Wall Street Is Now Dumping It's Junk On The Regular Investor | Lance Roberts

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We've got a market where Wall Street is bringing product to market as fast as they can. They're dumping all the crap that they don't want on their books onto the retail investors. The retail investors are going, "Hey, give me more." And they're like, "Great. I can finally get this off my books." And this is bonanza time for Wall Street. They're loving this. They're cleaning up their books. They're getting rid of all these these crappy companies, you know, into the public market, you know, privately, etc. getting them sold off. But that is very late stage activity. So whether it's six months from now or a year from now, we're probably going to have another 2022 type environment. Um I would expect that, but it doesn't mean we can't make some money between now and then. I just think you need to be aware of the if you're piling onto a lot of risk and really not paying attention to it. I think that's where your risk is. Welcome to Thoughtful Money. Hey, I'm Alpha Money founder and your host, Adam Tagert, welcoming you back at the end of the week for yet another weekly market recap with my good friend, the Polya-ish portfolio manager, Lance Roberts. Yes. Yes, I am. I am here. Actually, I don't think polyianaish is a is an adjective that really applies to you, Lance, but I was just trying to think of a word for the markets these days. Uh, they continue to be very happy hanging out here. uh at or quite near all-time highs. Uh everybody thinks earnings are going to be great going forward. Uh market seems not worried at all about uh inflation. Um about the slowing economic growth that you've talked about. Uh you I think still have some concerns about correction risk. Market doesn't seem to have any. Um so uh so let's start there. I guess, you know, I I titled one of our thumbnails for for for it was like two or three weeks ago for one of these weekly recaps, as echoes of 1999 because you were talking about the the return of just highlevel uh degrees of speculation in the market, which is still there. Um, the more I kind of look at this market, the more I'm kind of feeling like I'm hearing echoes of late 2021. Some of that, too. I mean definitely the meme stock chase is back. Um Bitcoin cryptocurrencies that whole chase is back. You know there's a there's a very very high correlation between cryptocurrency or Bitcoin in particular um and the NASDAQ. So you know they just kind of move lock step whenever there's a lot of exuberance in the markets. Bitcoin's doing well. Um so yeah you know then that was very similar to what we saw in 19 uh sorry in 2021 along with you know we had spa issuances back then. We've had a lot of IPOs this year already and they've come out of the gate at least. Coreweave as a good example did great and then it lost a third of its value this past week. So, you know, there's a lot of that going on and just the and again there's nothing wrong with it. You know, don't you know, just because you got speculation in the market doesn't mean, oh my gosh, the world's going to end and we're going to have this, you know, you know, massive crash in the markets. It just says that it does suggest though that there's decent risk that you could have a decent correction at some point. You know, 5 10 15% would not be abnormal at all to work off some of that speculation. The other thing that that worries me though uh is is just younger people that are investing in the markets because they're just taking on a tremendous amount of risk. I don't think they really understand the kind of risks are taking that that they are taking on with their money. They think that pretty much it just goes up. It's it's fine. Just buy everything. it just keeps going up. I'm going to keep making money. I'm gonna get rich. Um I saw John John Penn and I talked about a study that was out recently and they were talking about Jenzers and their goal is to basically be retired by the age of 35. And you know they don't think they should have to work longer than that. And so they asked him was like how are you going to do that? Well, not through a traditional job. I'm not going to get there. I'm going have to do that through investing in the markets. And that's a function of of this kind of speculative greed that we've built into the markets that typically historically speaking anyway has not worked out well. Well, not only is that specula speculative thinking, but I'm just sure that's bad math. I mean, how much do you have as as a Gen Zer, how much do you have to make on what you're ever whatever you're able to put into the a meme stock, whatever this point? They they can't have that much more than a couple thousand, maybe a couple tens of thousands of dollars to get to retirement status by 35. What does your annual return have to be? It's got to be bonkers. Well, it's got to be huge. And look, there's a bunch of Tik Tockers out there um you know, that are doing the same thing. There's this uh one this one uh young lady uh she's in her early 30s and her whole shtick she's got like two million followers too on on TikTok, but her whole shtick is that she was $40,000 in debt and in her early 20s and now she's got a seven figure balance sheet. Well, that's great, but did you And then so she's tellingbody, "Oh, just, you know, put $25 a month into your you want to be like me, put $25,000 $25 a month into your Roth and just invested in SP index, you'll be fine." And it's like the that math ain't math, right? You know, you don't the markets did not create that kind of return to take you $40,000 out of debt to a seven a seven figure balance sheet by just investing in stocks. You did something else. you know, you bought and sold real estate or you got an inheritance or something, but she doesn't, you know, ever expose that. Or you've got the ad revenue from two million followers on social media. Well, there's that, too. And then, but it's not just her. I'm I'm not picking on her in particular. There's a lot of them like her that are saying exact same thing. Oh, we were in debt. Now we're, you know, we're multi-millionaires because, you know, we did this. And it sounds great. That's, you know, that's very lucrative. um and and it's like, oh well, if I just do the same thing, I'm going to get the same results. And that's not the case um in a lot of cases. And and generally, as we've talked about before, you know, risk-taking is not about how much money you make, it's about how much money you lose when you're wrong. And I just think there's an increasing level of potential wrongness that will be coming up um with a lot of these bets that, you know, people are making on on companies. You know, for instance, there was a company just came out, just IPOed called FIG. It's it's it's, you know, it's an interesting company. They use AI to connect platforms and do a lot of different things, but the valuations on this company are astronomical. And I think we talked about this last week uh maybe or the week before, the moes for these companies are very narrow. There's not they don't have Nvidia has a moat. Nvidia's got a freaking ocean around their company that companies are going to have a hard time invading that space. They'll eventually do that through and competition will come and Nvidia will lose market share eventually to other they have a very big moat that has that that protects that company. Right now a lot of these companies coming to market they don't have that mode. It's just simply I was like we've got AI that's connecting these platforms. Well that's an easy thing for somebody else to replicate. And again, then you start getting into market share and and revenue growth and these type of things and in a lot of cases just does not justify multi-billion dollar valuations on these companies and that is similar to kind of what we saw during this the 2021 during that whole spa meme craze, right? And um talking about spaxs and companies like this. So there was a company that I think initially uh went public or was going to go public via a spa a couple years ago. um that went private again, then just went public again called Bullish, which is great marketing, especially for a market environment like now. And it's a crypto exchange, and they IPOed a couple of days ago, and I don't know where it closed for the day, but at one point during the day, it was up 200%. Yeah. Right. Um and uh it was um I think when I saw it, it had already come down to about a 100% up for the day, but even then it was still over a10 billion company, right? And to your point, Lance, you know, these companies are getting these sort of instant uh multi-billion dollar valuations, multi-billion dollar pops in their valuation, and they don't necessarily have tremendous competitive advantage, right? Yeah. So, this company IPO, so this company came out at like I don't know what the actual value of the stock was, but it opened at $90 a share, went to $118, and it's at $70 today. Okay. And I think I think when it was filing to go public, it was at like 35 bucks a share or something like that, right? But but you know, there's a really important lesson about this. Um you take a look at FIG. Same way um a lot of these companies, you know, you've got to remember if you don't understand IPOs, IPOs are simply where private equity has invested in the company and they're now selling their shares to the market and they're selling them at a premium. there. IPOs are not a good deal for you in general because they're selling the stock at the highest premium level they can get because they want to make money on their investment. That's why they did the private side of the deal. Now they're making it public so you can have this great company. Um, but you got to remember that's trading at a massive premium when it comes out. You're always better off to wait and let these companies kind of go through their first year and and let themselves sort themselves out. A lot of companies have, you know, IPOs fail miserably um over time and we've seen this repeatedly with Snowflake and others where they lost a tremendous amount of value before they eventually kind of found their their fair value and they kind of started to grow into earnings. So, you're generally better off, you know, you may get lucky once in a while with an IPO, but you're generally better off just letting IPOs kind of pass you by and come back and look at them in six months or a year when kind of that those insiders have a chance to sell all their stock. the, you know, the the equity companies are out. They've gotten their money and now you're just kind of trading on on market evaluation, right? But, uh, a hot IPO market is a sign of froth, right? Where the Wall Street realizes, as we've always talked about, you know, Wall Street's job is to sell you stuff. Uh, when the fish are biting, they're like, great, let's bring all these private companies to market here because everybody's, you know, chomping at the bit to get them. And again, this is sort of why it feels to me like uh 2021 here. And again, that just sort of I went back to that adjective polyanish is I just remember having a lot of these same conversations in 2021. And the market just didn't care. You and I did. Yeah. But and the market just didn't care. It was like, sure, spacks sound like they might be risky, but I need more of them, right? Just, hey, the the the things are going up and I want to be on the uptrend. Right. No, that's right. So, let me um let me let me dial through a couple of different things. Um f f first off um I I do want to um just say Lance, you know, you're not the only one out there warning people about um just slowing their role in terms of the enthusiasm here. You know again you're not predicting dire straits for the markets ahead but you have been saying look you know things are stretched and the uh you know the the risk of a of a correction you know five 7 10% whatever maybe even 15 you know not not abnormal not to be highly normal not to be dismissed so um I just released an interview yesterday with Brent Johnson who basically said the exact same thing and said look not calling for a crash by any stretch but he said um for all the reasons we've talked about um the way he puts it is the table is set for a correction. You know, will it happen? Who knows? When will it happen? Who knows? He says, "I I will be very surprised if we don't have it by the end of September." So, he's he's seeing enough data to kind of put his neck out there and say, "Hey, I think it's more likely than not we're going to get a correction before the end of September or by the end of September." Um so, anyways, I'm just saying, Lance, you got some company out here on this this branch you're on. Great. There's two of us. Um the rest Yeah, there's a few more. Um, but anyways, you just wrote a a piece. I just want to know if you want to say anything about it. Um, about speculation here, right? I think it was titled Memetock Trading and Livermore's approach to speculation, referring to Jesse Livermore. No, that's really just kind of a I wrote that piece last Monday and just talking a I've actually got a followup on that coming out tomorrow. Sorry, on Monday. Um but you know if you are investing in these stocks which is fine again you know we own Palunteer we own you know Nvidia we own these companies and there's nothing wrong with owning higher risk companies that's how you're going to make money and if you take a look at the market that's what's driving the markets right now so you have to participate in those stocks if you want to make money you can go sit in the bunker over here somewhere and not invest in those because you say oh they're too overvalued etc you can do that too, but you're missing out potentially on opportunity to grow your wealth. So, all this does is for if you're, you know, trading Bitcoin or you're trading um, you know, uh, specul, you