesting you know exp post yesterday is like Bitcoin's down, silver's down, gold's down, stocks are down. Where am I supposed to be putting my money? >> Right? >> You know that's what happens when you have highly correlated assets. And this is why you and I have had this conversation like be careful chasing assets that are all highly correlated each other because when they reverse at the same time, >> right? When correlations go to one be careful. Yeah. >> Yeah. And and so you know I got a lot of hate for that. It's like oh you don't know what you're talking about. Well, you know, I've been in markets long enough to understand how markets work. >> Yeah. Um, and by the way, you you and I, uh, have gotten some nice props from folks in the comments section here over the past week, um, for our, you know, our cautionary guidance about what to do with the precious metals when they were, you know, shooting the moon there, >> right? >> Um, so anyways, just know that not everybody hates you, Lance. [laughter] >> There's one. >> Yeah. Um, well, okay. So, back back to Bur's thesis here. So, let's just assume for a second that this isn't the bottom for Bitcoin, right? And I don't know if it is or it isn't. I'm not rooting for one way the other folks, but let's say Bitcoin, you know, has again, right? Let's say Sailor actually is forced to sell some, right? Is that just bad for Bitcoin holders or do you potentially see this as a contagion that takes other parts of the market down with it? it will take other parts of the market down with it. Um because because of the leverage, because of of sentiment, because of other stuff that's going on and and remember most of this is is driven by a lot. We have just so much speculation in the markets. We've talked about the margin debt. We've talked about the leverage. We talked about the, you know, the 2x lever ETFs, the 3x lever ETFs. We've got, you know, retail investors that are p, you know, piling into leverage ETFs on margin in their account and borrowing money to do that. So, you know, it's just we've reached that kind of point of peak speculation to where if we get more selling, it's going to become a contagion across the markets because again, there's going to there's fewer and fewer exits for people to get out of the market. So, that risk is going to run high. This is why you know like for instance ever since the beginning of the year we've had this hu we were you know last no you know in the mid November early December you and I were talking about the fact that we were buying value stocks in our portfolio because everybody hated them. Nobody wanted value and because we all wanted growth and so why would I own a value stock that's not doing anything? Oh Proctor and Gamble sucks. Um why would I own that company? Well those have done fantastic this year. Right? So there's been this rotation into value. So now value is extremely overbought and now growth is extremely oversold. So we may be actually setting up for rotation back into growth out of the value trade. So that doesn't mean tomorrow but you know those are the things that are that that are occurring in the market. We're getting these rotations across markets very quickly and so it's becoming much more important for investors to pay attention to how they're allocated. Yeah. and and be thinking about where is money going to go to when something becomes unbuckled and that's going to be the the thing that will save you if that if if what you're expecting occurs and we have this broader market meltdown um then where is money going to go Wayne Gretzky kind of you know statement where the puck's going >> that's I think that's where we need to be thinking about is where's this pup going next >> so Um, you know, we've said for a good while, Lance, that the environment seems to be shaping up to be one where an active strategy is is going to be superior to a passive strategy. And in the type of market environment you just described where it's kind of water sloshing back and forth or liquidity capital slashing back and forth between different sectors, I think that just becomes even more so. Um, and you're nodding as I'm saying this. um to your point about um uh the and you didn't use the word fragility but I think to a certain extent you were talking about that with the market um because of the margin debt and everything and we we didn't mention valuations but that's part of the story here too when when you have valuations that are as extreme as they are right now um things become more unstable because it's like pulling the rubber band right once it gets to its max point there's a lot of tension there it really wants to move. Um, and when you have a ton of margin debt, the system becomes a lot less stable because anything that that spooks people, even a little bit has an outsized effect, right? Because everybody feels, "Oh my god, I'm so exposed by all this leverage I have. I got to take action right away, right?" So, um, you know, I think about it like, uh, you know, the market is sort of on a tight rope, but it's on a tight rope that we've been raising up into the to the sky and maybe it's now like a mile or two high. It's being buffeted by winds on either side. And so, it's very it's it's, you know, it's very the stability is very fragile, right? In other words, and that's why the market seems to swing real quick from >> extreme greed to extreme fear. doesn't spend a lot of time in the middle, right? And I think it's because it's like either everything's working, like you said, margin debt's great when things are going up, but with a whiff of of uncertainty, all of a sudden everybody's totally freaking out. And so that's that's uh just the state of the markets that we have right now. And you know what I'd love to see is is that the tightroppe be brought back down to earth and then maybe become less of a tight rope and more of a pathway, right? >> What you mean go back to like 8% annual returns? That would be so boring. >> Yeah. I mean who wants to invest in 8% returns? It's funny you know just having said that you know two real real two points. First is that you know so much of this market is now tied to algorithms that when everything moves in one direction the algorithms just tack on to whatever the momentum is and they're all chasing the same assets. So, >> and it happens wicked fast. >> And it does. And this is why you see things like silver go completely vertical because once once the the speculators caught onto that trade, they were just piling all into it. Um, and again, we saw this across retail professional as well. I mean, everybody's sh the same assets. So, that volatility is not going away. Unfortunately, that's not going to go away. So, I think it's really important that as investors, we start to rethink how we're managing our portfolio. It's great to chase risk assets, right? It's like, oh, you know, this assets going up to the moon. I want to get in all and know I'm going to overweight, you know, this asset, whatever it is, because it's going to the moon. And that's fine. It works. And that that's all great until something breaks and, you know, you lose a very large chunk of capital very quickly, which sucks. And, you know, And and this is why it's important, I think, as investors, we need to start thinking about what's enough, right? We need to start thinking about I'm if the market goes up 20, that's okay. I don't need to get a 20% rate of return. I just need to get enough to meet my goals without having large risk to capital draw downs that impair my future returns. Look, if I'm a hedge fund, I've got no time horizon. My hedge fund is going to be here for 500 years, right? This is the Warren Buffett analogy. I'm going to buy Oxy Oxidental Petroleum today because I'm going to hold it for 100 years. It'll be dead, but Bergkshire Hathaway will still own it. As as retail investors, we don't have that option. Our optation is till we retire or die. That's that's our duration of our hold. So, we need to be thinking about our portfolio in terms of duration rather than risk-taking and speculation. And and I and I bring all this up to bring up this chart. I posted this chart on X this morning, and I think this really kind of encapsulates what we're talking about. This is the five-year return of some various asset classes. So, if I owned bit the the mag the magnificent 7, I had a 218% return over the last 5 years, outpacing gold, which was 164%. The NASDAQ was 82, outpacing the S&P 500 at 75. Bitcoin is only up 73, only up 73% in the last 5 years. And the Bloomberg Commodity Index is only up 40. Now, here's my point, though. If I own Bitcoin, I've got to have, you know, that was actually up a lot more before the crash. Obviously, it was up there with gold. So, but in order to sustain that 5-year rate of return, I've got to accept a lot more volatility. However, if I can just be happy with, listen to this, 15% a year. Now, if I could, if I said, look, I'm going to give you an asset that's going to give you 15% a year, are you going to tell me that's not enough? that that's not good enough for you to reach your goal. But 15% a year is what the S&P 500's given you over the last five years with a lot less volatility than gold and silver and Bitcoin and the magnificent 7. Yes, you got higher returns with these other assets, but you've got to take a lot of risk on to get those. And this is why, you know, when we start talking about rates of return over time and start thinking about how we structure portfolios so that we can survive the long-term game, that's the more important thing. >> Yeah. You're going back to our conversation from last week um where I complimented you on how unsexy and how boring you were, Lance, because that's what does it. And of course, as you say, >> my wife says exactly the same thing. >> Yeah. [laughter] Um, and just to be super clear, I think folks get the message, but you would say, "Hey, look, if you can just bend over and pick up, you know, a 25% annual return with no risk, absolutely do it." But you're saying it's it's all about the riskadjusted return here, right? And and and I agree with you. I mean, look, and I think the markets have I I'm concerned that the markets, uh, you know, even the quote unquote safer route like owning the S&P 500, Lance, um, they have been delivering outsized returns, um, >> you know, even even with a decent amount of safety over this period of time, but given valuations and everything we've talked about that the projected returns are a lot lower, I'm just afraid that there are people who are saying, "No, Lance, I get it. I'm just going to hang out in the general indices and I'm just going to collect my 15% for the next 10 years and I'm going to be able to retire on time or I'm retired and I'm just going to, you know, count on those 15% returns every year to fund my lifestyle. I'm concerned those people might wake up to a future where they're like, "Oh geez, not only is it necessarily singledigit returns, but sometimes those single-digit returns have a negative in front of them, right? This this is not the decade I expected." >> Exactly. And look, that's going to happen for every single asset class over the next 10 years. Every single asset class is going to have potentially lower returns than what they've had over the last 5 years. It could be the liquidity issues. It could be economic recession issues. It could be a whole variety of things. But yeah, I mean, you're absolutely right. If I've showed this chart before, if you take a look at the return and let's just use the S&P 500 just as an example. So going back to 1900, if I look at the rate of return from 1900 to present, it's about 8% a year, which aligns with economic