know, meme stocks, speculative stocks, it's okay to do that. Jesse Livermore was a specul he was a speculator in the financial markets. Just have some guidelines and and the real key is for this article is it lays out basically about 10 different guidelines to follow when managing your own money. So it just kind of gives you some rules of the road in terms of you know how to position the portfolio and things to think about um in terms of the risk management part of it because again it's fine this is these stocks are going to make us money here near term but there is going to and good core is a good example of this right it was a hot IPO everybody wanted to be in core weave and then they announced earnings which were disaster and the stock's down 33% in the week so if you weren't managing that risk you've lost a good chunk of your money over the course of the past week. And that's that's what eventually happens to a lot of these companies. And for a lot of retail investors that have a lot of exposure to these stocks, this will be the same, you know, when this works out. This will be very much the same as 2022. Market was down about 20% in 2022. the market because your big mega caps held up well in 2022, but underneath the surface, there was a lot of devastation and retail investors lost 35 to 50%. During that same period, the market only lost 20. Why? Because they were long a lot of these really speculative meme names. You know, a good example of that, of course, is Kathy Wood with her ARC Investment uh ETF got absolutely decimated in 2022, but she would remember she was the rock star in 2020 2021. Everybody wanted to be in Kathy Wood's fund. She raised billions of dollars. A lot of retail investors piled into that fund because Kathy Wood was the rock star. She had it all figured out and then they got absolutely crushed in that fund in 2022. And most of them didn't sell. They just wrote it all the way down. So again, what these rules are for, you know, kind of Jesse Liver, they're just kind of an extrapolation. They're not his rules specifically, but based on how he managed money, these 10 kind of guidelines follow the kind of his principles. Okay. Um, couple things. One, so let's say we have this correction that you and Brent think we may have. Let's say it's 10%. Right? Um, it seems like you're you're expecting that, okay, you know, market on average corrects by 10%. But these high-f flyier meme stocks, highly speculative stuff could be down 30, 35, 40%. Yeah. Very easily. Um, because because you got to remember, so we've you and I have talked about this a good bit before and we've talked about it recently. You've got to remember the market is so when we talk about the market, right? We're talking about the S&P or the NASDAQ, doesn't matter which market you want to talk about. 10 stocks basically control that index. So if and this is what we saw in 2022 as well. Apple was down a little bit in 2022. Microsoft was down, Google was down, they were down, you know, 10, 15, 20%, Amazon, those were down 10, 15, 20% in in in those in that market. because they didn't go down as much as the market. They they held the market up. They were all they were doing okay while the rest of this market was going on. But underneath that surface, you get down to that bottom, you know, quadrant of the S&P 500, these more highly speculative names, nonprofitable names, they were companies like Roku, etc. They were just getting absolutely, they were down 80, 90%. So, this is why we talk about asset allocation and when you look at your portfolio if you're trying and we we actually did a whole show this week um on the real investment show talking about concentration in portfolios and a lot of investors are getting too concentrated into one area of the market which leaves them vulnerable because money never leaves the market. It just changes where it's going. In fact, you've just seen this over the last couple of days in particular. Tech has actually been under pressure for the last two days, but health care, which was the least favored sector for like a month and a half, has been going gang busters. So, money left tech and where'd it go? It went to the most unloved sector of the market, healthcare. You know, now how long that last? Who knows? But we also saw that go from tech. We saw that go into small and midcap stocks, too. We small midcaps have had a decent week. So, um, money rotates in the market. So if you're very concentrated in the hot area of the market, but you don't have any exposure to the lower beta safer sectors of the market, when that money does rotate, you miss the rotation. So you get you have no ballast in your portfolio. So your portfolio will drop a lot sharper. And this is what we saw in 2022. And this is likely what we're going to see again. Market may be down 10, but your portfolio is about 2530. And you're like, what the hell just happened? And everybody's like, hey, it's fine. just 10% correction. What are you talking about? But yeah, but no, my portfolio is like, well, that's because you took on way too much risk. And we see that and and that's not an abnormality. We see that all the time. Oh, right. Right. But again, like we saw it in 2022, we're seeing that potential risk here again for absolutely more people than probably should be exposed like this. Right. So, I'm kind of getting back to the echoes of late 2021. Well, let me real quick before you leave this sec. I I posted this chart on Twitter this morning and I think this is the real this is the thing that I think most people are overlooking and you and I have talked about earnings and the fact that earnings expectations are just through the roof. Everybody's super polyianish. Yeah. Yeah. They are they they are very much too polyianish. Um I just need to make sure I uh share the right screen with you. One second. Okay, there we go. So I posted this chart this morning. Um, this is earnings. The blue line is earnings for technology stocks, for the tech sector. So, if you're looking at the S&P 500, this is all the stocks in the S&P 500 that make up the tech sector versus everybody else. What's important to to realize is that since 2021, there has been no earnings growth outside of technology. And so when we're basing for forward valuations on stocks and we're saying, "Oh, stock market's cheap based on forward earnings expectations. We're only trading at 20 times earnings or whatever it is." Well, that's all based on this expectation that technology is going to continue to generate this growth rate in earnings going forward. Now they very well they may very well do that but you don't have a that what what this tells you is is that we've basically got technology and the major financial banks generating 100% of the earnings growth for the S&P. Outside of that everybody's struggling and if everybody else is struggling that's what tells you about the real economy. The real economy is not doing that great outside of technology and the major Wall Street banks. So I, you, you know, I just think this is one of those things that that we're that a lot of market participants are overlooking. They're looking at the market going, "Oh, the economy is booming. We're doing fantastic. Everything is great. Buy more stocks because valuations are cheap relative to forward earnings." That's true as long as tech continues to to to do what they're doing. And that you know the question is can they continue to grow if the economy is slowing which we have clear evidence that today's retail sales report shows that CPI shows it the economy is clearly clearly slowing down can they keep can they keep generating this type of earnings growth in the future and it's just it's just something and again we saw this type we had the same if you kind of axed out that that last little leg up here you had a very similar chart pattern in earnings growth in 2020 and 2021 and then it peaked and rolled you know, that's probably going to happen again here at some point. Don't know what causes it, but you just can't grow earnings at this rate. It's just not sustainable. Yeah. Um, so a couple things about this chart. One is it really does explain why value stocks just haven't moved much in past years and it's because they haven't had a reason to. And we keep hoping value is going to come back, me included. Yeah. Yeah. But but like you would to do that to a certain extent it would need to show some earnings growth, right? like a reason to get back into the value stocks, right? But but that chart basically shows they're they're not really growing their earnings, right? Also also on the um uh the current rocket trajectory of of of earnings for technology, you know, how much of that is really by a capex investment boom, right? So, you know, it's people buying chips, building data centers, stuff like that. So you get the Nvidias and stuff who are the beneficiary of all that, but at some point that wave is going to to be over, right? Where it's like, hey, all right, we we we've bought all the infrastructure we need, you know, now it's time to actually hopefully get the return on it. Um, that's right. So you of course the million or the trillion dollar question is is when does that wave crest, right? I don't know but you know you are kind of looking at that as saying um not dissimilar to the spike that we saw in 2020 2021 which was largely just from all the freaking liquidity that was getting shoved into the system that peaked at some point and then that that we could see in the chart it ebbed there. So at some point this capital investment wave is going to peak out at some point. That's right. And again, when when that occurs, who knows? And and this is one of the problems with, you know, potential companies like Coreweave and others where they're getting chips kind of in advance of paying for them. It's like, okay, we'll give you the chips so you can build out your business and then you can pay us back kind of kind of pay us back later when you get your when you get your money going. You know, that's that's that's a a risk that we haven't seen before. We haven't I have I don't at least remember in my lifetime. We didn't do that during the com bubble. We weren't like loaning people you know fiber cables and stuff. Um so again that may you know there's there's that potential risk to a lot of this revenue and again when you start digging down the revenue of some of these companies how much of that is actual revenue versus promised revenue. Well I was going to ask when does that revenue get booked? So if if they give coreweee the chips are they booking the sales then on day one? Well, that's the qu remember that was Global Crossings issue back in 1999. They were booking a whole bunch of revenue that hadn't actually occurred yet. Yeah. It was all based on future revenue. And so when people started digging down their books, they're like, "Wait a second." You know, that's that's not what we thought. But yeah, I do think we're seeing some of that. And I haven't, you know, you know, I don't have the the I haven't done the forensic analysis yet to figure all that out, but I I'm absolutely sure there's some revenue getting booked that probably is either on the come or, you know, pulled forward by a large degree to meet earnings because again again accounting manipulation. Wall Street Journal did a whole article on this. CFOs. They they interviewed all these CFOs for companies and they said, you know, the the things like cookie jarring reserves and pulling forward future revenues and the these type of things, categorizing expenses, etc. That's all accounting manipulation and it's not illegal, right? It's not illegal though. It's not illegal, but it's accounting. They're manipulating the numbers. And so they as so the Wall Street Journal did this investigative report asked all these CEOs they said you know CFOs and said well how much of your earnings are manipulated they go oh about 10 to 15%. So that's not an insignificant number especially when you're talking about beating earnings by a penny or two. That manipulation that cookie jarring of reserves can make all the difference for an earnings beat which keeps the company going higher which then allows stock buybacks to to happen. In fact, I just posted an article this morning, Adam, on on uh at real at the realadvice.com and on our Substack at Lance Roberts talking about the July insider sales numbers. And that is proof positive that insider sales are what is driving buybacks. And then we had a very big surge in buybacks uh corporate buybacks in July. At the same time, you had record insider insider selling. So basically the company was buying back the sales from all these insiders and and funding their balance sheets. Um okay, you keep throwing additional interesting things to talk about. So I got a long list here. Um, so on that insider sales part, so um, you know, I've had guys like, um, Jesse Felder on who, you know, talks about how that has historically been one of the most important indicators is when the insider sales ratio, sales to buy ratio. Um, gets to an extreme. Um, and so at least you're saying the sales is increasing on the insider side of things. Um, I don't know what the current sale to buy ratio is, but I know the last time I talked to Jesse, it was near an all-time high. Um, so sometimes people can make the argument, hey, buybacks are really good because it says the company's got a lot of confidence in the company and they're they're driving the stock price up. But the flip side is is the insiders are getting out, right? So, um, where are you interpreting it at right now? Right. Well, no, that's the whole premise of the article is that everybody goes, "Oh, buyback's a return of capital to shareholders." It is not a return of capital to shareholders. And when when a company does a buyback, if you own Apple, did Apple send you a check in the mail? That answer is no. It wasn't return of capital because you didn't get anything from it. The only way you participate in a buyback is to sell your shares. Well, the only and and this is what that July data showed us, which is there's all these transactions inside the company that the company's buying those shares from. And the SEC did did this analysis. They did the investigation. This has been this is not just my opinion. And this is widely researched that the vast majority of buybacks are for the benefit of insiders to help manipulate earnings, make stock prices go higher so that insiders can cash out their options. That's that's why they're all that's why their executive compensation is tied to stockbased or stockbased compensation is because of that and that's where a lot of that insider buying occurs. And we're on rec we are on pace. We had we are running at the fastest pace on record this year for share buybacks. We'll exceed $1.1 trillion of share buybacks in 2025, largest on record. And that's also another big reason why stock prices are continuing to go up because you have an additional $1.1 trillion worth of buying in the markets helping lift these prices of stocks. So, you and I have ranted many times about buybacks, so I I will forego that this time. But I I will say when you look at the degree of speculation, you look at the um the high percentage of retail participation in what's going on right now and you see stats like this where you know um insiders are cashing out you know big time. It just really has a strong smell of, you know, latestage uh bull market, right? Where basically Wall Street is is trying to dump as much as it can at the the highest price it can to the the less sophisticated investor at this point. Well, this was exactly the article we wrote in November of 2021 and we said, "Hey, look, you know, you've to and it's exactly just kind of echoing your point, which is we've got a market where Wall Street is bringing product to market as fast as they can. They're dumping all the crap that they don't want on their books onto the retail investors. The retail investors are going, "Hey, give me more." And they're like, "Great. I can finally get this off my books." And this is bonanza time for Wall Street. They're loving this. They're cleaning up their books. They're getting rid of all these these crappy companies, you know, into the public market, you know, privately, etc., getting them sold off. But that is very late stage activity. Again, we wrote that same article in November of 2021. Of course, November 20 in 2022, just three months later, the market starts selling off. So, we're going to get to that same point whether it's this year or next year or the year after, who knows? Maybe this is more 20 early 2020, right? Post pandemic, just came out of the the pandemic crisis. you know, we just got through the whole tariff crisis, had the 20% sell-off. So, that 20% sell-off reverted a lot of that speculative activity, right? And so, now it's come roaring back, but you know, it's got a little bit of room to go here. So, whether it's 6 months from now or a year from now, we're probably going to have another 2022 type environment. Um, I would expect that, but it doesn't mean we can't make some money between now and then. I just think you need to be aware of the if you're piling onto a lot of risk and really not paying attention to it, I think that's where your risk is. Um, and I should say, you know, again, we we should be cautious in terms of how concerned we're we advise people to get here, but you know, Brent said, hey, look, if we get the correction that he's thinking of, and again, not crash, correction, he says he is, you know, fully expects to to then, you know, redeploy into that. Yep. Yeah. So, you know, to your point, he's not saying, "Hey, I think we're we're necessarily poised to go through a full 2022 of a year of just grinding downwards after this correction." Yeah. No. No. Look, and corrections are always buying opportunities. I mean, that's why, you know, you should see this is where I think a lot of the the media narratives are kind of go wrong, which is, hey, you know, markets are going to crash 50%, whatever. So, we scare the beevers out of people because it says, oh my gosh, you know, I don't want to lose all this money. Um but those are the opportunities and and this you know we should welcome these corrections in the market to put capital to work but unfortunately our psychology runs backwards right when markets are going down we don't want to buy anything right and when markets are all time highs we want to buy everything right so everybody wants to be in the markets right now this is when and again we've been we haven't done anything recently but this is why we were taking profits a couple weeks ago and stuff trimming back to exposures those type of things um because when markets are alltime highs that's when you want to be trimming back, reducing risk, rebalancing things. But that's where our greed's kicking. It's like, "Yeah, but I could get more." And then when markets are selling off, it's like that's when you should be buying hand over fist. But you can't get people to do that. Yeah. Um I'm going to tell a quick little story. Um and and I I I really want to be as respectful as I can in the story, but on my flight over to to Ireland, um I sat next to this very charming person. Um had a wonderful conversation. and when they found out what I did for a living, uh shared that um well, hey, I've I've recently gotten into crypto and I think that that's really what I'm looking to build my my um uh my wealth in going forward. And um you know, I bought some and it's done quite well. And so I'm feeling really positive about this. And um you know, the methodology I use is astrology and it's really showing me that this has got to last, right? And so you're holding your head there and you know I I I was just trying to say okay well interesting and look if you have a system that works for you it's not my my role to talk you out of it but you know there's a lot of speculation going on right now. Crypto is a very speculative asset. Astrology you know I it's not an empirical science so be a little cautious with it. Um, but it to me it just sort of had that, you know, zeitgeist of what you're talking about, Lance, where when when things start running, it starts sucking everybody into it, right? And humans are rationalizing beings, not rational beings. And so whatever discipline you want to bring in to to to justify why your investments's going up and and should go up in the future, you know, you can you get a lot of people who start bringing in a lot of a lot of thinking that might not really be based in reality, but it feels like it is because you bought it and the stock went up, right? Yep. And and look, you know, Bitcoin's a great example of this. I mean, it's, you know, it's done very well, but and every time it does well, you know, my my Twitter feed gets filled up with people with laser eyes and then, you know, it go it'll go through and it'll lose 30 40% of its value and then they all disappear, right? All the laser go away and then as soon as it rallies again, all the laser eyes are back. And, you know, look, you know, this asset, it's it's going up. It's doing great. It trades with the NASDAQ almost to a tea. I mean, it's it's the the it's spooky how close the correlation is to the NASDAQ, but you know, again, you got to and but again, if the if the NASDAQ corrects 20%. You know, Bitcoin's going to be down 50 and are you okay with that? Again, that's a buying opportunity for it when it does that correction, but are you going to be a buyer of it there? You know, because you just wrote it down 50% in its value that and that's why, you know, we talk about taking profits, rebalancing risk. you know, it's okay to sell some stuff and and realize some gains, but that's a very hard thing for people to do. Yeah. Well, again, that's sort of our job here on the channel, right? Is to tell people when the getting is too good to maybe slow their roll a little bit and when things look uh when things are on the downside, hey, maybe they don't look as d maybe they're not quite as dire as as they're looking right now and and don't get yourself totally out of the market. Um, you mentioned briefly that there has been at least a near-term beginning of a rotation into healthcare and you've done a good job over the past u number of months, Lance, you know, pointing to that as one of the the sectors as well as the energy sector that's really been lagging. Um, I'm just curious, did that rotation start before or concurrent with sort of the surprise news with Berkshire Hathaway that they were buying a stake in United Healthcare? No, it actually started uh about three days ago. Um so it started earlier this week and it was very quiet at the beginning. Um Eli Liy is a good example been had had fantastic earnings. Uh their earnings growth revenue projections are great. Um stock got hit by like 14% with their earnings when they did the earnings announcements because the study was they did a study they've got a new pill coming out for GOP1. I believe we you and I talked about this. Yeah. Yeah. So you don't have to inject yourself. You can take the pill. Just take the pill. So anyway, stock got really sold off on that news over that it was only people only lost 12% of their body weight, not 15, which is what Wall Street was expecting, which is kind of stupid because the question is did the pill work? Pill worked. So it's coming to market. Did people get thinner? Yeah. Yeah. So it's coming to market and that's going to give them a whole new source of revenue uh coming from that. Anyway, the that stock started bouncing earlier this week and along with Abby and some other big players in that healthc care space. Um we're also starting to see some stabilization of some of the the energy stocks as well. So So again, money flow's been quietly rotating over there. Um but yeah, that that certainly the the news that Bergkshire Hathway took a stake and United Healthcare certainly is helping the healthcare sector today in particular. Yeah, I mean there are things in in business, we talk about this all the time, right? like um uh a startup nobody will invest in until the first VC puts their money in and then everybody wants to to get into it, right? Um you know, investors are heard animals and um you know, if you're running a book um you don't want to be seen as taking uh you know uh too big of a risk that nobody else is taking. But hey, if Buffett just bought into this thing, I'm not going to get fired if I just follow Buffett into a trade, right? That's an easy trade to defend, right? How bad could it be? Let's not talk about accidental petroleum, but how bad could the trade be? Well, so I'm curious. Um, you know, we're going to get to your trades in a bit, but um, are you guys at RAA uh, making any changes to your portfolio yet in regards to these unloved uh, sectors now that they seem to be stabilizing a little bit? Well, that's what we're looking for right now. So, first of all, we already have positions in Eli Liy. have positions in app et which is why you never fully sell out of kind of core positions right you'll trim down but you'll never fully sell out and we had trimmed down on those positions uh back in April and so this actual kind of correctional process now is giving us an opportunity to look at those positions to add to them um and we'll and we'll probably do that but what I'd like to see is this little rally that it's having you know you can have this one thing about these markets these rotations have been very quick now the these rot these rot rotations used to take several months. Like you would migrate from tech to health care for several months and then healthcare would migrate back to tech for several months. Now these things are happening within a month or within weeks. And so I'd like to see this actually see Eli Liy kind of bottom here, build a base technically start to improve and then we'll add to that position because because again we already have posi already we already have a position. So it's not like I'm not in the stock. I'm just looking for the right opportunity where my riskreward really balances out and the the reward basis is very much in my favor now. I'm just trying to ensure that we haven't seen that we've actually seen the bottom of the decline. You know, you can go look at a stock like Novo Nordisk, which is their direct competitor. Let me see if I can just bring up a chart here real quick. So, this is a chart of Novo Nordisk. And this is this is a daily chart of this. And you know, this stock had a big decline and then it kind of based for a while and and kind of like, oh, okay, it looks like it's basing here and then it turns up. You get above the 50-day, you're like, okay, I get back into it and then bam, it just kills you again and then it does it again. It's like, okay, I can finally get back in and then bam, it kills you again. And this stock has now this stock is this chart right now is very deceiving. This is a monthly chart of Novodor Disk. it is back to where it was trading in before it even launched the GLP1 drugs back in 2022. So, you know, this has had a massive collapse in value um you know, based on what's going on with that company. We're actually kind of we're we're actually kind of looking at this company saying, "Hey, do we want to add a very small position of this ultimately to kind of balance out with Eli Liy?" Because they're both in the same space. uh they both deliver these GLP-p1 drugs which are you know the the growth is there. Um the the pill that Nova Nordisk is working on had a 15% weight loss versus Eli Liy's 12. Um but again you've got to get through this whole process of this decline. So you need to really give this thing some time to start basing. Now one thing we're starting to see though is we're seeing a lot of volume coming in where this these bottoms are kind of forming. So, we're eventually going to form a bottom here and deep deep oversold