growth, dividends, and inflation. That's because that's how you get to your return structure. It's dividends, growth, and inflation. >> Um, you know, over the but since 2009, we've been returning 12 to 13% annually since 2009. So we've got a 50% increase in the average annual rate of return than what we had over the last 125 years, right? So something's definitely different. That's all the liquidity, zero interest rates, monetary interventions, speculation, the rise of the retail investor, the rise of passive index ETFs has all has all pushed, you know, returns of these markets substantially higher, you know, to really levels that are far outside what economic growth says these returns should be. So again, economic growth, dividends, and inflation should be around 6 to 7 to 8% returns, not 12, 13, 14, 15. Mhm. >> But that's what we've gotten used to and this is what investors are used to. It's like, oh, you know, and this is why I said if we ever go back to 8% returns, everybody's going to be like, this sucks, right? You know, the 8% returns, this is terrible. But that's kind of really where markets should be. We should not be generating these levels of returns that we're generating now. And and yeah, my fear is is just like you that in the next 10 years, we may all look back and say, well, returns over the last 10 years have been absolutely abysmal. We only cranked out 6% a year. >> Yeah. I mean, my concern is zero. I mean, that's >> I know that. Sure. Sure. It could be less. >> Yeah. I mean, and you've seen the same charts I've seen that that basically say it should be close to that. Um, so Lance, you're making me think we should probably do either one of these uh weekly recaps dedicated to this or maybe even do a dedicated uh webinar. Maybe bring in uh Danny and Richard, the personal finance gurus on your your team. >> Sure. but uh to to do a section on retirement in a lost decade, right? What happens if you're already retired or you're planning on retiring in the next couple years and then you get a 0% average return, annual return for the next decade, >> like all those people did back in 2000. >> Yeah. And like I think you think is is probable going forward. Not guaranteed, but more likely than not. Yeah. >> So, how do we help those people, you know, figure out how to still soldier through without having to, you know, sacrifice too much or be too too unduly surprised? >> Look, put look, I'm happy to do it. Um, Richard Danny would love to do it. So, put it in your put it put a question in your chat and have people respond to it. And if there's interest, >> well, I'm I'm putting a question in the video here. Folks watching, if you want to see this, let us know in the in the comment section. It's strong enough. I I'll do it. But I actually think that that would not only be a real public service, but I think a lot of people, you know, again, people who watch this video tend to be a bit older. Um, I'm guessing it's on a lot of their minds. >> Well, you have to, but again, and I agree with you, but you have to enter that with a mindset of not this is absolutely going to happen. >> I agree. >> But what if that should happen? >> What's my plan if it plays out this way? >> Yeah. Because again, too many people are right now is like when you mention that um you say, "Oh, you know, the next decade is going to be 0% rates of return." They're like, "Ah, who right? That that's that that's that doesn't happen." You know, markets do 15% a year. That's that's the new that's the new norm. >> Um and maybe maybe that's the case, but this is this is look this is why we are very passionate about actively managing our portfolio, rotating between value and growth. Um that's why talked about rotating to value previously. We're now we're now about to make a rotation back to growth. Um we can talk about that, but that's how we think we navigate the next 10 years regardless of what benchmark returns are. >> Okay. Um All right. Well, we'll look to see what folks say and then I'll plan accordingly. Um All right. I still got a couple of big topics I want to get through with you. Um, but I guess before I make sure we don't skip over it, um, can you just pull up the the latest S&P uh tape and let's just um get your general thoughts on, you know, kind of what you think is going to happen in the near term? >> Not not run, but don't run away. >> Yeah, exactly. >> Run away. Uh, okay. So, yeah, S&Ps actually, you know, um, you know, we talked about, let's see, I guess what was this, Adam? Two weeks ago, we talked about this orange triangle. >> Yeah. and it's still not regaining it. So, >> no, no, not yet. Um, which which is which is important, right? That that that rising trend line acted as key resistance to that previous rally and we've now sold off and and have touched the 100 day moving average, bounced off of that here. Now, we're talking about on Friday. Uh, markets are trading very nicely right now. Um, markets are up about 147 on the S&P 500. Take a look at the heat map. It's Nvidia, Apple, Microsoft, you know, a lot of the semiconductors got really beat up recently um doing well. Eli Liy, which had boomer earnings, um this week along with Abby, they both got hit right after earnings and now people are starting to buy those stocks. Um Walmart has has been just on fire lately. That's part of that value trade. Financials doing well today also. So, we're seeing money coming back into the market. This is why a lot of this felt like last week a lot or this past week a lot of this felt like margin liquidation because stocks with really good earnings and really good fundamentals were just getting kind of sold off at random like RTX, Rathon Technologies was down like 4% yesterday for just kind of no reason. So it literally looked like where people were being forced to liquidate and they were just kind of selling assets, you know, as needed to to meet margin calls. Maybe I'm wrong about that, but that's just what it felt like. this week. It was just kind of very >> random as to what was getting sold off and and and why. Anyway, >> indiscriminate. Yeah, >> that's a great word. That's the word I was looking for. Um, however, let's let's um take this chart off. Let's take this off for just a second and take a look at this this a little bit differently. Um, you know, so so the market just really we kind of just go back. We just kind of keep trading in this kind of range. um you know we don't we're not we're not we're trying to progressively make you know some some new highs and we just kind of fail there and then we come back down just kind of keep trading in this sideways range. So the market really hasn't broken down uh from a momentum basis we've worked off a lot of that previous overbought condition. So you know that's kind of working itself into a better place. We're not oversold yet on a momentum basis but we're certainly much more back to neutral than we were. relative strength is also kind of working itself off as well. So you you know again the market's not falling apart by any stretch of the imagination right now. Um certainly been some pressure this week. Three ugly days in the market certainly didn't feel good but to your point earlier we're down about 2% from the peak. We're down about 1% now uh that the market rebounded on Friday. So you know the the market's not ready to let go just yet. um we are watching this very carefully and if we do take out this 100 day moving average then that will be kind of key support that will potentially bring the 200 day moving average which is at about 6480 into focus. So there is there is definitely some downside risk. You should not be you know dismissing that risk by any stretch of the imagination. But for right now, the market hasn't signaled anything to that real degree that oh my gosh, I really need to start getting out of assets and start going much more to cash. It feels that way because of what we saw in pockets of the markets, but the overall market was really rotating internally from that kind of growth into value hiding out there. And as we talked about uh particularly in today's uh daily market commentary, we were uh discussing this whole whoops, this is the wrong one. One second. Uh talking about this whole value to growth trade and we had talked about this rotation into value previously and now if you kind of take a look at MGK as an example, uh this is a a chart of MGK. So MGK is the ETF. It's the Vanguard Mega Cap growth index and just jumping on me one second. Um, so that's come down and yesterday touched on this 200 day moving average. So even it hasn't really broken down yet, but you've had a really big correction. This is a weekly chart, by the way. So sorry, daily chart, but you're you're pretty oversold on a relative strength basis. So you're kind of getting to that level where it won't be surprising to at least see a bounce in some of these mega cap stocks. And this particularly the case when we take a look at value versus growth. So this is the Vanguard value ETF versus the S the isshares S&P 500 growth ETF that that ratio which is the red line is now at this is a weekly chart. uh this is now as oversold as overbought as it's been at previous peaks to where you see that and again that doesn't mean value crashes doesn't mean go sell all your value stocks may stretch imagination but what it does suggest is that we're likely to see a rotation from value back into some of these beaten up growth names now because again when you take a look at earnings that story hasn't changed and I think at some point the market's going to start to refocus on those fundamentals this brings up an important point you and I had talked previously that earlier this year. I wrote a couple articles that earnings expectations this year were way too high and those expectations had to come down. What you have been seeing is those earnings expectations coming down which is then causing markets to have to repric stocks because of valuations. We've seen all that we've seen those valuations come down. We've seen those expectations come down. So now those growth stocks are in a much better position going forward as they report earnings that are in line with more realistic expectations. They're going to start per potentially start performing better. >> Okay. So um uh very helpful. Um I guess back on the the general S&P chart with the that wedge and you don't necessarily have to bring it up unless it's easy to do so. Um, tell me, are there key indicators that you're going to look at to determine the question, you know, is this a is this something that's been consolidating that it's now all of a sudden about to break out higher? Um, or is this a year that's going to look more like 2022 where there was a prolonged u topping process going in from the previous year and then things started to break down. Um so first of all yeah you know what we're looking for is we're looking for major moving averages. So so for instance let's just go back to last March right so this is the decline in last March and April over the whole liberation day issue. >> Yeah. So we had a very similar kind of consolidation process going on in you know kind of December, January, February, March and we were warning back then that 3 to 5% correction not out of the question at all and you know we were just kind of waiting for that to happen and so you started having this correctional process and then you started and this is we we started reducing exposure in really kind of late late March early April we started kind of cutting uh Sorry, early March, mid-Marchch started cutting exposure because we started getting these moving averages to cross over and those were triggering more important sell signals that suggested the risk