conditions. This will eventually be a good trade. May not be a good long-term investment initially, but it'll be a good trade just and and that's what we're trying to avoid with Eli Liy because they have, you know, they're in this kind of correctional process as well. And so, kind of working through that is is the one thing I kind of want to avoid is try to avoid some of that potential risk where all of a sudden, here's Eli Liy's chart. you know, they you see this nice rally they've had out to here was earnings. This was the disappointment on their drugs. Again, earnings and fundamentals are fantastic for this company. You take a look at their their earning their sales growth is booming. EPS growth is is booming. They're not buying back shares. So, this is all organic growth. They've got that's real EPS. Okay. Um so, you know, this company though has has had a huge run. It had this massive run in 2020 2020 uh 2023 2024. It's been consolidating that off. Pretty oversold here. But again, I think we get a decent bounce. You get above 800, I think you go back to alltime highs. But, you know, this is a very different looking chart than Nova Nordisk. And that's why and but we want to make sure we're not in the early stages of a Nova or Nordisk and this thing's going to keep going down. That's what we're trying to work through right now. Got it. Do me a favor. Just click the monthly chart there. I just want to compare it to the the Nova Nordisk one in my mind. No more Nord disk was all the way back down to here. Yeah. So for for Eli Liy to pull a Novo, it'd have to be down to $100 a share. Okay. And and not to rat hole on this, but I'm just curious what what did Novo sell off so tremendously? Well, they're kind of a onetrick pony. Um they're really focused on this whole GLP1 drug and and and so Eli Liy's drug GLP1 drug is doing a lot better, but Eli Liy has a lot of other drugs in the pipeline. So it's a it's a it's more mature company. Um, so I I think that and again I'm not in Nova Nordisk and so I haven't really done all the research into it. Um, I'm focused my research is focused on Eli Lilly and what they're doing. Um, but you know I do think that in Novo Nordisk's case if you take kind of even take a look at their fundamentals um you know this is a company that trades at a PEG ratio of one right now. So it's price to earnings growth and they're expected to grow earnings next year at about 9%. So they're trading at at a a price to growth of one right now. So fundamentally it has about a three and a half% dividend yield on it. So you know sales are growing, EPS is growing. There are buying back a few shares but not a tremendous amount. It's not like an Apple. Um so the fundamentals really for this company look very very well and you have to expect at some point you've worked yourself out of some of this position. But you know this this is the same thing we've seen with companies like CVS which is a great company fundamentally change trades at a very cheap valuation. The we were going back earlier about value stocks. These value stocks have not been working because all the focus is on technology and everybody's expecting these high rates of growth. You know here's United Healthcare. Um here's Warren Buffett's purchase right here. Y um you know I don't know if I don't know if UNH has worked out all of its bugs yet. It's got lots of problems. It's got lawsuits. It's got all other kinds of stuff going on with the insurance. Of course, there's risk from RFK Jr. Um, in terms of with him being Health and Human Services, what he might do in terms of, you know, Medicare, Medicaid, which UNH is is very dependent on, CVS is very dependent on Medicare, Medicaid. Any changes to insurance issues, etc. in the country from a policy standpoint, I'm not I'm not saying there's going to be. I'm just saying that's the risk that UNH is very exposed to. Fundamentally though, I mean, I can understand why why Warren Warren Buffett bought into this. I mean, he's very familiar with the insurance business. He knows that business very well. Um, it is a a getting to be a fairly cheap company at this standpoint, but I do think there's a lot of risk and and again, you know, I'm not knocking Warren Buffett, but at all and I never would because he's a genius and he's he's a great investor, but this is oxid accidental petroleum. He was buying accidental back over here. So, just because he's buying it doesn't mean that it's going to go that it's actually going to go up from here. His his time horizon is a hundred years. Yours is. So you need to make sure and keep those in balance. Yeah. And and last question on this then we'll move on on just on health care. Um you know you make money buying when there's blood in the streets and and then riding it back to when the sector's in favor. Um while there's lots of challenges especially right now with the the transition to make America healthy again and all that type of stuff. um uh you know the the sector's been beaten up as you've been saying for quarters now months or quarters um but also you you you know it's not going to go away right I mean it's we're going to need to have healthcare um and we have this aging population we've got this you know tsunami of boomers that are now getting into their late stages of later stages of life you know maybe latest stage of life um next decade plus um c can you make kind of a big macro argument that like, hey, if you've got a longtime viewpoint here, this may be a good time to add stuff to the portfolio that you're just going to hold on to for the next 10, 15 years. Well, it depends on the company, a right. So, that's got to be the the the you know, this is why fundamentals do matter and you need companies that are actually growing earnings. If you're going to hold something for 15 years, fundamentals matter a lot. So, it needs to have strong earnings growth, needs to have major market share, needs to have a moat, needs to have all those type of things, pay a dividend would be great. So, if you're going to hold it for 15 years and that's your horizon, that's awesome. And and over the last couple of weeks in the bull bear report, which is our weekly newsletter, um you know, we've been we identify what are the most oversold sectors of the markets and which ones are likely to catch rotation and healthcare was one of those. And we highlighted that one actually last week and this is this is healthcare. You can see it was way over here just a couple weeks ago. It's moving back up very nicely now. It was it was the most oversold sector. Now it's about halfway up. Um communications is now the most overbought with technology coming down a bit. Um but you know when you start drilling down into these uh you know into the healthc care stocks again this is why looking and you also have to understand when you do this to look at you know the the stocks that make up these indexes. And so when you talk about healthcare as a sector okay well who's in the health care sector well it's AB it's Abbott Laboratories it's Amgen Boston Scientific Intuitive Surgical Johnson Johnson and you know these companies have been you know Eli Liy was is still the most oversold out of this entire group. So if I'm going to buy healthcare I want to try to find the ones that have the best opportunity for a rotational trade. Thermoffisher Johnson Johnson very overbought very extended on an absolute and relative basis. they're over here and I've got Eli Liy and Boston Scientific sitting down over here. So, you know, that's where you kind of start looking through this rotation and trying to understand, okay, where are my opportunities? And then again, and then find those opportunities, but then do the fundamental research. So, if I, you know, this is where you you need to dig in and say, okay, well, what's going on with Eli Liy in terms of, you know, their their kind of, you know, future performance? What are their cash flows look like? What do what do these things look like in terms of are they growing their statements? Are they growing their income? And this is this is Eli Liy's revenue and green bars. I mean, it's just soaring through the roof. Stock prices come down a lot. But you look at the five-year analyzed growth rate on on for revenue for um Eli Liy, it's phenomenal. So, you know that it's just this. So, if I'm going to hold something for a long period of time, I want to make sure I've got the fundamental backing to own it. Yeah, good points. Hey, you're you're providing a great segue here to something important I wanted to talk about this week. Yep. Um so you're you're walking through the Simplevisor platform right now. Um you eat your own dog food, meaning this is what you use on a daily basis to analyze stocks in the markets, right? Uh as we talked about when when this new Simplevisor platform launched. Um, this is sort of like think of it as, you know, the affordable Bloomberg for the the the retail DIY investor, right? You don't have to pay 2,000 bucks a month for a Bloomberg terminal. Um, you can pay whatever. You can tell me, but it's a it's a non-existent fraction of that amount uh to subscribe to Simplevisor as a DIY investor and get access to all this stuff. Right. Right. Um, so now, um, I just want to help folks understand the spectrum of what RA has to offer. So there's to the DIY person, hey, you can use SimpleMiser and just be smarter in in how you understand the markets and make your investment decisions. On the other end of the spectrum is what I'm going to call full service, which is somebody that says, you know what, I don't want to be doing all this work myself. I've got a life. I've got a job I got to focus on. I'm gonna focus on making the money and and giving it to an adviser, but I want to leverage the adviser's expertise and have them build my portfolio strategy for me and execute on it. Right? So that's that's the full service side on the other end of the spectrum. Now to do that, you have to have a certain amount of assets, right? Below below a certain number of assets, you you don't really qualify for a a live advisor to work with you one- on-one. Um, and that's just the way the industry works here, right? So, if you have um if you're below that threshold, but you still would like a professional to manage your money, um, you have the ability now to to do what I call managed access. And you probably have a different name for it, Lance, where it's, hey, you can still put your money in RAA portfolios that are managed by the RAA team. you're just not going to get a lot of custom management of your particular um your capital because you don't have enough yet uh to kind of hit critical mass to have a dedicated um advisor. Um but it doesn't mean you're out of luck. You can still invest in RAAS's portfolios and you just basically made a lot of these portfolios available on the Simplevisor platform. Correct. Yeah, exactly. So like if you go to Simplevisor and you can actually do this um on our website too. So if you go to uh just to real investment advice, so this is our normal website and you click on the simple advisor tab at the top. Um this will actually link you to the actual page to where you can open your account online. Um as well as you know start you know going through kind of understanding the portfolios that are offered and well that's not cooperating. There we go. Uh so you can open your account and once your account's open use the same link to basically log into your portfolio but it kind of explains you know how it works. here's all the different portfolio models that are offered and so you can kind of start this process. But going back to to Simplevisor, um these are the portfolios and we we launched all these. So we launched these portfolios not this past Monday but Monday before. So these these portfolios have been live for about a week and uh two weeks now as of as of today. And so we've got we've got our standard models that we talk about a lot here on the show. So we've got the equity model 60/40 allocation but this has multiple varieties. So you have two two options when you go through the the open your account process. You can go through a risk profile questionnaire and you can do that risk profile questionnaire and it will basically say okay you're a 7030 allocation 8020 6040 40 60 whatever based on your answers or you can skip that entirely and just pick the model you want. But so we've got you know so in the equity portfolio there's 6040 7030 8020 and then in the other direction as well. Same thing for the ETF model um then the dividend focus uh dividend growth focused portfolio. Then we have about eight other models that are thematic in nature. So if you just say hey I want to I want some small midcap exposure. Well we've got a small midcap fund that or portfolio that was just built um you know as well. I want to be in AI. It was great. We got an AI portfolio. It's, you know, invested across the pl the kind of the spectrum of companies that are leading in the AI space. I want to be in Bitcoin. Great. No problem. 40% of that portfolio is in Bitcoin ETFs. So, you get the the Bitcoin movement plus you get stocks that are associated with that Bitcoin or that crypto type platform. So, and we've also got a a portfolio we launched just for people getting started. So, um you know, you got $10,000. I'm going to I want I want to stop here real quick. Let me I want to correct one thing you said. You said you don't qualify for full services. Qualify is a hard word because we want to help everybody and that's why we launch these models. We want to make sure that people have access to good portfolio management, good risk ma based management. The reason that like my firm as an example, we have a $500,000 minimum for managed accounts. So, if you want us to manage your money and give you all the financial planning, the estate planning, the insurance planning, all that type of stuff, and we cover it all. There's nothing that we don't do, but you need to have at least $500,000 to justify the fee because the fee that you're going to pay eats into your returns. And so if I have a $10,000 account and I'm paying 1% of my account to manage that, it's very tough to make it grow because the fee is eating up almost all your returns. If the market's up 5% for a year, you're giving 20% of your of of your growth away just in the fee. So, and then two, from a business perspective on my side, I've got to pay my advisors. And so, since we charge an asset fee, right, we charge 1% on the assets that we manage. Then, and I'm using round numbers just to make it easy, but um if we charge 1% on the assets that we manage, well, that generates revenue that I can then pay for my advisors, pay for my staff, pay for my rent, all those type of things. Well, in a $10,000 account, you can do the math on what 1% of $10,000 is. It doesn't pay for a lot, right? So, I lose money managing smaller accounts and what and that's why I would love to do it, but I've got to find I had to figure out a better way to do it where my overhead costs are very low where I can do an account like the accumulator model. If you're just getting started out, just want to get an investment, you know, into the markets. That portfolio is up 4% in the last last seven days. I can't figure out why, but it's just an S&P and NASDAQ and small caps and midcaps, right? But it's doing very well. Um, but you can put $10,000 into it. I've got very low overhead, you know, so you can you can get money invested, start contributing to that on a on a weekly basis or monthly basis and you can start building wealth, but it's a great starting point if you're just getting started or you want your kids to get started investing. It's a great place to get started. Um, you also need some money just to build an allocation, right? So when you start talking about stocks like you know Black Rockck which is in our equity model it's a thousand stock. So 1% if I want to buy 1% of my portfolio in Black Rockck it's going to cost me $1,000 right? So 100 So 1% of $100,000 is $1,000 in a $10,000 account. If I buy 1% of Black Rockck or I buy one share of Black Rockck in a $10,000 account it's 10% of my account. That's too much concentration risk. So prices of stocks, the quantity of the stocks, the fees that you're paying, all you got to factor all that in to make sure that you know, you know, you're in the right model for what you're looking for. And so that's why we run an ETF model that gets rid of all those thousand stocks, $900 stocks. We've got a lot of them these days. Uh Eli Liy 600 bucks. Uh now Service Now's $900. You know, there's a lot of very highric stocks in the markets that make it very hard to allocate to a portfolio on a riskmanaged basis. So that's why you also have the option of using ETFs which are very low cost, very easy to do, very easy to build an allocation with. Okay, great. And so I just wanted to make sure that folks had the general understanding which I think they do at this point is there's there's a spectrum here and you can kind of handle anybody given where they are and generally it fits in one of three buckets. one, you're self-directed, you're DIY. Great. Just subscribe, get the information, use it to make smarter decisions. On the very other end of the spectrum, you've got half a million or more. You want to do all the, you know, the full service, the fancy stuff, uh, all the bells and whistles, great, you can do that. And if you're in the middle, you've got a way to get access to all these different portfolios that your team manages at a much lower cost structure. And um you know it's it you don't get all the bells and whistles of full service uh but you get a lot of access to stuff that you would have a hard time doing on your own especially if you don't have the expertise or experience yet. And you can do that at a much more affordable entry point. Yeah. And like for instance you know a lot of a lot of the you know people that you have on your show they they're big on you know precious metals or commodity stocks etc. Um so we built one called the all-w weatherather model which has a lot of commodities in it has a lot of industrial metals um and and and also has some good valueoriented stocks as well. So this is kind of built on the permanent portfolio theory where you have precious metals commercial metals etc. You have cash, you've got bonds and you've got stocks. So it's a very lowrisk low volatility type portfolio. So again, we've tried to build something for no matter kind of what your flavor is of what you're trying to achieve, then there's probably a portfolio sitting here for you. Okay, great. So I'm just going to say sort of from a call to action here, if any of this at any part of that spectrum sounds like it's a good fit for you or something you want to learn more about, just go fill out the short form at thoughtfulmoney.com. I'm going to remind you to do that again at the end of this conversation. Um, but whether you're looking for full service or whether you're looking for Simplevisor, uh, Chris at your organization, Lance, will take the person by the hand and say, "Hey, look, I think this is the right thing for you, and I will show if it's Simple Visor, I will show you exactly where to go, how to set it up, and all that stuff." Yeah, absolutely. Absolutely. Okay. All right, great. Um, let's get back to the macro stuff just for a little bit longer, then we'll wrap up. Um, so you mentioned, Lance, that uh the latest retail sales numbers came out today. I have actually hadn't had a chance to see them yet, but you've said they are corroborative of the general slowdown that we're seeing in the economy and the continued weakening weakness that we're seeing in the consumer. So, what what was today's data? Well, so you know, last you know, so in uh so this is July data that just came out. So the June data remember was exceptionally strong. We had a everybody was like oh my gosh, retail sales up 0.9%. A huge number. Um but that was coming off this whole kind of concern of you know the April liberation day tariffs and everything got you know kind of everything kind of shut down. So having that rebound was not surprising and everybody was expecting really really strong retail sales day today. It was okay. They came so retail sales headline. Now remember so really important point about retail sales. Retail sales is just measured in dollar volume. That's that's all it does. So, if you, and I've used this analogy before, if I go to a to a gas station, I fill up my car. I've got a 16 gallon g tank on my car. So, if I fill it up with gas at the gas station, we count retail gas sales at at the gas station. So, I fill it up, it cost me 50 bucks this week to fill up my car. I come back next week completely empty. I put in 16 gallons again, but this week it cost me $60. Well, there's the increase in retail sales. Did I buy any more gas? No, I bought the exact same amount of gas. I just paid more for it. So, see, what we don't measure in terms of retail sales is the most critical aspect of retail sales, which is the volume of the sales. And that's really what we should be looking at. Are we buying more of stuff or are we just paying more for it? But, nonetheless, having said that, just understand that going in when you're looking at just looking at just retail sales on headlines. Um, they were up.5 at the headline. uh ex uh retail sales x auto were only up.3 expectations were.3 so this wasn't a super strong report and particularly coming off last month where retail sales x auto were up8 that's a pretty sharp reduction in the rate of sales volume that was occurring over the month and and and so again it's not disastrous you know it's not like oh my gosh it's a recessionary number it's just kind of everything's kind of just gyating along this kind of 2% growth trajectory of the economy. All the other data is kind of cooperating on employment, retail sales, everything else just kind of cooperating this 2% growth rate we've got going on right now. Okay. Um so, you know, the market has um uh taken it back on that the Fed is going to cut this year. Uh and I think uh at least a couple days ago the Fed the market was pricing in at least three rate cuts this year. Um looked like it had a rate cut for the remaining three FOMC meetings. Um uh we did just get uh and when we got the CPI numbers that came out earlier in the week um that was corroborative that hey it looks like inflation is still pretty muted. We then just got the PPI numbers though and that were was higher than folks were expecting. Um so all in one area. All in okay in which area was that? Trade services. Okay. In trade services. Um but it it's got some people questioning this. So what I want to ask you is is what you think is likely to happen here with the Fed? And and let me just bring up this one um tweet here. This is from uh Kevin Olirri. um he's one of the the sharks on Shark Tank. Um he just put this out today and he says, "I don't think Pal's gonna do it." Um so he says, "Look, the economy is uh still on fire. We're killing it. The consumer is still strong." Um he's referencing uh the most recent credit card spending data, which actually was uh uh higher than the market than folks were expecting. And this was after a couple months of credit card spending decreasing. Um, so he's basically saying, look, I I think the economy is doing just fine. I don't think Powell, you know, needs to cut here. Um, that would be a big surprise to the market at this point in time. So, what what do what do you think is likely rate? Well, no. So, so talking about surprising the market, the Fed tends to listen to the markets and this is why they go around, they kind of drop these trial balloons all the time. They'll say stuff to see how the market reacts. And that's why they trot all their speakers out ahead of time and they'll they'll have, you know, everybody will be talking, you know, their points, whatever. But those are all kind of trial balloons and they're kind of seeing how markets react. Right now, the the the market is has a 90.8% chance that the Fed will cut rates by quarter basis point mid in September, right? Yeah. So, the Fed's got the green light from the markets to cut rates. Now, will they, won't they? That's the big debate. Um, now there's going to be two new members on the Fed uh Fed board by the time the meeting comes. Those are all pro pro cuts. So I I think that I look, you know, odds are they're going to cut rates. They should have cut rates last meeting. Um, that employment number and those revisions are not good. The retail sales data is not great. The economy is not booming by any stretch of the imagination. And the risk so and so and and the reason they should cut now is to get ahead of it. And I think then there's been a couple of Fed speakers, Wallers and others that have said the same thing is that the risk they run is that something happens economically and they're behind the curve. The market's going to be okay. If the Fed cuts rates 25 basis points in September, the market expects it. Market may go up a little bit on it, but the market will be okay. But if the Fed comes out and cuts 50 basis points or they skip this meeting and then have to come back and cut 50 basis points at the next meeting because the something's happened economically, the market's not going to like that because now the Fed's behind the curve and the economy is clearly starting to break. We're see reflected in earnings growth estimates, etc. Um, and that the Fed doesn't want to be on that side of the coin trying to play catch-up because whenever that occurs, you get a bigger draw down the markets that impacts economic growth. things come unwound and and that's not what the Fed's trying to avoid. So I I think they're going to cut by quarter basis point and then they'll kind of leave it iffy whether or not they cut one or two more times this year. Okay. And you know after you were talking I I I looked at this tweet from Kevin Larry a little bit more. Actually I think he thinks they they probably will cut in September but then not after that. Um and that could be that could be the case depending on the data. But that employment data is not good by the way. Uh which I think is more which I think is more indicative of what the risk is to the economy. The economy. Yeah. Exactly. Which is why you think the Fed should have cut uh earlier than than now. Um well, let me ask you this. So let let's let's assume the Fed delivers on what the market's current expectations are, right? Which is three rate cuts this year and more to come in 2026. I was uh talking with your uh partner in crime there, Michael Liowitz, your co-portfolio manager there at RAIA, uh earlier this week. And you know, I asked him uh you we talked about how the historical pattern is that when the Fed shifts from a hiking regime to a cutting regime, that usually is kind of coincident with the wheels coming off. Like that's generally where the next recession is dated from. Usually there's a market correction in there somewhere. So, um, if the market if the Fed does deliver on what the market expects, which is to shift to a cutting regime here, do you think that that this has good potential to be kind of a buy the room or sell the news type of transition? It could be. Um there's you know what we saw if you go back to 2021 um really in 2022 in particular you know the markets had these big rallies on expectation the Fed was going to cut rates and when the Fed didn't cut or sorry the when the the market would rally on the expectation the Fed would stop hiking rates and when they didn't the markets would sell off again. That's what that was the whole process of of 2022. Um excuse me. So, this initial rate cut, I don't think the market has a big reaction to it. I think it's pretty much already priced in. Um, there was an interesting piece of commentary this past week is that the markets broke out to all-time highs on the CPI report