of the market. So, you know, yes, the market was down off its peaks before we started aggressively reducing exposure, but that's kind of part of the process. If you're going to invest, you got to accept some volatility along the way. Um, but that analysis kept us, you know, helped us avoid a big chunk of that decline. Now down here on April the 7th and 8th, we started adding exposure to the portfolio because we had not seen sentiment and um allocation levels at such low levels since the financial crisis. In fact, I even wrote I go you you have not seen sentiment this negative since the 2008 financial crisis and we're only down 19%. [laughter] Right? Um, and so that was really a good indication that it was time to get, you know, some money allocated back into the markets and that and that's worked fairly well since. Um, right now sentiment is still very bullish. Uh, positioning is still very bullish. We haven't broken that yet. So, if we start seeing these markets break down, start seeing the 20 cross the 50, that's going to we're going to start reducing exposure. Now, we're not going to go, you know, hugely negative and like short the markets or anything, but we're going to start reducing that exposure until we get a better feel for where the market. Are we going to have, you know, this type of event where the market corrects and then takes off running again, or is it something that leads into a broader, more extended, more protracted correction? That'll take some time to figure out. >> Okay. And then how about on the upside? Is it just, hey, if it gets back into that wedge and and moves higher, that's a breakout for you? or is there anything else you're looking at to say, "Hey, this is time to actually increase exposure." >> You have to break out to new. So, you'll need a breakout to new highs, a retracement back to the previous highs that holds, and then a move higher that then breaks out again. That second breakout's your go long. >> That that's your buy signal. Okay. Um All right. Thank you. That's very useful. Um All right. So, you I want to talk about two pieces you've written recently. Um, uh, one is market cycles driving 2026 action. Um, is there anything more to say about that piece that we haven't already said here yet? >> Well, no, that that that is actually talking more about the the 10-year cycles, uh, the presidential cycles. Um, we've got a midterm election year this year. So, >> which tend to be bad, right, for the markets. >> Well, they Yeah, they tend to be weaker years. Uh, not bad, right? But market >> Well, the weakest year of the four-year cycle. >> Yeah. Yes, there I don't want people to walk away from here going, "Land said the market's going to crash." >> Yeah. Okay. >> So, but no, um the the the midterm election years tend to be weaker return years than the other four years of the presidential cycle. The sixth year of a uh of a 10-year cycle also tends to be one of the weaker years in terms of returns. This was statistical basis. Um, >> okay. And sixyear meaning it's 2026 out of the decade of the 2020s. Right. >> Correct. >> And so, so that also suggests so, so again, these are just statistics that don't mean anything other than they're just statistics. It's just something to consider that when you start looking at the fact we've had three years in a row of near 20% returns. And which by the way, those cycles, you know, the first year of a pres presidential cycle tends to be one of the strongest years. the fifth year of a dennial cycle tends to be the strongest year of the decade. So those those kind of returns last year were all very much normal for what normally happens. But again, when you kind of backstack, you know, three years of of 20% returns, these cycles start to suggest that, you know, maybe we need to be, you know, kind of curb our enthusiasm, so to speak, for for 2026. And and look, I just think there's a lot of risk this year. I think this whole reflation narrative is at risk. If you take a look at the employment data, the ADP um Rilio um Labs, which does a employment type projection that tracks fairly closely the BLS employment report. We should get the we were supposed to get the BLS employment report on Friday. I think it's going to be released on Wednesday if I'm not mistaken. Um you know, that's going to probably be pretty weak, maybe 20, 30,000 jobs. It's very difficult for me to buy into this reflation narrative that this economy is going to go surging off to the moon with no inflation if you can't have employment growth. Wage growth is also declining across the decileis. That's also a problem for the reflation story. You look at a three and a half% savings rate. That's a problem for the reflation story. So there's some problems to that narrative this year that I think we need to be at least aware of. I'm not saying that we can't have reflation. I'm not saying it can't happen. Everything's awesome. But I just think there's more risk building up than not and I think that feeds into that whole kind of cycle story. Anyway, >> okay. Um, so I was going to go to reflation right after that. Um, so I want to note that uh I think on the day we're recording here, Lance, uh, we just got the latest University of Michigan consumer sentiment data. >> Mh. >> Which is actually becoming more positive. >> Yep. >> Um, and their inflation expectations um, have just hit a 13-month low. Um, so they're continuing to to decline there. So, uh, I mean, it's not these aren't happy days here here again, uh, sentiment levels, but they're definitely off of the lows and improving here. So, um, I hear your point about, you know, without the labor market really kicking into higher gear, maybe it'll be harder. Um, but, you know, on the flip side of that, if there's greater productivity coming from AI and technologies, you know, who knows? Um, wage growth might be slowing, but wages have been real. Uh, we we've had it's still positive real wage growth. Um, it is. >> So, people are slowly getting ahead. Right. >> Right. Right. But, but that rate of growth is declining and that's the more important factor. >> Okay. Rate of change. >> Yeah. I'm not declining. I'm I'm just saying that um, you know, I I wouldn't count the reflation trade out yet. Um, you necessarily are. Yeah. >> Right. No, but here's here's another reason that and again I'm not just I'm not counting out the reflation trade at all. Um but there's a lot of expectation built into the market already. I mean you take a look at basic materials, industrials, energy. They are extremely overbought. They've had huge runs in in the month of January, well outside their normal return ranges. And that's all based on that reflation narrative. So when when prices get too far ahead of the narrative, when the narrative becomes reality, whatever it is, it tends to be more disappointing. >> Right. Well, that's right. It's the silver news, right? Even if it happens, right? Expectations have just been built up too high. Right. >> And and that's and that's the point of my articles, which is, hey, let's just let's just kind of calm down here a bit. >> Okay. [laughter] Well, so let me let me let me ask you this. What is more your point here Lance which is that you're you're not sure the refl that that reflation is going to happen or is your your point more reflation may happen but the stock market may not have a party because of it >> my my point is twofold one that so the article is a bull bear case right so I'll lay out the bull case for inflation then I'll just y >> out the bare case as well >> my biggest question is this how can you have economic reflation without inflation this is the this is the big question because inflation is a function of economic activity and growth. You can't have and if you're having reflation which is this massive increase in economic activity that how are you going to get that without increasing wages and if you and if you don't increase wages which is a function of supply and demand in the economy you're not going to get inflation. So what they're saying is we can have growth but nobody gets a wage increase and you're have no inflation. That's not really reflation in in terms of of an environment that I think plays out well for earnings for companies, >> okay? >> Because again, remember earnings come from economic activity. And here's something I'm watching very closely right now. >> This is a chart of true flation. And so the white line is true inflation. And that's for the last month and a half that thing has dropped like a rock. >> The yellow line is CPI and and the green line is as personal consumption expenditures. These all and and what's important is these all have a very high correlation. They track very closely PC tracks with a lag and what this is suggest if if trueation is real right and they track like a million prices and and you know in real time. So, but but if trueation is saying what it's saying and it's actual, this reflation narrative has a problem because that's not reflation. That's disinflation. And if that's and if that's what's going on with with CPI, that means PCE is about to come down sharply with it. That's my that's my problem. >> But but reflation is growth without inflation, right? Doesn't mean you can't have disinflation in growth, right? >> Well, where's your growth coming from though again? So, what is economic growth? Economic growth is 70% that green line, right? 70% of economic growth is >> consumer expenditures. Y >> Okay. So, you mean to tell me that 15% of of the of GDP, which is business investments, so that's all the capex. >> So, that 15% is going to drive the entire economic growth of the country. and forget about the 70% weight that's sitting there in consumers that are just struggling to make ends meet. >> Yeah. I don't know. And as we've talked about, I think it has a lot to do with what the the top echelons do who's, you know, spending is a very outsized part of the consumer spending landscape. Um, and I just interviewed Daniel D. Martino Booth who thinks that there that top leg of the K is starting to weaken. So, look, >> yeah, there's this uh there was actually a very interesting let's see if I can find that chart real quick. There was interesting chart on that this morning as a matter of fact that shows that the bottom 50%'s now catching up to the top 50% in terms of spending. So in other words, Daniel's Daniel's right is that that top 50% is starting to slow down their consumption, which is potentially problematic. >> Well, I don't think it's potentially problematic. I think if that's true, [laughter] it for sure is problematic. >> Yeah. >> Um but we'll see. And and look, part part of this too is just me um keeping an eye out as I've watched, you know, closely what the administration is doing and saying um I think that they are probably very happy to make the trade-off lance of growth now uh for inflation later. >> Just in other words, you know, get us through the midterms and anything else we'll figure out after that. >> Yeah, I think that's I think that's dangerous, but yeah. >> Whoa. When's the last time uh you know politicians have done things that we liked? [laughter] >> Exactly. >> Yeah. Um okay, so um TBD, but obviously folks will be tracking this. Um and and again, just one of the things I want to echo um just in case it comes to pass, I want to make sure that folks can say they they were warned. Um I have no clue, you know, what the markets or the economy are going to do for sure this year, but I I I can see potential for uh economic growth coming in, you know, surprising to the upside. That does not mean that the markets necessarily have to do that. And I'm I'm increasingly open to a year where GDP grows, uh but the markets maybe close lower uh than they are right now. Not saying that's going to happen, but I'm just saying don't don't be shocked if that's what happens. Um, all right. >> Real quick, real quick before we jump. Here's that chart. I was >> find Yeah. Yeah. >> So, this is the what this chart shows. I can't really enlarge this, so I'm sorry. Um, uh, this is from the the daily shot, but this is showing. So, this is the global consumption spending percent of total. The poorest 50% are now exceeding the richest 1%. >> Okay. But this is global. This is not US specific. >> Not just US, right? This is global also. But but the whole point is even global global GDP still driven by consumption. >> Right. And so if the if the top 1% that's been driving 50% of the consumption is slowing down, that's a problem. >> Right. Right. Right. Well, so this is super interesting and I'm I'm going to I'm going to uh try to track down some slides uh or some charts of what's going on in the US. um because that seems to be a little bit at odds from the the data that I've seen in the US which shows the top 10% usually is the chart I've seen that their their half has been growing and I just wonder if that's because the US is a little bit different from the rest of the world or if there's a different explanation. Um, okay. So, you know, part of that too is is, you know, there the world is gentrifying, right? You know, we we are pulling more people out of poverty over the past, you know, couple of decades. More people have been getting pulled out of poverty. U not necessarily living lavish Kardashian lifestyles, but, you know, going from, you know, living in a mud hut to, you know, a place with a tin roof and you've got a, you know, scooter to get around and stuff like that. Um, so I can see that lifting the bottom 50% materially over time. >> Yeah. >> But anyways, we'll see. Like I said, I'll go try to track that data down. Um, all right, Lance, I want to get your opinion on another interesting concept uh that that was raised on thoughtful money this week. >> So, you're familiar with Mike Green's giant mindless robot, right? The the the passive bid, right? The the passive capital flows that just come in. They're they're price blind. They just buy the markets every month. um had David Haye on and he was he's a big fan of Mike Greens totally gets the giant mindless robot. He's just saying I actually think there's maybe a bigger risk out there than the giant mindless robot going into reverse. um which is uh foreign passive or sorry foreign capital you know for past number of years foreign capital has flooded into the US markets right the US market makes up a greater share of the total global market cap than it ever has before um we're now starting to see signs that that capital might be starting to leave right we're starting we're we're seeing um foreign markets have outperformed the US market last year, continuing, I think, to do so this year. Um, [clears throat] you're you're you're also getting um I know you would say this normally doesn't matter, and I would agree with you normally, which is that um a lot of other countries aren't super psyched about the US flexing its power. And you know, we we we've seen things like you've scoffed at, right, the the Danish uh pension fund or whatever it was, saying, "Okay, we're going to take our money out of the US market." And I generally agree with you that that those types of threats are generally empty because I think capital will go where it's treated best. >> But if all of a sudden you can get a better return in your domestic market or a foreign market outside the US and you're not so happy about the US, all of a sudden the economics and your philosophies are starting to align. And you're starting to see in some countries, Lance, David was saying in uh South Korea that they're actually having like a repatriation campaigns where they're saying, "Hey, look, if you bring your capital back here, we won't tax your gains." So all of a sudden, there's a real, you know, compelling carrot to consider doing this. So, you know, David was just saying, hey, if you look at kind of the scales of the scale of it all, if foreign capital starts to start fleeing the US markets, you know, at a high enough volume in the next couple years, that could be a bid uh or a reverse bid that could could do potentially even more damage than the giant mindless robot going into reverse. Curious to hear your thoughts on that. >> If it was only true, then that would be a really interesting story. >> Okay. [laughter] So, but no, foreign assets are still flowing heavily into the US dollar and you know just in a variety of assets and look what's what's been what's been one of the best performing asset classes over the last few months that everybody's been raving about. >> Gold, right? >> I was going to say gold, but I thought you was a trick question. Okay. >> Yep. Trades US dollars. So, every time you buy gold, this is the whole problem with the whole fiat currency. I want to get out of the dollar buy gold. You're not out of the dollar. You're just buying dollars. And because gold trades in dollars, silver trades in dollars, uh commodities trade in dollars, treasury bonds trade in dollars. So it's just a function of where you're moving reserve currencies. And so yeah, I mean, if if a c if a country says, you know, look, I'll give you I'll you bring your money back and I'll wave all your taxes on your gains, you bet your bottom dollar, I'm going to move that money back right now. I'm gonna get all my gains for free. I'm gonna turn right around and re reinvest back into the US dollar because that's where the money that's where money flows are going. Where's economic growth in the world? Is it in Europe? Nope, it's in the US. Where is economic prosperity? Is it in Europe? Nope, it's in the US. Where is AI development happening? Is it in Europe? Nope, it's in the US. So, if you're a if you're a large cap manager or or or just a money manager anywhere in the world, where are you going to invest? You you know, yeah, there's you can certainly put some money in China. No problem with that. Those assets are doing well. Sure, I'm going to have some assets in Europe, absolutely. But at the end of the day, if I've got to have exposure to the dollar for reserve assets or whatever it is, or if I'm if I'm managing currencies on international trade, I've got to have exposure to the dollar, I'm going to buy dollar assets. >> Okay. So, so that that part's not going to change. But, but and I what I'm taking from you is, hey, I'm not worried about this, at least not until I see real signs that it's going on. Um but just just you know let's say that Bloom starts coming off the AI trade in some sort of serious way right um and let's say that you know continued uh uh need interest in commodities right well there's lots of countries out there that that produce these these commodities >> um that that actually have been doing quite well recently so South America you know etc. And when I buy commodities contracts, how do I trade those? >> Sure. Well, if you're buying it on a US exchange, yeah, you they're traded in dollars. >> They all they all trade in dollars. So, when I'm buying futures, if I'm if I'm writing contract, look, there's three types of speculators in the market, right? There's there's commercial hedgers. So, if I'm if I'm new mining and I'm mining copper, I'm going to lock in my copper prices by writing contracts. That's a very small fraction of the futures market. Then you have the retail speculator in the market which is a very small fraction of the retail speculation in the markets. The rest of the the rest of the commodities markets driven by speculators. Wall Street, hedge funds, pension funds, you know, massive commodity traders. That all trades in dollars. So again, it's f these narrative. This is the whole point. These narratives are great. They're great for spreading fear mongering and all that type of stuff and oh my gosh, the world's going to crash. That's fine. These narratives are okay. But pay attention to where the dollars trade. Because the this narrative that money is going to go flying out of the US for one reason the other, it's just not true because you're still just the predominant dollar currency reserve status in the entire world. So >> let me ask you this. You're making your point clear and I'm I'm not going to fight it. Um but >> capital flows, right? >> Sure does. Absolutely. >> Capital flows into the US. Good for US stocks. >> Capital flows out of the US. Not all the capital, but capital flows out of the US. That's not stocks. Right. >> Right. Right. And that happens all the time. If we have really weak economic growth and Europe is stronger economic growth, capital is going to lead the US to go to stronger economic growth, right? So no doubt about that. And that happens all the time throughout history. When you start taking a look at economic growth rates in 2026, 2027, 2028 for Europe, it's 1%. >> Yeah. No, it agree. It doesn't look good in Europe. So, let's do this. Just to cut to the chase, I I'd like to reach out to David and who's the nicest guy in the world, unlike you, uh, and say, "Hey, David, you ask him if he'd be willing to come on and have a 10, 15 minute conversation with you about this." >> Absolutely. No, I'm not. And I'm not disagreeing with him. Right. Capital flows particularly when it comes into the ETF market are extremely important because again what's the the one question we have always had is what breaks the passive flow because again just every month people are just sticking money into ETFs it just keeps and 40 cents of those go into the the mega cap stocks. So, you've got to have something that all of a sudden reverses that trade and something if something happened in the US as an example that caused all of a sudden everybody else in the rest of the world says I don't want my money in the US anymore. I want it back in I'm going to shift all my money over to the yuan, right? Or I'm going to pull all my money back into Europe. that would be very bad for the US market because all those flows would come out of ETFs simultaneously and then that would just cause every every other asset's got to get sold off with it. So he's absolutely right that that would be very problematic. There's just no evidence that that is occurring as of now. >> As of now. Yeah. And and just two things. Um as I see it, there are there are two risks and they can happen at the same time, right? So a lot of like what Mike Green talks about with the robot tends to be very domestically focused. So in Mike's mind, the top candidate for for sending domestic passive capital flows to flatline or go into reverse would be like a lot of uh a spike in unemployment. Right. A lot lot less people being employed and therefore less capital needing to be reinvested. Right. >> Right. And that would reflect right back into your economic growth like we're talking about. >> Right. So, so and and that would you know the markets would definitely react very negatively to that and then as you said and then foreign c foreigners could then pull their capital out in addition to that oh gosh your markets are getting beat up I'm taking my capital you know home right >> but those are two different things so you could still have the giant mindless robot doing its thing and foreign capital could decide to pull itself out as well they they don't have to be uh interdependent although they probably would be. Um, so anyways, uh, let me let me reach out to David and just I know you're not saying this about him. Um, >> no, and I'm not dis I'm not disagreeing with him. I'm just saying that there's no evidence of >> you're not seeing signs of