because that now suggests the Fed will cut rates. And if the Fed cuts rates, that lowers the discount rate on future earnings. Okay, I'm good with that. except for the fact the market has already discounted the Fed rate cut and the discount future discount rate to earnings by running up to all-time highs before it happens. So the question becomes at what point and this is always the case at what point does the market start to question the expectations on future earnings even with a discount rate and yes if I can if I cut interest rates that gives me the ability to overpay for earnings today based on that forward discount rate but the question is how much of that has already been priced in and my suspicion is is that we have already priced in more than a substantial amount of rate cuts into the market. Yeah. And and my suspicion, this is not going way out on a limb, but my suspicion is is the thing that is going to cause the market to re-evaluate earnings expectations is going to be some negative surprise in the employment market. Yep. It it's it's been so stable for so long. Um yet, you know, stable with the data we've had now. Even you know, the president has said, "Look, I think this data is a whole bunch of bunk." Um, and to your point, Lance, you know, we just keep seeing every time a report comes out. We see a little bit more degradation. We see a little bit more under the hood to to have some concerns about. Uh, and and I'm not saying it is going to happen, but if at some point the data comes out and it is just worse than the market was expecting, I think that's going to get everybody's attention. Well, again, why is that important? Because economic employment drives economic activity. Economic activity drives earnings. Exactly. So all this comes down back to earnings. Yeah. Right. Right. It's all comes back down to earnings expectations which are very very lofty, right? Very lofty. And so anything that impairs that expectation, that's the rest of the markets. Okay. All right. I'm going to start wrapping up here. Uh trades, any trades over the past week, you guys still Okay. Zero. So you're still making your shopping list, looking at things. Okay. Yeah, we're we're holding about 12% cash right now in the portfolio still. Um portfolio is doing well. um keeping up with the markets. It's, you know, had little bumps and bruises along the way um just like anything does like you know Eli Liy last week that kind of you know hurt us a little bit but overall you know while Eli Liy was getting hurt tech stocks were doing great. So that balance that we talked about in the portfolio kept the portfolio performing well uh portfolio is doing very nicely this year um even relative to the markets even though it holds fixed income as well. Um so yeah nothing really to do right now. We're just being really opportunistic. we've got this cash that's burning a hole in our pocket. We really do want to get it allocated, but you just can't really justify the riskreward right now. So, holding that cash is a buffer. It's helping hedge the portfolio a little bit. Uh I don't mind giving up a little bit of performance to the markets based on that. But, you know, again, just, you know, that's kind of the, you know, we're looking for that really good opportunity where I can take some of that cash and put it to work at better prices. And I think we're getting there. We've got some stocks that have come down, uh, Service Now, Eli Liy, others. And so I'm now just kind of looking for entry points where I can build those positions out and add cash to them. Okay. But but fair to say you're still concerned enough about correction risk that you'd prefer to sit on that cash. Yeah. Yeah. For right now. Yeah. Yeah. Okay. And I don't disagree with I don't disagree with Brent that I think that we could have a correction again. You know, we've been saying that, you know, August, September, you know, we're potentially set up here for a 5 to 10% correction. I still think that's very likely. Doesn't mean it has to happen. And come the end of September, if the markets are at 7,000, I'll sit right here and go, I was wrong. So, you know, I have no problem with that. We're still allocating. We're still making money. I just still think that risk, the riskreward is just out of balance. And then we've got to have some type of pullback to at least get some of that back in line. Yep. Yep. And again, that's your job there as a a capital manager is you you got to always have risk management in your mind. You can't just be throw caution to the wind, you know, and and even if it does go to 7,000, you you're not going to beat yourself up because you're like, it would have been reckless to to have not had concerns given the conditions at this time. Yeah, exactly. Okay. All right. Well, let's let's end uh on a rant here. Um I mentioned I I you know, had this trip last uh week and um I got a lot of a lot of potential rant material out of it. Um, so I'm I'm going to try to connect a couple of different dots both some things on the trip with some recent conversations I've had on this channel. Um, so Lance, you've you've seen Downtown Abbey or at least you you get that reference, right? Yes. Yes. Yeah. So, you know, super fancy mansion manor living that the nobility in in Britain lived in. Um, so my daughter and I visited a very Downtown Abbey like place um in Kani in Ireland called Mukros House and it it's very much a Downtown Abbey type of of mansion and it was built in I think the 1840s. Um, and uh beautiful property, beautiful estate. It's it's right on this national park so it's just absolutely gorgeous. Um, and uh it's amazing. you know, you walk through this place and and you just appreciate the opulence of of what the aristocracy lived in, you know, back in the Victorian age. And um it's amazing how massive this place was and how it pretty much revolved around just a husband and a wife and their small kids. Um and they must have kind of felt like gods. I mean, they really you really must have felt as a no as a member of the nobility that you were of a different species than pretty much everybody else, right? whether it was chosen by God or just the way you lived, it was way different than how everybody else lived. And this place had, I don't know, you know, 25 fireplaces and I lost count of how many bedrooms and stuff. I mean, it's just it's massive, right? Um, and so it's fun to walk around and see the lifestyle these people had. But what was really interesting was was walking in the downstairs part of it, um, where all the servants lived and worked. And they spent a lot of time talking about how, you know, really hard it was for the servants, the life that they had there. They'd get up at 5:00 in the morning every day you had to. And you'd stay up at least as late as as the owners and often times they'd be entertaining until late into the night and you had to get everything ready for the next morning. So you might only get a couple hours of sleep uh at night. And they walked us into some of the rooms like the laundry there, which they said was part combination steam room and gymnasium. Right. So just, you know, you have, I don't know, 20 bedrooms in this place. So you're just running sheets and linens all day long in this place. There are these massive hand crank machines there to to both wash and press and dry these things. Um, so just a massive amount of physical labor. And then they tell you to look at the sinks in this laundry room and they're kind of at about like knee height. And they ask, "Why do you think they're so low?" And it's because a lot of the workers were kids, right? they they had to have the sinks at the height that the workers, you know, were. Um, and they they ended up giving this really impassion story about, you know, as hard as the lifestyle was there, if you lived in the surrounding area, you would get on your knees every day and beg for your children to get employed at this place. And the reason why was because the alternative was was squalor and perhaps death. Um, so this place was built in the 1840s right around the really big um, potato famine in in Ireland. There were a bunch of famines, but the really big one was was around then. And um, if you didn't work at this place, you were completely ignorant. You you had no education. They spoke Gaelic, so you didn't speak English. Um, and your only alternative was to try to help your family farm hopefully enough potatoes that you wouldn't starve during the next winter, right? let alone die of some terrible disease. Whereas, if you got, you know, a job at this this manor, you got fed and you got fed a variety of calories, more than just potatoes. Um, you were taught English, right, which was a huge station changer back then. um you were taught skills and uh if you you know ended up growing up there and and marrying another servant at this place the the lord and lady would try to find a a place for you on the property to be able to live right so it was it was just a massive catalyst to get out of just pure squalor then and uh and the guy who was sort of telling us all this you know said look for a lot of you in the room we're not talking that many generations ago like we're talking like your great-grandparents maybe maybe your great great grandp parents. But the whole point was which we've sort of talked about at times, Lance, which is like life was hard until quite recently in society. Like it it was really hard. Um and you were really grateful even for really hard labor like the people who worked at this this place was, right? And we we've kind of forgotten that. And I'm and now tying it to my conversation with um Greg Lucianov um coddling of the American mind like the price of comfort that we've just become less resilient with each generation you know at least since World War II because life has gotten a lot more convenient and a lot more comfortable for us and we've kind of begun to lose the the collective memory that like the average average life until very recently was was really hard for the vast majority of people. So, um I I want to make one connect one more dot and then I'll I'll um I'll let you react. Uh so I was interviewing um uh Ivy Zelman um yesterday and that interview hasn't come out. that's going to come out the day after this video airs. And we were we were kind of talk we we were talking about that chart that's been making its rounds around the internet that shows the decrease in um 30 year olds who were married and owned a home over the past 75 years and it was like over 50% back in 1950 and now it's under 15%. It's like 13% or something like that. meaning, you know, it's just we've seen a collapse in the ability of our younger generations to be able to afford to be married homeowners, right, for a whole variety of reasons. Um, and you know, Ivy was talking about how, yeah, it's been really hard for this generation to to form capital and how a huge determinant of whether you're going to be able to afford a home is are you getting parental help? And she sees this a lot in the markets, right? you know, the the millennials that she sees buying homes, she said the vast majority of them are getting subsidized by their their affluent parents. And then she was sort of tying this to to kids that she knows, including some of her own. And she's like, you know, my kids, like, you know, I still have a lot of adult children that are kind of still at home. She has a 25-year-old. And um she says, I'm happy to help them, but I got to be honest. You know, Ivy said like I was totally self-made. I came from nothing. There is this real condition of of affluenza where um our kids who grow up uh in a in a you know somewhat affluent household they uh they get used to that comfort and um and they really don't want to they're losing their drive to go out and be independent. We see this where kids turn 16, they don't want to get a car. Um but now you know the the stigma of of um staying at home after graduating college has pretty much gone away. And you know she was initially saying like yeah we we've seen that in Europe and whatnot. and and and the thing that I brought up to talk with her about which is I'll I'll end on here which is um you know America I think one of the things that really made American culture and society so successful and so different from the rest of the world was this kind of can do pioneer spirit of I want to get out and be independent and strike out on my own and find my own fortune and if we have this generation that is starting to give that up for a whole bunch of reasons, many of which are understandable. But but that that becomes like a real cultural risk here, I think, for America of losing what's made this country so great was this just burning desire to get out from under your dependence on anybody and strike it out on your own. So anyways, I'll take a beat here, but I'm curious to hear what you think about all that. I think it's all is what I think it is because Oh, Jesus. Okay, come on. Well, seriously, I mean, well, what I mean, how about my part about life being hard until recently? Yeah, it it No, life is still hard, you know. Get over it. Get a helmet. Go out there. Life's hard. Life's always been hard. It's still hard, right? She's the problem with her kids. If she's letting her kids live at home at the age of 25, she's the problem, not the kid. And just to be clear, because you're enabling. Just to be clear, she she she was agreeing with you on this. I understand that. And but if her kids are living home at 25, she's the problem. She can't look at her kids and say, "Well, you need to move on now." No. If you're allowing that to occur, you're the problem. You're enabling your kids to do that. And see, we've en we've engendered that idea into civilization today where all the parent look I deal with parents all the time. They come in like, well, I'm trying to figure out how to pay for my kids' college. And you know, I'm like, hey, you can do that, but