it. I think he is seeing preliminary signs that make him concerned that it could happen. And I'd like to hear you guys sort of talk about that. But all I want to say is I know David very well and and this audience is too. He's not like a fear merchant. He's not trying to freak people out. I think he I think he has a good faith effort concern here and I would love to see you two guys explore it together and if you find things to push back on awesome. If he finds ways that you haven't been looking at to change your mind, awesome. We'll see what happens. >> Sounds good. >> Yeah. Yeah. Yeah. No problem. Yeah. >> All right. Good. All right. >> Like I said, I don't I don't disagree with him at all. I mean, this is going to be one of those conversations where we're both going to nod at each other. >> No. No. You're saying you would say, "Hey, if if it happened, I'd agree with you, David. I'm just not seeing signs it's going to happen anytime soon. And that's what we can have the discussion about. Um, all right. So, one last question before we get to your trades and then we'll do a rant to wrap it up. Um, you know, increasingly folks that I'm interviewing, Lance, are bringing up concerns about the credit markets and in particular private credit. um you know and they're they're whether it's things like uh the Black Rockck you know writing down 19% of its um BDC funds um or you know struggles at what is it blue? Um so I'm just curious what are you seeing in the credit markets right now and what level of worry if any at all do you have? Well, we just go back to looking at credit spreads um in general, which right now they're just, you know, yes, we've seen credit spreads rise here a little bit in some areas of the market, but nothing dramatic. And, you know, again, if we start seeing a sharp increase in those credit spreads, we'll become a whole lot more concerned. But we have a lot of little one-off events right now. Certainly concerning. But this is my whole problem with private equity, private credit. You know, when you invest in a private credit fund, as an example, they just mark to what they think when when you get your report each quarter, they say this is then and they go this is what the fund is worth. That has not been marked to market. That is just what they assume >> their value is. And so when something like this happens and there's some there's, you know, a concern over, you know, some type of, you know, credit default, whatever it is, then all of a sudden they have to start writing that down. So all of a sudden you get this write down in the value. It was like, "Well, that probably should have been written down a year ago or six months ago at least." >> Here's the question. Do they have to? I mean, >> no. And and why would I if if if I'm a private So, let's say you and I start a private credit fund, right? And so, we raise $100 with our private credit fund because we're really bad at this. So, we have a $100 private credit fund. Now, are we going to go issue out our next quarter that the fund is only worth $98? >> No. And that's what I'm saying. Like, what you said if something comes out, they have to mark it down. Do they even have to then? >> No, they don't. They That's This is what happens a lot of times that these these these values are what they assume. There was a a a private equity fund that was and this was about six months ago and they had everything marked up great. Everything was wonderful and then they got acquired and when they got acquired they revalued all the assets and those assets were about 50% of the value. >> Yeah. >> That's the problem. There's no visibility in this. And this is why for God's sake, can we please have some regulatory oversight and not put these things inside of 401k plans? This >> or pensions. This is a huge pension issue, >> right? These needs to be as far away from those as possible. >> But, you know, but just overall, right, you know, when you're buying credit, you buy credit in companies that you can evaluate. And you know, for instance, Oracle has I'm going to just pick on a couple of companies, right? real quick because they've been in the headlines. So, Oracle has been doing a lot of debt deals, right? Lots of concern over Oracle. Oracle has a debt to equity ratio of four, right? That's pretty high for a company. Now, can they service that debt? Absolutely. They're probably, you know, you know, with a rating probably double B, triple B, somewhere in there. And but they can service their debt. So, but there are certainly concerns when you got debt to equity of four times. That's a concern. Go look at go look at Meta. their debt to equity ratio is >> 0.19 >> with [clears throat] massive revenue flows. They could they could pay off all their debt tomorrow and it wouldn't even impact their free cash flow. So, you know, when we're buying credit inside of our portfolios, and we we buy the actual bonds um for our clients, we're we're doing that work, right? We're looking at the the credit quality of the company, their debt to equity ratios, their fundamentals, their free cash flow, those type of things. And then also comparing their yield vers versus the treasury. So if if if I'm not I've got to if I'm going to take the credit risk of buying an Apple bond for an example, then I got to look at Apple and say what what do they look like financially? Are they a good risk? But then also part of it is like if I'm getting 4.4% 4% on an Apple bond versus 4.2% on a 10-year Treasury. Why take the credit risk? Right? I don't need to take the credit risk. I'll just buy the Treasury instead, >> right? >> So, but this is the important part about managing a portfolio is. But, you know, just from a market perspective though, now if we're worried about the markets, then pay attention to credit spreads. Credit spreads tell you everything you need to know. And right now you look across the the the spectrum of B, single B, double B, triple B, single A, double A, triple A, those spreads are compressed at very very low levels and and yes, they've they've ticked up slightly, but not anything significant enough to cause concern. Okay, I don't put words in your mouth, but would it be fair to say that you are watching the news and maybe feeling a little tightness in a little corner of your gut, but you're not going to worry about it or act on it until you start to see credit spreads move? >> I I don't I'm not worried about it right now because again, from the portfolio management standpoint, we don't have any of that risk. >> Yeah. Yeah. I I get it. I know you're not buying that stuff, but I'm just talking from a market standpoint. >> From a and from a market >> market integrity standpoint. >> Right. Right. Right. So, from a market perspective, yes, we're watching those credit spreads, but they haven't ticked up enough to really say we've got to be, you know, we need to take some action. >> Yeah, totally get that. I was just I was just trying to get a sense. Are you are you like I watch there's a little fire behind this smoke, but I'm not going to I don't know for sure. So, until credit spreads start moving, I'm not going to worry too much about it. >> Yeah, it it's more of that. It's just we're watching it very closely and seeing if the story develops. Right. Okay. This is >> this is the the early headline. um which is great. Again, we kind of go back to just, you know, headlines and narratives, those type of things. These are great headlines and narratives. Um gets lots of clicks and views and gets people really excited, but we need to see more consistency to seeing, you know, interest rates rise across the whole spectrum, starting to see potential a pick up in defaults, you know, those type of things. And we're just not seeing that yet. >> Yep. Got it. Got it. Um so, you and I have talked about buy now pay later um in the past, and I think we both think it's you know, the dumbest idea ever. In other words, it's it's just something that we have high confidence is going to come back to bite the issuers and the credit markets, right? Um, do you have a maybe not quite as extreme, but do you do you have a do you think it's more probable than not, you know, in in the future we're going to look back and be like, yeah, we to let this private credit market grow as large and fast as it did with no regulatory oversight was probably not a good idea. >> Yeah, of course. I mean, we go through this all the time and this goes back to private credit earlier. we've got all this money chasing private credit, buy now pay later, all this. Whenever that happens, these remember these people have to allocate that capital. And so when I have a bunch of capital being thrown at me that I have to allocate, that means I start doing worse and worse deals, right? It's like that's not a great deal, but I'll fund it anyway just because I got to get the money off my books. I got to get it invested otherwise I have to give the money back. So, you know, so yes, definitely at some point down the road we're going to look back and go, "Well, yeah, that was obvious. that was all going to blow up at some point just because of the function dynamics of how it works over time. And this is this goes back to why we should not put in 41k plans etc. because >> y >> that you know now you're just giving Wall Street another place to offload the worst deals. >> Y [laughter] >> and that's in your retirement plan. So no, just say no. >> All right, but let me put my lance hat on and say this is a lot like stock valuations. Um, while we can kind of have concerns about the probability of what's going to happen in the future, we don't have a sense of the timing. So, this is not a reason to say, "Oh my god, I got to sell everything because the credit market's about to implode under private credit." Um, we just don't know when this is going to happen. But, but to Lance's point, credit spreads will be a really good early indicator that there's trouble in the credit market. >> Right. Exactly. Yeah. [snorts] Okay. >> And just real quick, this is why on there, I'll just share this with you. On Simplevisor, we actually track uh credit spreads every day. So, this is this is, you know, charts of credit spreads. So, this is the AAA historical spread of 20 years. Uh we look at double A. And you're going to see the same thing in these charts on the far right hand side. These are at the lowest levels they've been in like 20 years. >> Yeah. >> There's D triple B. Here's single B. Here's Right. And here's C. This is absolute junk, right? So, yeah, >> you know, you just cannot get more comp over 20 years. These are about the lowest levels they've been. So when we start seeing these things tick up, you know, like we saw here in 171 18, you know, back in, you know, 2007, 2000. I mean, this is the stuff you're looking for or these upticks to tell you there's trouble in paradise. >> Yeah, Lance, this may be a a conversation for a different day when we have more time. We're not near the end, but why [laughter] why are credit spreads the lowest they've ever been? I don't think that this is necessarily the safest, most tranquil period we've ever had in US markets. Although I don't know if you disagree with that, let me know. But what I guess I guess my question is is there something that is increasingly different about the markets that maybe suppresses credit spreads in a way they weren't suppressed earlier? >> Absolutely. 15 years of bailing everybody out. I mean, okay, >> for 15 years, every time something blew up, >> we would, you know, the Federal Reserve or somebody would step in and bail it out. I mean, look at what we did in 2020. The Federal Reserve >> stepped in with Black Rockck and bailed out junk bond ETFs, >> right? So, didn't want to have those companies blow up and go out of business. So, we we basically suppressed the yields in junk bonds during 2020 to keep those companies in business. And so now that we we've taught markets and this is why you see so much speculation in the markets. You see again, you know, it's a shame because I've been, like I said, I've been watching my X feed over the last couple of days and just the number of people that have blown, you know, blown up their entire portfolio because they were leveraged long four times, you know, silver and other direction just completely wipes you out, >> you know. You know, and it's funny because when we talk about it, we say, "Don't do this." They go, "Oh, you're a boomer. You don't understand. this time is different. You know, yeah, I've only seen this happen out multiple times over time. It always ends the same. >> But we've now taught everybody that there no there is no risk of taking risk. And this is why when you take why not buy an 8% C-rated bond, there's no risk in doing that. I can get 8% if I buy a C-rated bond, I can get 8% of my money and as long as they get bailed out, I'm I'm in good shape. So, so is it is it fair to say then that while they're still a very important indicator, an early indicator that credit spreads may not be as reliable as they were in the past, that maybe they might be a little bit slower to move to danger than they were because you have to convince everybody who's just assuming there's always going to be an immediate bailout. >> I don't I don't know the answer to that to be honest with you. My suspicion is is that when it breaks, it all breaks at once and it moves very fast. Okay. All right. Well, >> then the Fed steps in and bails everything out again. >> Right. Right. I don't neither of us is expecting a different playbook. >> Exact. Exactly. I I mean, you know, but the answer I I don't know how it's going to move, but my suspicion is is that when it moves, it moves quick. >> Okay. All right. Uh trades. We'll get to our rant and and with the rant, I ask a very important existential question. Very curious to hear your answer to. Um but trades, what trades have you guys made? tra only trades this week were we did so we launched early this year the factor rotation model which which switches from value to growth y >> and then from growth back to value and so when we launch that portfolio >> sorry sorry to interrupt but before you go is it just growth to value or is it it's switching out of whatever is up in the high right end quadrant to what's in the lower end quadrant >> no no so the way the factor rotation model works is it looks at the value index versus the growth index Okay. >> And we have about 18 different metrics that determine when that rotation is changing. So in other words, growth stocks are going to outperform value or value is going to outperform growth. When the model changes, it moves from 80% of one to 80% of the other. So there's always 20% like for instance right now it uh as of as of last week we launched it um sorry let me rephrase that. When we launched this portfolio back in January, it was 80% value 20% growth. So it owned the palunteers and any bitties but very very small weights. Now as of this week and particularly as of Tuesday that those 18 indicators have now all switched suggesting that value is now ready to start rotating back into growth which we're actually seeing today in the markets. So that portfolio switched from 80% value to 20% value and from 20% growth to 80% growth. So now it's weighted on the on the growth side of the component. And what those indicators are telling us is that that we now should see here over the next few months that we should see growth potentially outperform value. Now these rotations, now here's the important thing about this. >> These rotations can last anywhere from 23 days to 435 days. >> Okay? >> So it, you know, we might be in growth for two weeks, we might be in growth for two years, right? It just just depends on where the signals work >> on what the indicators tell you. Okay. And is it is it only 8020 or 2080? In other words, you don't go 50/50 or 40 60 along the way. >> The way the model we back tested this model for like 25 years. And so, you know, the way it works is it's 20. It's it's one or the other. Now, we're going to launch another version of this potentially we're working on right now that will actually include um fixed income and cash as part of those switches. So, it could actually then go from 80% value to 20% growth. and 40% cash or whatever. So, we're we're working on that modeling now. >> Okay. So, it'll breathe two ways. Value and and growth and it'll breathe in or out of the market. >> Correct. Correct. >> Okay. Um All right. So, sorry. You were talking about trades. So, that that's what now gone live or what's what's the news around? >> Oh, yeah. No, no, no. We launched that portfolio back in January. On January the 1st, we launched that portfolio. It's it's a live model. I I funded it with 100,000 cash and then it's been trading live since then. Um, and so on Tuesday we did that switch. So we had like 60 trades. It all occurred one day. >> Okay, guys. So the new the news is the model flipped. >> The model flipped. Yes. But outside of that, we didn't make any other changes. >> Okay, great. All right. Um All right. Well, look um now let's get to the uh the rant. I'm working I'm working up to a very important question. Um but I'm going to start with um first a little celebration. So, Lance, yesterday, uh, as you probably know, you know, I work out and been I've been chasing a a four plate deadlift. Um, so four plates on each side of the bar. Uh, that's 405 lbs. Um, I've been, you know, for a while now on the hexar, uh, for deadlifts. Anyways, I I I finally lifted uh 405. I'm putting up a quick video of it here. >> Um, and I was going to make this rant about goals, but I'm I'm not actually. Um, I'm going to make it more. >> That's a good That's a good That's a good goal. >> Thank you. Um, [snorts] yeah, it took I mean I' I've literally had the desire to lift four plates for I don't know over a decade uh or whatever. It's very cool to have finally hit it. Um, but uh going to make the rant about um getting comfortable with discomfort um even extreme discomfort um because that's really what progress is a result of, right? to be able to lift those four plates. I had a lot of time in the gym, you know, struggling to push myself to to to always try to get a little bit stronger, right? Um and so, uh I mean, Lance, you've been a gym guy, right? You know, the whole no pain, no gain, right? Um you you you don't get where you want to go in life without having to push yourself to get there. And a huge part of that is just really understanding that pain, as long as you're not injuring yourself, right? um that that pain >> is is the price of progress, right? Um and that pain is something that can be endured, right? Um and uh you know, there's the old saying, whatever doesn't kill you makes you stronger. Um but anyways, uh I want to I want to encapsulate this in a little story. So, when I was in college, uh I had uh uh a period where I was getting strep throat an awful lot. And so, um, I I, uh, I think it was right at the end of the summer, I had strep throat. I went back to college. Uh, that year, uh, there was like a an outing, you know, out in the wilderness. It was like a 4-day outing. And so, I I was just finishing whatever antibiotic they gave me for the uh, the strep and went out on this this camping trip and finished it, but it it wasn't enough to kill the strep. So, when I was out there in the woods, it came back. Uh, and I was, you know, away from hospitals and doctors or whatnot. So, by the time I got back from this camping trip, I just had this raging case of strep. Couldn't open my mouth. You know, it was like having to talk through gritted teeth. And, uh, when I get back, they they, you know, went to the doctor. He said, "Oh my god, you you got to go to the hospital and have them take care of this." So, went down to the hospital there in Providence. And, um, uh, the doctor said, "Oh my god, this is pretty bad." Um, and he looked in the mouth and he said, "God, you know, you you've got a huge infection inside your mouth. It's not just in your tonsils or in your throat. It's all over your mouth and I'm going to have to lance it. I'm going to have to literally get in there and just squeeze all the pus and everything out of there." >> Ouch. >> He said, "The problem is is um like it's all in the roof of your mouth, right?" which is basically just bone pallet and then just a whole bunch of Sorry for the graphic details, folks, but a whole bunch of pus underneath it. He said, "There's nothing for me to to put an anesthetic in there." So, he said, "Dude, you're going to have to just white knuckle this. Um, I'm going to I'm going to get a scalpel in the back of your mouth, cut the roof of your mouth, and then just push all this gunk out of you." >> Oh, Jesus. >> So, you know, I'm sitting there as he's doing it, and Lance, this is like the most pain I'd ever experienced. And and I have to just take it. like I have to keep my mouth open and let him get this let him do the work he's he's got to do in there. And I remember my brain just trying to claw its way out of my ears and escape. [laughter] It was it was like an out-of- body experience. But what I took from that was oh my god like that was a maximum on the pain scale and you know I survived and just FYI folks I ended up having a tonslectomy and fortunately since then really haven't gotten strapped again. Um, but anytime that I had to deal with with something that was very physically, you know, uncomfortable, I could always compare it to that and say, "Well, okay, it's not nearly as bad as what that thing was, right?" And it's helped. It really has helped me get through an awful lot of stuff. Like the other time in the gym, like I'm tired or this hurts or whatever, but like, "Okay, it's not as bad as that dude with the scalpel in up in my mouth there." Um, so, [clears throat] uh, so first off, you know, I I think the ability to get comfortable with discomfort and realize, you know, as long as I'm not actually breaking bones here or or doing real damage, like pain is just something that will go away eventually and I can, you know, I can either soldier through it to get to a greater goal or if something is happening to me that I don't like, I'm not going to let it like you, I'm not going to fall to pieces because of it because I know that if I just endure through it, it'll be in past and I can get on with my life. So, I'll take a beat here. There's more to this, but I want to take a beat here and just let you respond to Lance because I think you've had a life where you've had a relationship with pain like this, too, where you've you've found that, hey, if I if I can just get through it, it filters out a lot of people who can't. And it's a it's a big, like I said, almost sort of a superpower. >> Well, no, this is this is, you know, for so first of all, when I was training in martial arts, I had this Korean instructor. He used to train the rock army um back in the day and he was brutal and you know he would you know while we're practicing he'd walk around with this big bamboo cane and he would whack us on the shins constantly just to toughen the shins up and we had to and he just there was a lot of things we did that were extremely painful but it was to strengthen the bones and and really just build that mental that kind of mental toughness because once you get in a ring >> you know you've got to be able to endure the pain of the fight right this is and this is you know the