you're going to be living with your kids because you're about to use all of your retirement money to pay for their college. That's not your responsibility. Like, what do you mean that's not my responsibility? I'm supposed to pay for my kids to go to school. Nope. That's not your responsibility. It's not your responsibility to help your kids buy a house. That's their responsibility. They've got to figure it out. You know, did you realize that the cost of home ownership today is less than it was back when it was in the 1970s because interest rates were 13%. Cost of home ownership cost you about 31% of your income. It cost you about 16% today. So, you know, yeah, it's still expensive, but again, what we have today is all these other things that we think we have to have. Oh, I've got to have a $1,000 iPhone or $2,000 iPhone with an $800 a month phone plan or whatever it is. That's not a necessity. That's a want. And we've confused our wants with and our comforts with necessities. And this is what people didn't have back previously. We're talking about the 1800s, 1900s. When I when I turned 18, my dad was like, "See you get out of the house. Go to school. Pay for your college. Get on with your life." But my job is over as a parent. That was my dad. So, but that's the same way my kids are. And my kids have to pay for their own school. I don't pay for it. Could I afford to pay for their college? Sure. But that's not the point. I want them to pay for it so they have a stake in the game. They understand the value of that education they're getting. And then they make sure that they take best advantage of that school to get their education to the place where they can go out and succeed in the world in the right jobs, the right ones that that create the right incomes in the right areas of the economy. And we spend a lot of I spend a lot of time with my kids focusing on I send them lists like every week, right? These are the 10 worst paying degrees you can get in college. These are the 10 best paying degrees you can get in college. And I'm constantly feeding them that information to make sure that they are successful individuals in life. And am I going to help them buy their first home? No. Will they buy a home? Absolutely. Why? Because I'm teaching them to save and invest now. So they can learn how to live on a budget, live within their means, save 20% of their incomes. The things you have to do, save up 20% of the down payment for your house. That's that's all you have to do. It's not hard. It's very achievable. But people just have to want it. And the problem today is is that we've now created this environment. Everybody's coddling to it just like your guests going, "Oh, it's such it's the environment. It's the economy. It's all, oh, why poor me." You know, Get out there. If you want it, go get it. You just have to go want it enough to do the sacrifice to get to where you want to be. The rest of it's just excuses. And you can live in the world of excuses, but you'll never succeed living in that world. If you want to go get it, put on your big boy pants and go out there and get it and everything else. You can come back at me in the comments and say, "Well, you don't understand. You know, I do understand. I am raising kids in this environment. I'm teaching them these very things. I know what all these things cost, but it's their responsibility. And if I don't teach them it's their responsibility, they're going to fall in the same trap as everybody else going, "Oh, I have all these excuses as to why I can't do something." rather than coming up for the reasons to why they can do something. So, so just to be clear, you and I are in violent agreement here. You're making the point that I've been setting all this up for. And um I I think you're agreeing there is this affluenza that is is is sapping the drive and the belief that hey, you know, I can persevere through this, right? Absolutely. But the parents, you know, we we blame the kids for having affluenza. No, no, no, no. it the parents engendered it. Well, exactly. The kids didn't become affluent independently. You know, it's the parents who were subsidizing them with their affluence. So, I'm I'm I'm a thousand% right there with you. And again, one of the things Ivy and I talked about, which is sort of the same thing you're saying is is, you know, and this goes to my my cultural point, which is kids have grown. She she said something like um I remember when my daughter who's now in her 20s was 16 and said mom you know your generation I can't remember her exact words but like you guys basically sold us a bunch of rocks here right like you you guys have like you know drained the system and we're just getting a whole bunch of crap right we're getting a whole b a nation in debt and we got you know lower work prospects and everything's much more expensive and stuff and I do think Lance there is a lot of truth to that and you know we've talked I I know we disagree on this a little bit and I don't want to have this fight but I I I actually do. Why? This is the fight we need to have. The reason we have debt is because we're so freaking successful. It's not the reverse. Okay. But but I it doesn't I don't want to get rattled this because that you and I still get to the same conclusion, which is which is that look, you you got to get out there. You got to make your way in the world no matter what the conditions are. And that that that the struggle that that progress comes through struggle and without the struggle you don't progress, right? Um but what we've done g given that mentality of the kid which I think I I I'm sensitive to it. I'm empathetic to it. But what it does is it creates this victim mentality which we've saw kind of go on steroids through this kind of woke era that we've just lived through where everybody's a victim. You know, it's victim versus oppressors. Um, and so when you have a victim mentality, you're just looking at the world in ways that it screws you and and you sit in that pity party of being a victim. You have to adopt the hero mindset that says, "Look, no matter what my situation is, if I want it to be better tomorrow, I got to grab life by the horns and I got to figure out how I'm going to get from this level to that level." Right? Um, and I think that that's what affluenza as well as just sort of where we've gone with this helicopter society, whatever, is we we've sort of robbed kids of that hero mindset and we've we've kind of nurtured this victim mindset, which I think is bad for them individually, but I think bad for us as a society if hey, we want to pass the torch along to a generation that's going to build on top of America's success and make it even more successful. We are not setting the stage for that. as as Greg Lucianov says like we've basically been teaching the exact opposite uh of the values uh and the messages that we need to be instilling in these future generations here right so absolutely and but the end we just you have to just start with you know you know look go to your kids and start with baby steps right learn to say no when they come to ask you for something just say no one time right just start there and then let let them figure it out. When I was growing up, one of the best things my dad ever did was is is and I do this with my kids still. So my daughter, I'll give you a good example. My daughter came to me the other day and she says, "Dad, I want this." And I'm like, "Great, go save up the money for it." And I said, "I'll tell you what I'll do to incentivize you. I'll match you if you, you know, something she needs for college." So it's I would buy it for anyway, but it's not the point. Um, I go, "Go." I said, "You're working. you come to me at the end of the month with half the money and I'll match you and I and we'll get you the other half the money because I at least want her to understand that it's important to have stake in the game. And when I was growing up, I you know I wanted, you know, I was learning to play guitar and I wanted a Gibson Les Paul custom just like uh just like Peter Frampton had, right? You know, black ebony with the gold inlays, all that, right? And back then that that Gibson was like $1,300. And so my dad said, "Fine, I'll match you half the money." Which is worth like a million dollars today in today's Well, actually, time value money from when you were a kid. Well, no, but actually I sold that guitar when I was in college because I needed money to eat. Um, and I sold it for like 10 grand at the time. And that guitar today is worth like 75 if I would have just kept it. Anyway, yeah, long story. I was just trying to make a joke about how old you were, but yes, it was a good No, no, no. I'm I am that old. But the point was I went out and mowed yards all summer um to to save up half the money and then my dad and I went and bought the guitar. Um but the point is is is that you have to start engendering instead of just giving them things and saying, "I love you. It's great. Here it is." And and we would all love to do that. I would just love to give my kids whatever they wanted. But we have to remember as parents, our job is to teach them about how to navigate life and give them responsibility. Make them responsible for their actions. make them responsible for the consequences. You know, for instance, when they turn 16, I go help them buy their first car just only from the standpoint that because I have to go 16, I have to co-sign for the loan, but they're responsible for the loan payment. So, they've got to earn the money to pay for the loan. They've got to pay for their insurance. They've got to pay for their gas. They've got to learn these things. And so, they they've had to work ever since they were 16 and go to school. They work while they're in college and go to school. amazingly they can get it done somehow and they do well. Um, and so there's no reason when, you know, I' I've heard other kids go, "Well, I can't work in college because I'm in school all day." You're in school maybe four hours a day. There's a lot of time left to go wait tables, whatever you can do. But that all engenders this work ethic, which is what we need to give to our kids. So when they leave school and they go to a job and they're in in a a position of employment, they have a work ethic, they have a discipline, they understand responsibility, they understand the value of money. That's our jobs as parents to teach them. And if we don't teach them now, you set them up for failure later in life. And it sounds cruel. It sounds mean. And I get emails. I say, "I can't believe you treat your kids that way." Well, you know what? My kids may hate me. They don't, but you know, they may hate me for it now, but they're going to love me for it later because they'll see what the value of that is when they compare themselves to their peers, how much further ahead they are. Well, and I'm going to make an analogy here. So, when I was talking to to Greg Lucino, um, one of the things at the core of of the coddling of of the American mind is has been the rise of safety, which is what he and his partner call it. M and um it's it's where safety becomes the most important thing and and in in in just a small incremental increase in safety we put a priceless value on right um and he basically says look you know the the well the more you end up protecting and sheltering the more you know kids don't get exposed to the adversity that then makes them resilient and independent right and so the the the solution is to inject more risk into the lives of our children, right? Not recklessly, but but to not, you know, sanitize everything with, you know, safety helmets and seat belts and everywhere and bubble wrap and all that stuff, right? And so the question I asked him, I said, you know, okay, but but if that's really the goal, you have to be honest about it and say, look, if we dial up risk than large law of large numbers, you're going to have more absolute um tail results that are really bad, like maybe even fatal. like, you know, it it's hard for people to not hear what you're saying is is, hey, we're going to lose more kids in childhood because we're we're making childhood a little bit more risky. And he says, no, that's fair. And he says, I think the honest answer is is that's true, but if you want to look at at it on a lives lost or lives saved basis, we believe that by dialing up risk early in in earlier in life for children is you're going to save a lot more lives later on when kids get to adolescence and start going through, you know, all the mental health issues that they have from being too sheltered and not being able to deal with the adversities of life that that with the kids who check out or self harm or or kill themselves. you'll actually reduce a lot of that by building more resilient kids in life. And so on the long scale of things, yeah, we think we'll save a lot more lives even if we maybe lose a few more, you know, early on, right? So it's kind of cruel math, but I think it's really true. And so to your point, Lance, it's like parents don't want to see their kids suffer, right? So let's let's protect them from the suffering. Well, you end up setting them up for greater failure and suffering later in life. So, it's actually more loving, more caring to force them to have to go through the pain of learning to punch through life's challenges early on. Yeah. No, I mean, it's like, you know, when when my kids were little, you know, it's it's, you know, I listen to parents today and I kind of chuckle, but when my kids were little, if kids down the street had the flu or whatever, I was like, "Hey, go play with Jimmy." I'd send them down there to get sick so they could build up immunities with it, right? And same thing during CO. I was like, "Go play with people with COVID, you know, come let me know how you're doing." Um, you know, because that way they could build, you know, their bodies could react and fight, build up immunities. But, you