one thing that it's always interesting. I see people, you know, they're like practicing self-defense and so they'll go to a self-defense class like, "Oh, I took self-defense." That all goes right out the window as soon as you get smacked. >> A thousand% a thousand%. >> And you know, Mike Tyson says, like, you know, best leg plan goes to hell as soon as you get a punch in the nose. And so, you have to learn, you know, kind of what that, you know, how to endure that pain so you can stay on whatever plan is. you know, for for for for people, right, and for individuals. You know, we talk about this a lot. And and one of the most frustrating things for me right now is I I see all these emails from the younger generation, the Gen Z's and the millennials, and they're like, "Life is so unfair. This is unfair. That's unfair. You know, home ownership is unfair. This is and and like, hey, I get it. I I completely understand that. But you have a choice." And I in fact I just I'm writing an ebook for for this right now. I'll have this ebook out hopefully in the next couple of weeks, but it's called the 10 immutable laws of money. And all these challenges are pain and they're painful. And you have a choice. You can either blame everybody else for why you're in your predicament and allow the pain to overtake you, right? Just I'm qu I I don't want the pain, so I'm just going to quit. I'm just going to just not do this. Or you can take the other route which is to endure the pain and do what's necessary to achieve those goals. And this is what the 10 immutable laws of money are about is just going through these things that you have to start thinking about sacrificing and enduring and doing these type of things to really build wealth over time. And there's nothing stopping you from being successful, achieving your financial goals, achieving your business success. But what happens for most people, and I can tell you this from personal experience, I've had businesses I've started that have failed, flat on my butt, had to start all over again. And where normal people would quit, I just had this key. I was like, "Okay, well, it happened. Here we go again." And and and did it over again. And those setbacks are always painful. They hurt a lot. They're very dis They're very disjointing. But if you can get through that, A, you learn a lesson. Okay, I'm not going to do that again. Um, and B, I now know what to be on the watch for for next time to make sure that doesn't happen to me again. And, and so this is so the endur to your point and I think it's a very valid point. It's a very good point is that no matter what your situation is, a don't adopt a victim attitude. That's the wor that that is basically just giving up. As soon as you start blaming other people for your problems and not accepting responsibility, you've already given up. It's guaranteed failure. Yeah. >> Yeah. And and so the best thing to do is even, you know, if Adam slightes me, right, and or does something to me and and he hurts me somehow, I'm not going to blame Adam for that. I'm going to blame myself for letting Adam do that to me for whatever it is. So, in other words, except >> I know you, Lance, you're going to do that, but after you punch me in the nose first. But >> Exactly. But, you know, my my point though is is that it's really easy to blame other people for our situation. But if you will step back and just say accept responsibility for it, say, "Okay, this happened. I'm probably at fault for letting this happen, right? Even though they did it to me, I let them do this to me." It allows you mentally to accept your situation and to now look forward and say, "Okay, I got myself into this mess. How I'm going to get myself out?" Like my daughter always says, the best rescue is a self- rescue. >> Smart daughter. Um, so great, Lance. Agree with everything you said. Um, folks, I did not know about this top 10 rules of wealth or whatever that Lance was writing here, so I promise this wasn't an intentional softball that I tossed to Lance here. >> Um, so yeah, so you know, my advice to folks, which I think is yours too, Lance, which is get comfortable with discomfort because so many benefits come from being able to persevere, right? And it's funny like when you think about our, you know, our ances our caveman ancestors, like their life was like 99% discomfort all the time. I mean, they would look at what people are bitching about today and be like, are you kidding me? Right. You know, there's nothing waiting to eat you right now. [laughter] >> Exactly. I'm going to go to work today. Don't get eaten. >> Yeah. So, okay. So, that's the benefits of of persevering through through discomfort. Um, there are there's another edge to that sword, though. Um and that is uh I have definitely while I think this is a strength of mine uh it has also been a weakness of mine where I have stayed in situations for far too long. I have endured things for way longer than I should. Lance is raising his hand as I'm saying this. Um we all do. >> Yeah. Whether it was relationships before I found my wife, you know, whether it was um jobs that I had, business partnerships that that I should have left long before. Um uh or just like I mean like like uh injuries. I've I've had things where you know it just hurt and I just dealt with it and then you know like a year or two later when I still had this chronic pain I was like why have I not gone to the doctor yet and just gotten this addressed right Lance again is grimacing here. Um, so, uh, the the important thing here is you you need to in addition to the the physical part and the mental part of like, okay, I just got to grit through the discomfort, you also have to have some some active thinking to say, okay, but is this worth it? Like, is is is this is this discomfort that's getting me towards a goal? Is this just the hard slog towards a better place? Or is this just wasted effort? Right? Am I just grinding gears that aren't going to get me anywhere good? Right? So, it is very important as you're dealing with discomfort to make the distinction, right? And obviously persevere on the stuff that's going to get you somewhere good and and bail on the stuff that's not going to help you out in the long run. >> Okay. So, Lance, now that I've got both sides of this, here's the question I've been been uh leading up to. So, when I travel, when I fly, I'm pretty much because I'm just such a frugal bastard, um, I'm pretty much the guy who goes to Expedia, finds the cheapest ticket of where he wants to go and buys that ticket. And a lot of the time I end up with where where when I was coming back from your conference at Houston where I'm stuck in the back of the plane in the middle seat, right? Um, and the way I think about it is, um, look, back of the plane gets to the destination the same time the front of the plane does. It's just a couple of hours, right? I'd much rather just get the cheapest ticket and just, you know, go to my happy place in my brain and gut through it all and then have more money to either compound and grow in the future or to spend at wherever I'm going to. Right? So, I I posted a video or a picture of me in in my uncomfortable seat when I was flying back from Houston and got a lot of sympathy from a lot of nice people, but I had a surprisingly high number of people say, "What are you doing?" Like, I never fly, coach. Like, like flying is the one thing I refuse to be really inconvenienced on, especially if I'm a taller person or whatever and I at least pay for premium economy, but no, I when I fly, I fly business or I fly, you know, more than that if I can afford it. And um I realized that there really is sort of two, you know, there two different types of people when it comes to traveling. One like me who just says, "Look, it's just time in a bus and I'm going to get the cheapest way to get to where I'm going to go and save the difference." And other people who say, "Man, life's too short and uh this is one of the things that I just always make sure I'm not sacrificing." So I'm curious, do you have a a strong opinion on this very clearly important existential debate? >> So [laughter] this is so important. Uh this is exa I first of all it is very important that when you're in the back of the plane you are the last person to the scene of the crash. >> Okay. Now, having said that, uh, no, I I I'm the same as you. >> It's dark. [laughter] >> When I when I book flights, I book the economy class. You know, I'm back there with you. Cuz because again, this is one of the 10 immutable laws of money, which is don't let leakage interfere in your savings and investing goals. And this is how we start to justify things, right? It's like, oh, well, you know, I'm going to cut over here. I'm going to cut out my coffee, but I'm going to spend an extra $2,000 on this plane ticket because I want to fly first class, whatever it is. That's fine. That's your choice. But again, I'm I'm very much in your camp that it's just a flight. It's two hours of like when I go to New York for interviews or whatever. I it's three hours of my flight. I get I get in the back. I just sit where I sit. I, you know, you know, write write notes for my speech or whatever I'm doing or, you know, I'm working on a blog post, you know, it's it's three hours of my life and it's it's not worth spending that money that I could be investing and making a lot more money with. So, so yeah, I'm I'm absolutely in your camp because normally I find that people that are splurging on, you know, in, you know, airline seats, etc., they're also splurging in a lot of areas of other life going well you only live once you always do these type of things and that's once you start adding all those things up that's what impairs you from reaching your financial goals >> so I I totally agree and particularly if you're younger you know absolutely I think everybody should be taking our way at Lance I'm not necessarily here to say that my way is the the best way and I'm sure my wife you know doesn't necessarily see it as as well as I do I'm sure she'd love some upgrades in there at some point in time And I also realized too part of this too um is influenced by miles and because I don't use credit cards I don't get miles and I know I'm giving up you know that those perks and so you you can get better seating without necessarily spending extra cash to do it. Um, but I also like part of me also does get the like, all right guys, I hear you. But like if if let's say somebody here is in their 60s and you know they're they're pretty good at you know they're on track for their life goals. You know, for them they just might say like, "Hey, Lance, the money is a means to an end, right?" And and and for me to be able to travel and not feel like I'm just crammed in as a piece of cargo. That actually is something that brings me a lot of joy in life. And you know, a business class ticket is not going to kill me if I have one or two of those a year. It's not going to derail me. So, like, I kind of get that, too. Um, >> if you are if you are financially squared away, then yeah, go for it. you know, fly private. You know what? You know, at some point I'm going to sell my business and forget commercial. I'm gonna fly private because I'll be able to afford it at that point. So, yeah. I mean, if you get to the point to where, and this goes with all things, right? This goes with, you know, everything you're doing. You know, I don't pay for my kids college. I make them do that. So, a lot of parents go, they go, "Yeah, but I want to pay for my kids school. I feel like it's my responsibility." Cool. On you. That's that's that's your choice. However, if you pay for your kids' college and you wind up using, you know, not reaching your retirement goals because you spent all the money paying for the kids' college, great. You're now a burden on your kids. You have to go live with your kids in retirement. That's not really what you want. So, I don't care what you spend your money on. And yes, if you've done a great job of saving and investing and doing all those type of things and you're now in a very good position financially and you can go drop 15 grand for a business class ticket, go for it, right? Awesome. That's what you that's what you did all this work for. Right? This is what we're talking about earlier about, you know, reaching goals and doing those type of things. But the effort, you know, to reach that financial goal was flying economy, right? That's the pain, right? I'm going to I'm going to subject myself to this pain so I can save and invest and reach my goal. And once I reach that goal, guess what? Now I can I can fly first class if I want. I can, you know, buy fast cars, fancy cars, you know, I can do all those things because now it doesn't affect my end goal because I've reached my goal. The problem most of us is is we're flying business class when we're still trying to save and we're buying, you know, G Wagons and, you know, $80,000 cars because we want to look cool and a car just gets us from point A to point B. >> Yeah. Yeah. You're flying business class on an economy life uh economy income. >> Yeah. >> Exactly. >> Yeah. All right. So, >> it's just choice. It's just choice, Adam. At the end of the day, it's just choices and how you how you live your life and how you do things totally up to you. But that's the whole premise behind this ebook on 10 immutable laws of money is just helping you think through the choices you make. >> Okay. Well, look, when the book is available, obviously, Lance, we'll make ample time in whatever week's recap that it comes out in where you can, you know, tell people about the key tenants, but also where to go get it. Y >> um and I'm also thinking a fun discussion to have with you at some point too would be um uh you know enjoying the journey along the way. So, I mean, you and I are a bit older, you know, we're doing fairly well. Um, but like like with my wife and I right now, like we are really trying to be more planful about creating experiences, you know, during the week to say, "Okay, like let's get out and let's like we just took a crosscountry ski lesson the other day or, you know, we're going to go for a hike with the dogs or whatever." Right? We're trying to create this space because otherwise, you know, I'm still so locked in >> on working pretty much all the time uh to not just run Thoughtful Money, which takes an awful lot of bandwidth for a oneman show, but also to try to grow it too, right? So, um you know, if left to my own devices without a nice little reminder or me boxing the time off on my calendar, I would probably just work all the time, right? and and that's that that's me taking the pain to get to a better place down the road. >> But there's no guarantees, right? I might get hit by the bus tomorrow and I want to make sure that I say, "Okay, look, I I lived enough of my life along the way to have enjoyed it even if you know my my time here is cut short." So I I I do want to talk to you at some point about you know how do you find the right balance? How do you juggle between the two? But I think that's a longer discussion than we have. >> Yeah. But no, just and just real quick just to your point absolutely agree. Um, and I tell you what, and I talked about this before with you, is that, you know, I I am just like you. I am nose to the grindstoneone. Seven days a week. I work every single day of the week on my business. And that's the way it's been for 25 years. And when my wife got cancer, that changed all that >> because she also works. She has very good jobs. She does very well at her job. She works all the time. She travels a lot. But that really brought into focus this, you know, importance to your point of spending more quality time together, enjoying the life that we have, doing things together. So, we're making a lot of plans now now that she's through chemo and thank God it all went fantastic. She's no evidence of disease at this point. So, the outlook couldn't be better. >> But now we can get back to living our lives. But again, we don't know how much, you know, what that brought into focus was is that we never know how much time we have with each other. And so we need to value that time. We always take it for granted. Oh yeah, you know, honey, you'll be here tomorrow, right? You know, it'll be fine. But when something like that happens, you know, you really realize that time is very valuable. So, you know, to your point, it is very important to certainly live and and do things and do experiences that are important, but that doesn't mean you have to spend a lot of money. Again, this is one of the things in the teneemeable laws of money is that there's a lot of things you can do in life that are absolutely free. And the time and and what's important is not what you're doing. It's that you're spending time with the people you love. >> Exactly. Yeah. A thousand% agree. And in fact, when you think back, I mean, just think back on your most memorable fond experiences in life. Lance, I'll bet very few of them you were spending a ton of money doing and it was just, hey, I was out with soand so and we had a really great time. Right. >> One one of just a funny just quick story. One of the fondest memories of all my kids and and and me and my wife as a whole is that she went down to Walgreens and bought like 12 cans of that Barbasol shaving cream [laughter] >> and the kids had a shaving cream paving >> cream pipe in the front yard. And that one memory that cost us maybe 12 bucks at the time or something. I mean, it was meaningless. >> But they had so much fun because they were covered head to toe in shaving cream, right? And I've got pictures of it and all this stuff, but that is the one memory whenever they talk about being kids, they all remember that very vividly. And that was again, it was it costs nothing for a memory that they still remember today. >> Yeah. Yeah. Um s such a great point. Okay. Um well, look, let's end on this. Um so again, and we don't know how much time we have uh on this planet. Um but but there are elements of that timeline that are in our control. Uh, I just got my, you know, we talked about the concier doctors. I think both of us now use, but mine's been going through a checklist. I just did the last big thing, which was got my colonoscopy. Um, and again, back to kind of like soldiering through discomfort. Yeah. Especially the prep wasn't super fun, but you know, it was nothing com compared to the big challenges of life. It was absolutely nothing. And now having the peace of mind that things are generally pretty darn good, they got they found one polip. I'm going to wait, you know, they're biop they biopsied it, so I'm waiting for the results, but nobody seems worried at all. Um, but but more importantly beyond that, everything looks just fine. Um, and just, you know, concluding with an important PSA, you know, invest in your health. A lot of the stuff that that I've talked about on that list, I think the heart uh CAT scan cost me 120 bucks. Um, I think the, uh, I don't think I had to pay necessarily anything for this colonoscopy. I think it was totally covered, uh, by just my general healthcare. Um, so, you know, a lot of these very important diagnostic things that are very important to prevent against things getting worse down the road, they don't cost that much money. Uh, and they can make a really big difference in increasing the amount of time you have left here on this earth to enjoy the things that you want to do. So, folks, if you haven't gotten, you know, a colonoscopy and you're in the right target age, go ask your doctor about it. Um, all right, my friend Lance. Um, it's always great. Uh, folks, if you think, uh, one of the absolute best things you can do to enjoy the time you have left on this earth is to continue to watch Lance Roberts on this channel with me week after week, please let them know that by hitting the like button and then clicking on the subscribe button below if you haven't already, as well as that little bell icon right next to it. Um, if you would like to get some help from a professional financial adviser for positioning your wealth for the type of year that may lie ahead here, as Lance and I have discussed, um, I highly recommend you get that advice from a good professional financial adviser. Uh, if you don't have one that's already advising you, um, feel free to talk to one of the ones that thoughtful money endorses. To do that, just fill out the very short form at thoughtfulmoney.com. The firms will be in touch with you right away. Uh, also lastly, can't forget to mention this. Thoughtful Money's spring online conference uh is coming up. Uh, it's going to be next month on Saturday, March 21st. Uh, I had meant to print out the list of the speakers. I'm sorry folks, I keep forgetting to do that, but it is our by far our our best list of speakers ever. Very quickly, off the top of my head, Lacy Hunt is doing his regular uh graduate level keynote to kick it off. Uh we'll then have um Luke Roman. Uh we'll have Brent Johnson. Um we'll have uh Ed Dow for the first time. We'll have Matt Taibbei here for the first time. We'll have uh Judy Shelton. We'll have Daniel D. Martino Booth. We'll have Michael How talking about liquidity. We'll have Darius Dale. Uh we'll have uh Rick Rule going through his top uh resource stock picks. Uh we'll have Melody Wright talking about housing. Uh David Haye will be talking about international investing and income investing. Uh I think there's one or two more that I might not be remembering right now, but you can get all the details about the conference and uh buy your ticket over at thoughtfulmoney.com/conference. But folks, you can tell that is a incredible lineup of speakers. It's going to be over 10 hours of content. If you can't watch live on Saturday, March 21st, don't worry. Everybody who signs up for the conference will also get a replay video of the full event, all the all the presentations and all the live Q&A. And we're pretty good about getting that replay to you within just a couple hours after the event's conclusion. Um, let's see what else. Um, well, I guess that's it. So, folks, anyways, make sure you sign up for that. Oh, that's right. Make sure you sign up for it now so you can lock in the lowest early bird price that we're offering. And if you are a subs a premium subscriber to our Substack, uh, check your email. I've sent you a code. you can get an use that code to get an additional $50 off of that lowest early bird price. And you know, if you're not a premium subscriber to the newsletter yet, you might want to think about becoming one because it's only, I think, 19 bucks a month. So, if you want to game the system and just subscribe for a month, pay your 19 bucks to do that to get the $50 off the conference, well, you can pocket the difference and I'm totally happy with that. All right, my friend Lance, I'll let you have the last word here as we wrap up. >> Nope, that's pretty much it. So, we'll uh see how this uh week plays out and we'll be back here next week. >> All right, buddy. Thanks so much again. So, just so phenomenal to hear things are going so well for your wife health-wise. Appreciate you being here on this channel with me week in and week out and look forward to seeing you next week. >> Absolutely. Look forward to it. Thank you. >> All right, and everybody else, thanks so much for watching.