know, that's how we are as humans. Our whole our whole nature is built up that we grow from adversity. And and you know, so the more adversity we have, the stronger we get. And you know, remember when you know, this is one of the the sad things I think about even with my kids growing up. It it had changed a lot um as a parent when I was growing up versus the way I was raised as a kid. When I was raised as a kids, you know, you came home from school and you left and the rule was be home when the street lights came on, that was it. And if you got thirsty, you drank out of garden hoses. You know, people my kids go, "Y'all really did that?" Yeah. All the time. I'll tell you. Yeah. It was benign neglect, you know. Yeah. Yeah. It it was. And you know, but you know, you get in a fight with your, you know, you have an argument, you get in a fight with some kid, you punch them in the nose, and then you all start laughing about it and you're best buddies after that, right? And you know, that's the way childhood was. And it was all about, you know, we we found our own problems. We solved our own problems. And we couldn't figure out how to get to somewhere, we would figure that out, whether it was riding bikes or getting, you know, hitching a ride with somebody else, whatever it was, you know, we had to figure out our own problems. And so we had to do all these things. And then we had responsibility. We had to go home. We had to do chores. And there was no allowance when I was allowance. What the hell was that? Yeah. He's like, "You just had chores to do." And you better get them done or you got your butt whipped. Um if you went to school and you acted up, that was the worst thing. You got sitting out the coach's office, you got paddled in the coach's office, then you get home and you get whipped again at home because they found out you got paddled at school. So, you know, but we've taken all that out of society. We've taken out the discipline. I was listening to this really great interview um with a with an educator um the other day. She was doing this interview on the radio and she's been teaching in the school system for 30 years. And so the guy that was interviewing asked says, "Well, what's the biggest, you know, what's the biggest thing that you've seen, you know, change in the educational system for the better or for the worse?" And she goes, "I can't tell you really anything for the better." She goes, "I can tell you that the worst things we've done is taking out religion from schools and taking out discipline from schools. Everything has gotten progressively worse since we've done that. The education has gotten worse. What we teach our kids is getting worse. We just teach them now. We have what's called the STAR test in in Texas. Um I think it's nationwide, but particularly in Texas. And so all we do is just teach our kids how to pass that test. We don't teach them to be critical thinkers." So, we've done all these things over the last 30 years to your point to make things safer, easier, quieter, calmer, more convenient, and it's having a very adverse effect on the ability of our kids to deal within the economy. And we're and we're seeing this in a lot of the reports about Gen Z's and millennials in the workforce that they're having a lot of challenges, you know, working within the workforce. employers are are having problems, you know, integrating with this younger generation because they have higher they have a different set of expectations than what, you know, millennials or jenzers may want to deliver. And so that's something that I think we're going to have to all step back at some point and go, you know what, Dr. Spock's theory of child rearing was probably not the right way to go. Yeah. Um, all right. I'm going to end this just on um a comment I made to uh to Ivy, which is um you she and I whenever we we get together, we usually end the conversation on the coming wave of boomers aging out of the system, which is kind of a polite way of saying dying off eventually, right? And not and sooner the better. Well, no, but but the the question of okay, you know, who is going to buy all these homes from boomers when it comes time to sell their homes for the prices that the boomers want to sell their homes at, right? And I think there's a there's a big challenge coming up there in general. But if you have a cohort, younger cohorts that are coming up that are unprepared for life, unprepared to be productive members of society, then you're really compromising their ability to afford to pay for your home. So like even with just a selfish mindset of like, you know, we all have a stakeholder in bringing up uh we all have a stake in bringing up raising younger generations that can step into this economy in the way that we want them to. Well, but again, you said something very important there, which is buying the home from the price that the boomers want to sell it at. If there's no demand for the price of that home, they won't be able to sell the price of that home at that price. It will be much lower, right? And this is this has been one of the interesting kind of catalystes. Everybody's expecting this massive home price boom when the Fed starts cutting rates because that's what we're used to. But there's a real risk that the Fed cuts rates. There's a lot of people that are locked up in their homes right now and they can't sell them because if I sell my house, I'm going have to go get a mortgage for a new house and I can't afford a 7% mortgage on a new house. I'm just going to stay where I am. One of the potential or one of the interesting outcomes could be I'm not saying this is going to be the case, but one of the interesting outcomes of the Fed cutting rates is all a sudden there's a massive supply of existing homes that hit the market with people wanting to sell now expecting to get this price and there's no demand for it. and those prices and that actually results in a in a fairly serious price declination in homes even more so than we've had now just because of the supply glut that hits the market. So just as a teaser I ask Ivy that exact question uh in tomorrow's uh conversation. Okay. Um all right so just in wrapping up here last point on on this. So um you know this whole thing about raising more resilience and and fully functional younger generation um it matters both on the societal level as I've been beating the drum on but it matters very much on the individual level as Lance has been talking on with our own kids and I have these exact same conversations with my kids and Lance I actually had one yesterday with my my younger daughter on this and um who gets it? She's heard me talk about this a lot and I and you know this really is a it it there's responsibilities on both ends here, right? The parent and the child. And um I have chosen as my kids have gotten older to be really pretty transparent with them about like, hey, as a parent, this is what I'm trying to do, right? I'm I'm trying to guide you and support you when I can in these areas, but I'm also deliberately not stepping in in these areas because you need to develop these skills and you need to struggle to do it. and I'm going to let you struggle, right? And what what I kind of came up with with my daughter, you know, I said, "Look, when you get out of college, just FYI, like, you know, that's it. The support becomes 100% emotional at that point in time." And I said, "Look, I I do want to help you." Like, she's got some dreams about businesses and stuff she might want to do entrepreneurally. I'm like, "Look, I would love to be, you know, one of your seed investors on on your entrepreneurial dreams here." But I said, "Look, um, think about it this way. The more you demonstrate to me that you don't need my support, the more my support you're gonna get. Yeah, it's absolutely true. I have uh you know, you know, my son left and went to the UK when he was 18 and I cut him off entirely. I said, "Hey, if you want to do this, it's fine. Um but you're completely on your own." And he's like, "Fine." And he went and he did it all on his own. And he's very successful now. He's doing very well. And what's so funny is I'm try I try to give him stuff all the time. Like we were when when we went to go see him, all my wife wanted to do. My wife's sole goal in life is to buy my kids shoes. That's all she wants to do. And she's like, "I want to go let let's go buy you a pair of shoes for work." And he's like, "I just bought a pair. I'm completely fine." And she was so disappointed because all she wanted to do was buy him shoes. Yeah. But but no, to your point is like once they demonstrate success and that they're doing what they're supposed to do on their own and like my daughter that lives in Austin right now, she's doing very well for herself. got her apartment set up, she's doing well, got her job, she's, you know, going getting some additional education. And so, you know, she gets herself in a bind somewhere, you know, I'll let her struggle through it for a while, but then I'll have my wife secretly go help her. Um, you know, and so I don't mind helping them in that point once they demonstrate a success, but the the mistake that we make as parents is is helping them upfront. You know, one of the the I see this a lot with my clients is they'll have a child that gets into credit card debt and then they'll bail them out of the credit card debt and they'll say, "Okay, we'll pay it off." Right? And then they run the credit card debt right back up. And they do this over and over and over again every time because you're teaching the kid if you get into trouble, I'll bail you out. I'll bail you out. Right? And so, you know, none of my kids have credit cards. And you know, this is a bit this is a big no no in our house. and and my daughter came to me the other day and she's like, "Hey, I'm trying to do this and you know, should I take out a loan for it?" I'm like, "Absolutely not. If you can't afford it with cash, you can't afford it. So, just save up for it." And she's like, "Okay, got it." Um, but you know, there's this big myth that you got to have a credit card in order to have a credit score. Completely, right? That is absolutely not true. So, you know, it's just we have to teach our kids the right things and then be there. And to your point, if my kids want to start a business, I'm all in first investor. I'm going to take half the business, but I'll give you the capital. Right. Well, well, to be clear, you know, what I don't want to do is say, "Oh, you got an idea. Here's money. Go for it." Like, you raise up your part of the seed capital. You get this thing start. You prove you don't need me to start it. And as soon as you do, I'm going to come in and tell you, I want to give you half of it. Right. Exactly. No, that's right. But then I'm going to take ownership. We're going to run it like a business. You're going to be responsible to me just like any investment I go for. I mean, it's not a this that that isn't a a a fatherdaughter, father son, you know, gift. No, we're going to be business partners and we're going to treat it that way. But but yeah, I mean, this is this is if you you know, and this is look, maybe I'm entirely wrong. Maybe I'm entirely wrong, right? And maybe everything I do is entirely backwards and maybe nobody agrees. All I know know is I is I love my kids very much and I just want them to be as successful as they can be in life and I just want to give them the pathway to do it and the only way I can figure out the way to do it is to give them adversity and challenges to overcome so they understand what they're facing in the future. Yeah. Well, very well said. Um well, you're if you're wrong, you got company with me. But parting point here for folks is just look at your life, look at your relationships with those in your family and say, "Hey, look, am I letting affluenza uh reduce my my loved ones potential versus uh help their potential?" All right, that being said, I got to wrap it up here. Um note for folks, um this coming Tuesday, 700 p.m. Eastern, 400 p.m. Pacific, uh I'm going to be um hosting a webinar for Rick Rule. Um, you might have heard Rick on his many appearances on this channel talk about the new bank that he's founding called BattleBank. Um, so we're finally um going to be doing just a deep dive into what that's going to be, uh, what opportunities or or what benefits that's going to offer people that would choose to do business with Battlebank. And he's also still looking for investors in that endeavor as well. So, if that's something that you're interested in at all, uh, just go to thoughtfulmoney.com/battle and you can sign up for that webinar. It's going to be totally free. Um, and uh, as usual, if um, you think the the way to best increase the prospects of for the of those in your life whom you love the most is to continue listening to Lance Roberts on his channel every single week. Let Lance know that by hitting the like button, then clicking on the subscribe button below as well as that little bell icon right next to it. And if you would like some help in navigating your wealth through what might lie ahead, potentially even the correction that uh uh Brent Johnson thinks is likely to happen over the next couple of months. Um wherever you fall in that spectrum, DIY, full service or somewhere in the middle, um highly recommend that you consider uh scheduling a free consultation with one of the financial adviserss that thoughtful money endorses. These are the firms you see with me on this channel week in and week out. Perhaps you'd like to even work with Lance and his firm there at RAA with one of the solutions that Lance walked us through. To do that, just fill out the very short form at thoughtfulmoney.com. All right, Lance, as usual, I'll give you the last word. I've said enough today, so we'll see you back here next week. All right, short and sweet. Thanks so much, buddy. Everybody else, thanks so much for watching.